Finance Act 2017

PART 1 Income Tax, Universal Social Charge, Corporation Tax and Capital Gains Tax

Chapter 1 Interpretation

1. Interpretation (Part 1)

1. In this Part “Principal Act” means the Taxes Consolidation Act 1997.

Chapter 2 Universal Social Charge

2. Amendment of section 531AN of Principal Act (rate of charge)

2. (1) Section 531AN of the Principal Act is amended—

(a) in subsection (3)—

(i) by substituting “€19,372” for “€18,772”, and

(ii) by substituting “2 per cent” for “2.5 per cent”,

(b) in subsection (3A)(a) by substituting “2 per cent” for “2.5 per cent”,

(c) in subsection (4) by substituting “2020” for “2018”, and

(d) by substituting the following Table for the Table to that section:

“TABLE

PART 1

Part of aggregate income	Rate of universal social charge
(1)	(2)
The first €12,012	0.5 per cent
The next €7,360	2 per cent
The next €50,672	4.75 per cent
The remainder	8 per cent

PART 2

Part of aggregate income	Rate of universal social charge
(1)	(2)
The first €12,012	0. 5 per cent
The remainder	2 per cent ”. (2) Subsection (1) applies for the year of assessment 2018 and each subsequent year of assessment.

Chapter 3 Income Tax

3. Amendment of section 15 of Principal Act (rate of charge)

3. As respects the year of assessment 2018 and subsequent years of assessment section 15 of the Principal Act is amended—

(a) in subsection (3)(i), by substituting “€25,550” for “€24,800”, and

(b) by substituting the following Table for the Table to that section:

“TABLE

PART 1

Part of taxable income (1)	Rate of tax (2)	Description of rate (3)
The first €34,550	20 per cent	the standard rate
The remainder	40 per cent	the higher rate

PART 2

Part of taxable income (1)	Rate of tax (2)	Description of rate (3)
The first €38,550	20 per cent	the standard rate
The remainder	40 per cent	the higher rate

PART 3

Part of taxable income (1)	Rate of tax (2)	Description of rate (3)
The first €43,550	20 per cent	the standard rate
The remainder	40 per cent	the higher rate

”.

4. Amendment of section 466A of Principal Act (home carer tax credit)

4. (1) Section 466A of the Principal Act is amended by substituting “€1,200” for “€1,100”.

(2) Subsection (1) applies for the year of assessment 2018 and each subsequent year of assessment.

5. Amendment of section 472AB of Principal Act (earned income tax credit)

5. (1) Section 472AB of the Principal Act is amended in subsection (2)—

(a) in paragraph (a), by substituting “€1,150” for “€950”, and

(b) in paragraph (b), by substituting “€1,150” for “€950”.

(2) Subsection (1) applies for the year of assessment 2018 and each subsequent year of assessment.

6. Amendment of section 244 of Principal Act (relief for interest paid on certain home loans)

6. Section 244 of the Principal Act is amended—

(a) in subsection (1)(a) by substituting the following for the definition of “qualifying interest”:

“‘qualifying interest’, in relation to an individual and a year of assessment, means—

(i) as respects a year of assessment before 2018, the amount of interest paid by the individual in respect of a qualifying loan,

(ii) as respects the year of assessment 2018, 75 per cent of the amount of interest paid by the individual in respect of a qualifying loan,

(iii) as respects the year of assessment 2019, 50 per cent of the amount of interest paid by the individual in respect of a qualifying loan, and

(iv) as respects the year of assessment 2020, 25 per cent of the amount of interest paid by the individual in respect of a qualifying loan;”,

(b) in subsection (1A)(b) by substituting “2020” for “2017”,

(c) in subsection (2)(a)(ii) by substituting “2020” for “2017”, and

(d) by inserting the following after subsection (10):

“(11) For the purposes of the application of this section, the definition of ‘relievable interest’ in subsection (1)(a) has effect as if—

(a) in subparagraph (i) of that definition—

(i) as respects the year of assessment 2018, ‘€4,500’,

(ii) as respects the year of assessment 2019, ‘€3,000’, and

(iii) as respects the year of assessment 2020, ‘€1,500’,

were substituted for ‘€6,000’,

(b) in subparagraph (ii) of that definition—

(i) as respects the year of assessment 2018, ‘€2,250’,

(ii) as respects the year of assessment 2019, ‘€1,500’, and

(iii) as respects the year of assessment 2020, ‘€750’,

were substituted for ‘€3,000’,

(c) in subparagraph (iii) of that definition—

(i) as respects the year of assessment 2018, ‘€15,000’,

(ii) as respects the year of assessment 2019, ‘€10,000’, and

(iii) as respects the year of assessment 2020, ‘€5,000’,

were substituted for ‘€20,000’, and

(d) in subparagraph (iv) of that definition—

(i) as respects the year of assessment 2018, ‘€7,500’,

(ii) as respects the year of assessment 2019, ‘€5,000’, and

(iii) as respects the year of assessment 2020, ‘€2,500’,

were substituted for ‘€10,000’.”.

