Finance minister Paschal Donohoe has published the Finance Bill 2022, which runs to 93 sections and over 200 pages, and implements the taxation changes announced on Budget Day as well as introducing some administrative and technical changes to the tax code.

The Bill provides for announced income tax changes, the Temporary Business Energy Support Scheme (TBESS), the rent tax credit and the defective concrete blocks levy which were announced on Budget Day.

It also contains a number of additional taxation measures that were not announced on Budget Day such as the increase in the threshold for cargo bikes under the cycle to work scheme, and changes to the Key Employee Engagement Programme.

Cargo bikes are more expensive than ordinary bikes and electric bikes and the threshold for cargo bikes is being increased to €3,000 from 1 January 2023.

Temporary Business Energy Support Scheme

In Association with

The TBESS will apply to tax compliant businesses carrying out a trade or profession (Case I and Case II). It will also apply to new businesses. A monthly cap on relief of €10,000 per trade or profession will apply. Where a qualifying business operates across more than one location, increased relief may be available subject to a monthly cap of €30,000.

The minister said the scheme will be administered by the Revenue Commissioners on a self-assessment basis and will run from September 2022 to 31 December 2022, with the intention to extend it to 28 February 2023 subject to the anticipated EU approval.

Retailer lobby group Retail Ireland said the benefit of the TBESS will be limited if a business has to spread the supports across a large network of stores.

Retail Ireland director Arnold Dillon said: “Designing and tailoring an energy support package for the wide range of businesses across the economy is not straightforward, but it must be far-reaching and equitable given the scale of the challenges that many companies, large and small, are now facing. Each individual shop should have equitable access to government support packages.”

Brid Heffernan of Chartered Accountants Ireland said extension of the TBESS relief to 'Case 2' trades will come as a huge relief to dentists, solicitors, accountants and other non-incorporated enterprises.

Gerard Brady, chief economist with business lobby group Ibec, commented: “Care needs to be taken that the hard cap of €30,000 in energy supports per company is adjusted to take regard for threats to viability or reductions in activity or opening hours for businesses which might own multiple locations or sites.

“This could be done by allowing for additional support above the cap for companies which can show direct threats to their ongoing viability.”

Brady also pointed out that an issue concerning Ibec members is changes to BIK on company cars from January 2023, which was announced in Finance Bill 2019.

“It is our view that these changes should be delayed until the economic environment improves,” said Brady. “Whilst the rationale for the changes was sound, the costs involved could run into multiple thousands in additional taxation for workers on even modest salaries.

“Feedback from Ibec members is that this is causing significant concern amongst their workforces given the financial pressures many are now facing. Implementing these changes for new cars only, subject to ministerial order, would both achieve maximum behavioural change in leasing arrangements whilst avoiding placing further significant burden on households.”

Vacant Homes Tax

The Bill provides for a new Vacant Homes Tax (VHT) to be introduced in 2023. The VHT will be self-assessed and administered by the Revenue Commissioners, and will apply to long-term habitable vacant residential property that is subject to Local Property Tax (LPT). The VHT will be paid by property owners.

A property will be considered vacant for the purposes of the tax if it is occupied for less than 30 days in a 12-month period.

The first chargeable period will commence on 1 November 2022, and owners of vacant properties will be required to file a return in November 2023. Payment of the tax will be due on 1 January 2024, at a rate equal to three times the property’s base LPT rate. The VHT will be paid in addition to the LPT.

Exemptions span properties recently sold or currently listed for sale or rent; properties vacant due to the occupier’s illness or long-term care; and properties vacant as a result of significant refurbishment work.

Mineral Oil Tax Excise

The Bill provides for the extension of the existing Mineral Oil Tax reductions on petrol, diesel and Marked Gas Oil. These reductions were first introduced in March 2022 and were due to be reversed from 12 October 2022. As announced in the budget, the reversal of these reductions will now be implemented from 1 March 2023.

VAT

As announced on Budget Day. the 9% VAT rate reduction for gas and electricity will be extended for an additional four months, until 28 February 2023.

The VAT on newspapers will be reduced from 9% to zero from 1 January 2023. However, magazines have been excluded from the concession.

Other products which will be zero-rated are Automatic External Defibrillators, some period products, non-oral Hormone Replacement Therapy and Nicotine Replacement Therapy.

Defective Concrete Products Levy

The rate at which the levy will apply will be halved from the planned 10% to 5%, and will come into effect on 1 September 2023, as opposed to 3 April 2023. Finance Bill 2022 provides that the levy will apply to pouring concrete (aka ready-mix) and concrete blocks under two harmonised EU standards. It will not apply to precast concrete products.

Drafting Delays

Donohoe added that due to the nature and extent of issues for which provision is being made in the Finance Bill, and the complex nature of certain drafting requirements, and the need to align certain provisions with EU legislation, the draft legislative provisions relating to a number of issues are being held over for introduction at Committee Stage of the Bill.

These include the provisions relating to the Key Employee Engagement Programme; the introduction of the provision for Accelerated Capital Allowances for the construction of slurry storage; and the extension of a number of agricultural tax measures due to expire at the end of December 2022 which are dependent on the outcome of negotiations at a European Level on the Agricultural Block Exemption Regulation.

The minister added: "As indicated at budget time, the clear intention remains to provide for the buy-back of KEEP shares by the company from the relevant employee and to raise the lifetime company limit for KEEP shares from €3m to €6m.

"As also mentioned at Budget time, changes to broaden out the relief to allow for group structures and more flexible arrangements as regards employees are also being brought into effect."