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Finance Bill 2021

  • Ireland
  • Tax planning and consultancy - Briefings

17-11-2021

The Minister for Finance published the Finance Bill 2021 on 21 October 2021. The Bill gives effect to the measures announced on Budget day as well as legislating for other tax policy changes, including the completion of the transposition of the EU Anti-Tax Avoidance Directive (“ATAD"). The Bill will now make its way through the legislative process, to be finalised by the end of the year. Although the big tax talking point is of course the new 15% minimum rate, nothing is included in the Bill in relation to this measure, which given the early stages in which the process is, is not unexpected.

A summary of the key changes is as follows:

ATAD

Introduction of an interest limitation rule (“ILR”), which seeks to limit tax deductible interest to 30% of EBITDA. This rule has been overlaid onto existing purposive interest limitation rules, which will cause additional complexities for taxpayers. The new ILR contains two carve outs, based on group borrowing or group assets, as well as a de minimus limit under which the rules do not apply. Any taxpayer with tax deductible borrowings will need to consider this new ILR rule when filing their tax return, and when considering debt financed investment. Further details are found here.

The final piece of anti-hybrid legislation required by ATAD is also included. The anti-reverse hybrid rules contain provisions to deal with hybrid mismatches where an entity is treated as transparent in its home jurisdiction but non-transparent in another. Further details are found here.

DAC7

The Bill contains transposing legislation for DAC7, which will require details of sellers to be reported by online platforms, where certain goods and services are provided by those sellers. This is the latest directive in the EU’s suite of information reporting and sharing requirements. Further details are found here.

Digital Gaming Credit

As mentioned in the Budget, the Bill contains details of a Digital Gaming Credit, which will provide tax relief to those involved in the creation of video games. The credit will take the form of a refund of corporate tax (or payroll tax in some cases), and will be dependent on the game in question meeting certain cultural or educational criteria. Further details are found here.

Real Estate

A number of changes to the hastily introduced provisions to apply a higher rate of Stamp Duty to bulk purchases of homes have been introduced. These provisions largely clarify the intention of the previous legislation.

Further, in a move to ease the housing crisis, a new “Zoned Land Tax” has been introduced to apply to property which has been zoned for development but not yet developed. Further details on both these real estate measures are found here.

For more information, please contact: 

The Minister for Finance published the Finance Bill 2021 on 21 October 2021. The Bill gives effect to the measures announced on Budget day (insert link) as well as legislating for other tax policy changes, including the completion of the transposition of the EU Anti-Tax Avoidance Directive (“ATAD). The Bill will now make its way through the legislative process, to be finalised by the end of the year. Although the big tax talking point is of course the new 15% minimum rate, nothing is included in the Bill in relation to this measure, which given the early stages in which the process is, is not unexpected.

A summary of the key changes is as follows:

ATAD

Introduction of an interest limitation rule (“ILR”), which seeks to limit tax deductible interest to 30% of EBITDA. This rule has been overlaid onto existing purposive interest limitation rules, which will cause additional complexities for taxpayers. The new ILR contains two carve outs, based on group borrowing or group assets, as well as a de minimus limit under which the rules do not apply. Any taxpayer with tax deductible borrowings will need to consider this new ILR rule when filing their tax return, and when considering debt financed investment. Further details are found here (insert link to document – Orla I have sent you a separate word version of this for conversion).

The final piece of anti-hybrid legislation required by ATAD is also included. The anti-reverse hybrid rules contain provisions to deal with hybrid mismatches where an entity is treated as transparent in its home jurisdiction but non-transparent in another. Further details are found here (insert link – see attached anti-reverse hybrid pdf).

DAC7

The Bill contains transposing legislation for DAC7, which will require details of sellers to be reported by online platforms, where certain goods and services are provided by those sellers. This is the latest directive in the EU’s suite of information reporting and sharing requirements. Further details are found here (insert link – see attached Update on DAC 7 pdf).

Digital Gaming Credit

As mentioned in the Budget, the Bill contains details of a Digital Gaming Credit, which will provide tax relief to those involved in the creation of video games. The credit will take the form of a refund of corporate tax (or payroll tax in some cases), and will be dependent on the game in question meeting certain cultural or educational criteria. Further details are found here (insert link – see attached pdf).

Real Estate

A number of changes to the hastily introduced provisions to apply a higher rate of Stamp Duty to bulk purchases of homes have been introduced. These provisions largely clarify the intention of the previous legislation. 

Further, in a move to ease the housing crisis, a new “Zoned Land Tax” has been introduced to apply to property which has been zoned for development but not yet developed. Further details on both these real estate measures are found here (insert link – see attached pdf).