7. Benefit in kind: relief relating to electric vehicles

7. Part 5 of the Principal Act is amended—

(a) in Chapter 3, by inserting the following after section 118(5G):

“(5H) Subsection (1) shall not apply to expense incurred by the body corporate in, or in connection with, the provision, for a director or employee, in any of its business premises, of a facility for the electric charging of vehicles, where all the employees and directors of that body corporate can avail of the facility.”,

and

(b) in Chapter 4—

(i) in section 121—

(I) in subsection (1)(a), by inserting the following after the definition of “car”:

“ ‘electric vehicle’ means a vehicle that derives its motive power exclusively from an electric motor;”,

and

(II) in subsection (2)(b)—

(A) in subparagraph (i), by deleting “and”,

(B) in subparagraph (ii), by substituting “car, and” for “car.”, and

(C) by inserting the following after subparagraph (ii):

“(iii) notwithstanding subparagraph (ii), no amount shall be treated as emoluments of the employment where the car provided is—

(I) an electric vehicle, and

(II) provided during the period 1 January 2018 to 31 December 2018.”,

and

(ii) in section 121A—

(I) in subsection (1), by inserting the following definition:

“ ‘electric vehicle’ has the meaning assigned to it by section 121;”,

and

(II) in subsection (2)(b)—

(A) in subparagraph (i), by deleting “and”,

(B) in subparagraph (ii), by substituting “van, and” for “van.”, and

(C) by inserting the following after subparagraph (ii):

“(iii) notwithstanding subparagraph (ii), no amount shall be treated as emoluments of the employment where the van provided is—

(I) an electric vehicle, and

(II) provided during the period 1 January 2018 to 31 December 2018.”.

8. Taxation of certain perquisites: employees of authorised insurers and tied health insurance agents

8. Chapter 1 of Part 5 of the Principal Act is amended by inserting the following section after section 112A:

“Taxation of certain perquisites: employees of authorised insurers and tied health insurance agents

112AA. (1) In this section—

‘authorised insurer’ has the meaning assigned to it by section 470;

‘emoluments’ has the meaning assigned to it by section 983;

‘employee’ includes an office holder and any person who is an employee within the meaning of section 983;

‘relevant contract’ means a contract of insurance, or any other agreement, arrangement or transaction, as the case may be, which provides specifically, whether in conjunction with other benefits or not, for the reimbursement or discharge, in whole or in part, of—

(a) actual health expenses (within the meaning of section 469), being a contract of medical insurance, or

(b) dental expenses other than expenses in respect of routine dental treatment (within the meaning of section 469), being a contract of dental insurance;

‘relevant contract price’ is the amount that would be payable, by an individual who is neither a relevant employee nor connected with a relevant employee, under a relevant contract, by way of a bargain made at arm’s length, before deducting any amount the individual would have been entitled to deduct and retain by virtue of section 470(3)(a);

‘relevant employee’ means an employee of—

(a) an authorised insurer,

(b) a tied health insurance agent, or

(c) any person connected with a person referred to in paragraph (a) or (b);

‘tied health insurance agent’ means any person who, directly or indirectly, enters into an agreement or arrangement with an authorised insurer—

(a) whereby that person undertakes to refer all proposals of insurance, made under a relevant contract, to the authorised insurer with whom the person has made or entered into the agreement or arrangement, or

(b) which restricts in any way that person’s freedom to refer proposals of insurance, made under a relevant contract, to an authorised insurer other than the authorised insurer with whom the agreement or arrangement has been made or entered into.

(2) This section applies where—

(a) a relevant employee enters into a relevant contract, or

(b) an individual connected with a relevant employee enters into a relevant contract,

arising from, or in connection with, the employment of the relevant employee.

(3) Where this section applies in relation to a relevant contract—

(a) an amount determined by the formula—

(A - B)

where—

A is the relevant contract price for the year, and

B is the sum of the amount paid, if any, for the year by the relevant employee and the connected individual, under the relevant contract,

shall be treated as emoluments of the employment of the relevant employee in a year of assessment,

(b) Chapter 3 of this Part shall not apply, and

(c) section 112A shall not apply to the relevant employee or the employer of the relevant employee.

(4) Where an amount is treated as emoluments in a year of assessment under this section—

(a) for the purposes of section 470, the amount (referred to in this subsection and subsection (5) as the ‘notional payment amount’) shall be treated as if it was an amount paid—

(i) under the relevant contract concerned to an authorised insurer by the relevant employee concerned, and

(ii) in the year of assessment,

and

(b) subject to subsection (5), notwithstanding that the payment of the notional payment amount is deemed under paragraph (a) to occur after 6 April 2001—

(i) section 470(3) shall not apply to the notional payment amount, and

(ii) section 470(2) shall apply to the notional payment amount as if the relevant employee concerned had made a payment under a relevant contract of that amount to an authorised insurer.

