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.
The draft Directive aims to identify and penalise entities that do not maintain sufficient substance within the EU.
Additional reporting requirements would be imposed on entities that did not meet the substance requirements, and such entities would also be denied the benefits of double tax treaties relief and EU tax directives (such as EU Interest and Royalty Directive and the EU Parent-Subsidiary Directive).
The draft Directive is likely to increase communication between the Member States through automatic exchange of information on all entities within scope, regardless of whether they are shell entities are not.
Entities will be identified by the use of three “gateway” tests. If an entity “passes through” all the gateways, it will be brought within the scope of the Directive and subject to additional reporting requirements. The gateway tests are as follows:
It should be noted that the above tests are applied for the two proceeding years. If the Directive comes into force in 2024, this would result in 2022, and 2023 is considered for the purpose of the tests.
Certain entities are excluded by derogation from the above gateway tests. These include:
Entities that meet the above gateway tests will be required to report via their tax returns on whether they meet certain minimum substance requirements.
Entities that have passed the gateway tests and do not meet the substance requirements will be presumed to be shell entities for the purposes of the directive.
The draft Directive allows the presumption of lack of substance to be rebutted by entities under certain circumstances. This would require the entity to demonstrate that it either:
The tax consequences for an entity of being deemed a shell entity include the following:
The Directive proposes an automatic exchange of information between the Member States on any entities in the scope of the Unshell Directive, regardless of whether these are shell entities or not.
Additionally, a Member State would also be able to request the Member State of the entity to conduct an audit of that entity and communicate the outcome to the former Member State in a reasonable time frame.
The Directive must be adopted unanimously by all Member States before being transposed into domestic legislation.
If the draft Directive is adopted by the Member States, the Commission proposes that Member States transpose the Directive into their national laws by 30 June 2023 for the Directive to apply from 1 January 2024.
If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars corporate tax team below:
Staff Member | Position | Telephone | |
Cormac Kelleher | Tax Partner | ckelleher@mazars.ie | 01 449 4456 |
Aisling Curran | Corporate Tax Director | acurran@mazars.ie | 01 449 6319 |
February 2022
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