PAYE Settlement Agreement for 2024
It is getting close to that time of year when employers need to consider whether they are required to make an application to Revenue in relation to a PAYE Settlement Agreement (PSA) for 2024.
However, uncertainty arose as to the application of the exemption, in particular to transactions that did not include consideration passing (e.g. interest-free loans or the rent-free use of property between connected parties). This led to a re-drafting of the section relating to the matter in the Finance Act 2020. Nevertheless, due to the uncertainty and concerns raised by a number of professional bodies and practitioners on its re-drafting, the commencement of the section was made subject to ministerial order. This has never been made which meant that the principles set out in Finance Act 2019 have remained in force since 01 January 2020.
Finance Bill 2021 includes draft legislation intended to provide clarity on the scope of the exemption for non-trading Ireland to Ireland transactions (trading transactions remain subject to transfer pricing rules).
Key points relating to the exemption
The draft legislation proposes the following:
The amended exemption will apply for chargeable periods beginning on or after 01 January 2022. There is still uncertainty as to the scope of the exemption for accounting periods which commenced prior to this date.
It should be noted that Finance Bill 2021 has not been signed into law and therefore the above is subject to change.
Attribution of profits to an Irish branch
The Authorised OECD approach (AOA) seeks to attribute to a permanent establishment or branch the profits that it would have earned at arm’s length if it were a separate company, i.e. the branch and the remainder of the company would be treated as distinct entities for tax purposes.
The new AOA provisions inserted by Finance Bill 2021 will apply these transfer pricing rules for the attribution of income to an Irish branch of a non-resident company to accounting periods beginning on or after 01 January 2022. The implementation of the AOA in respect of small and medium enterprises is subject to ministerial order, which is keeping in line with Ireland’s general transfer pricing rules.
A company carrying on a trade-in Ireland via a branch will be required to keep records detailing various items including but not limited to:
Penalties may apply where there is a failure to provide branch records to Revenue on request.
The requirement to keep records as outlined above will not apply where the company is a small enterprise or where the company is a medium enterprise and the income attributable to the branch is less than €250,000 in the accounting period.
December 2021
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