(5) Where an amount (in this subsection referred to as the ‘actual payment amount’) is paid under the relevant contract concerned by the relevant employee concerned or an individual connected to that employee—

(a) section 470(2) shall apply subject to the following modifications:

(i) a reference to a payment shall be construed as a reference to an amount being the sum of the notional payment amount and the actual payment amount;

(ii) the amount by which the income tax to be charged on the individual for the year of assessment, other than in accordance with section 16(2), is reduced shall itself be reduced by the percentage of the relevant contract price which the actual payment amount represents,

and

(b) section 470(3) shall apply subject to the following modifications:

(i) a reference to a payment shall be construed as a reference to an amount being the sum of the notional payment amount and the actual payment amount;

(ii) the amount the individual shall be entitled to deduct and retain shall be reduced by the percentage of the relevant contract price which the notional payment amount represents.”.

9. Amendment of section 458 of Principal Act (deductions allowed in ascertaining taxable income and provisions relating to reductions in tax)

9. The Principal Act is amended in Part 2 of the Table to section 458 by inserting the following after “Section 472”:

“Section 472AB

Section 472BA”.

Chapter 4 Income Tax, Corporation Tax and Capital Gains Tax

10. Key Employee Engagement Programme

10. (1) The Principal Act is amended by inserting the following section after section 128E:

“128F. (1) In this section—

‘connected persons’ shall be construed in accordance with section 10;

‘control’ shall be construed in accordance with section 432;

‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by all subsequent amendments to that Agreement;

‘EEA state’ means a state which is a contracting party to the EEA Agreement;

‘emoluments’ has the same meaning as in section 983;

‘excluded activities’ means—

(a) adventures or concerns in the nature of trade,

(b) dealing in commodities or futures in shares, securities or other financial assets,

(c) financial activities,

(d) professional services companies,

(e) dealing in or developing land,

(f) building and construction,

(g) forestry, and

(h) operations carried out in the coal industry or in the steel and shipbuilding sectors;

‘financial activities’ has the same meaning as in section 488;

‘market value’ shall be construed in accordance with section 548;

‘option price’ means a predetermined price at which an employee or director can purchase a share at some time in the future;

‘ordinary shares’ means shares forming part of a company’s ordinary share capital;

‘professional services’ means—

(a) services of a medical, dental, optical, aural or veterinary nature,

(b) services of an architectural, quantity surveying or surveying nature, and related services,

(c) services of accountancy, auditing, taxation or finance,

(d) services of a solicitor or barrister and other legal services, and

(e) geological services;

‘qualifying company’ means, subject to subsection (10), a company that—

(a) is incorporated in the State, or in an EEA state other than the State, and is resident in the State, or is resident in an EEA state other than the State and carries on business in the State through a branch or agency,

(b) exists wholly or mainly for the purpose of carrying on a qualifying trade on a commercial basis with a view to the realisation of profit, the profits or gains of which are charged to tax under Case I of Schedule D,

(c) throughout the entirety of any relevant period—

(i) is an unquoted company none of whose shares, stock or debentures are listed in the official list of a stock exchange, or quoted on an unlisted securities market of a stock exchange other than—

(I) on the market known as the Enterprise Securities Market of the Irish Stock Exchange, or

(II) on any similar or corresponding market of the stock exchange—

(A) in a territory other than the State with the government of which arrangements having the force of law by virtue of section 826(1) have been made, or

(B) in an EEA state other than the State,

and

(ii) is not regarded as a company in difficulty for the purposes of the Commission Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty [^1],

and

(d) at the date of grant of the qualifying share option—

(i) is a micro, small or medium sized enterprise within the meaning of the Annex to Commission Recommendation 2003/361/EC of 6 May 2003 [^2] concerning the definition of micro, small and medium sized enterprises, and

(ii) the total market value of the issued but unexercised qualifying share options of the company does not exceed €3,000,000;

‘qualifying individual’, in respect of a qualifying share option, means an individual who throughout the entirety of the relevant period—

(a) is a full time employee or full time director of the qualifying company, and

(b) is required to devote substantially the whole of his or her time to the service of the company, with a minimum requirement for the individual to work at least 30 hours per week for the qualifying company;

‘qualifying share option’ means a right granted to an employee or director of a qualifying company to purchase a predetermined number of shares at a predetermined price, by reason of the individual’s employment or office in the qualifying company, where—

(a) the shares which may be acquired by the exercise of the share option are new ordinary fully paid up shares in a qualifying company, which carry no present or future preferential right to dividends or to a company’s assets on its winding up and no present or future preferential right to be redeemed,

(b) the option price at date of grant is not less than the market value of the same class of shares at that time,

(c) there is a written contract or agreement in place specifying—

(i) the number and description of the shares which may be acquired by the exercise of the share option,

(ii) the option price, and

(iii) the period during which the share options may be exercised,

(d) the total market value of all shares, in respect of which qualifying share options have been granted by the qualifying company to an employee or director, does not exceed—

(i)€100,000 in any one year of assessment,

(ii)€250,000 in any 3 consecutive years of assessment, or

(iii) 50 per cent of the annual emoluments of the qualifying individual in the year of assessment in which the qualifying share option is granted,

(e) the share option is exercised by the qualifying individual in the relevant period,