In November’s edition of Finance Dublin’s Irish Tax Monitor Yvonne Diamond, Senior Manager, Financial Services Tax, highlights the key takeaways for Ireland's financial services sector from Finance Bill 2024. This includes the introduction of the Participation Exemption for Foreign Dividends in Finance Bill 2024 which aims to simplify double taxation relief by offering an alternative method for qualifying foreign dividends received from subsidiaries in EU/EEA and tax treaty partner jurisdictions starting from 1 January 2025. To qualify, the parent company must hold at least 5% of the ordinary share capital of the foreign subsidiary for at least 12 continuous months. Companies can opt to claim this exemption or continue using the existing relief under Schedule 24 through an annual election in their corporation tax return. The bill also addresses the scope of Ireland’s domestic top-up tax under Pillar Two. It exempts standalone investment undertakings like unit trusts, ICAVs, investment limited partnerships, or common contractual funds if they are not part of a consolidated group, even if their revenues exceed €750 million. Additionally, securitisation entities will be exempt from this tax unless there are no other entities in the group, in which case the tax is borne by the securitisation entity itself. Following changes in Finance Bill 2023, Finance Bill 2024 introduces further amendments regarding leasing. These include clarifications on the timing and value of balancing events, treatment of cross-border leases for associated enterprises, and the introduction of general anti-avoidance tests. The bill makes technical amendments to definitions in legislation, focusing on payments to entities treated as transparent for tax purposes. Updates to definitions regarding lease payments address potential mismatches from changes introduced in Finance Act 2023. These updates ensure the full taxable or tax-deductible amounts of payments are treated as interest equivalents for the ILR. Additionally, there are updates on how foreign exchange is handled when there is a change in functional currency during an accounting period or when amounts are carried forward in a foreign currency. The revised form of the bank levy introduced for 2024 will be extended to 2025.
In addition, Tatheer Fatma, Manager, Financial Services Tax, explains the partial exemption from QDTT for securitisation entities under Finance Bill 2024. This exemption follows the OECD’s guidance on the treatment of securitisation entities under BEPS Pillar II, which sets a global minimum tax rate of 15% for MNE groups with global revenues of €750 million or more. The bill adopts the “Inclusion with Tax Collection” approach, meaning securitisation entities part of a large multinational group will not be directly liable for QDTT. Instead, the tax liability is borne by other constituent entities within the same jurisdiction, pro-rated based on their income, excluding the securitisation entity. If no other constituent entities exist in the group, the QDTT applies to the securitisation entity as it would to other entities.
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In addition, Tatheer Fatma, Manager, Financial Services Tax, explains the partial exemption from QDTT for securitisation entities under Finance Bill 2024. This exemption follows the OECD’s guidance on the treatment of securitisation entities under BEPS Pillar II, which sets a global minimum tax rate of 15% for MNE groups with global revenues of €750 million or more. The bill adopts the “Inclusion with Tax Collection” approach, meaning securitisation entities part of a large multinational group will not be directly liable for QDTT. Instead, the tax liability is borne by other constituent entities within the same jurisdiction, pro-rated based on their income, excluding the securitisation entity. If no other constituent entities exist in the group, the QDTT applies to the securitisation entity as it would to other entities.
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