Tax concern over share plan changes

TAX professionals have expressed concern that changes to the tax treatment of employee-share schemes in the Finance Bill for this year will have a negative impact on foreign direct investment.

They told the Revenue Commissioners that the majority of multinational corporations with employees in Ireland “provide access to some form of a share scheme”.

Minutes from February’s meeting of the Revenue’s Taxes Administration Liaison Committee state that the Finance Bill’s changes to how share schemes are treated, “particularly the application of employer’s PRSI”, will be a priority for the committee’s technical sub-committee.

A dedicated sub-group is being formed “to progress this matter”.

Also discussed was “the possible application of the special Universal Social Charge (USC) on bonuses paid to bankers” working at the five financial institutions bailed out by the state “to commission-based remuneration of such employees”.

The USC charge on such bonuses is 45%, where they exceed €20,000 in a single tax year. The Revenue said it will consider the matter further on receipt of a written analysis from a practitioner body.

Revenue said it is likely to only use so-called attachment notices “for significant tax liabilities”.

The attachment notices allow the Revenue to tell a taxpayer’s employer to deduct specific amounts of the employee’s salary and pay it to Revenue if they have previously defaulted on the payment of tax.

They can be put in place for a specific amount of time and commissioners have the power of inspection of returns of a company where a taxpayer is subject to an attachment notice.

Details of procedures related to the attachment notices “will be developed by Revenue and published in due course”.