Finance Act 2013 contains the legislative provisions for a number of changes to the Irish tax system under all the main tax heads including Income Tax, Corporation Tax, Capital Gains Tax, Excise, Value Added Tax, Stamp Duty and Capital Acquisitions Tax.
Due to the amount of changes it is not possible to detail each individual provision so I decided to focus on a cross section of amendments to give a general overview. The legislative provisions I have selected will have an affect on most if not all Irish individuals whether resident and domiciled or resident and non-domiciled; employed or unemployed; retired or still working; self employed or PAYE workers; corporate structures or individuals, etc. This is a ten-part Worldwide Tax Blog Series:
1. UNIVERSAL SOCIAL CHARGE
Finance Act 2013 introduced legislation to eliminate the 4% rate of Universal Social Charge applicable to individuals aged seventy years and over where their aggregate or combined income exceeds €60,000.00.
According to Section 3 Finance Act 2013, individuals aged seventy years or over will be subject to the normal rates of Universal Social Charge where the individual’s aggregate income exceeds €60,000; in other words:• 2% on first €10,036 • 4% on next €5,980 • 7% on the balance (10% where the relevant income exceeds €100,000.00)
No marginal relief will be available. This means that in situations where the individual’s income exceeds the threshold amount, the higher rate of the Universal Social Charge will apply to the entire income and not just to the excess over €60,000.00.
How is “Aggregate Income” defined?
“Aggregate Income” includes the aggregate of all “relevant emoluments” including pensions, employment income and benefit-in-kind if applicable and “relevant income” including rental income, dividend income, income from a trade or profession, etc.
It does not include:• Social Welfare Payments or • Deposit Interest subject to DIRT (Deposit Interest Retention Tax)
What about the Medical Card holders?
Previously medical card holders were entitled to avail of the special reduced Universal Social Charge rate of 4%.
According to this new amendment, individuals holding medical cards will be liable to pay Universal Social Charge at the normal rates if his/her aggregate income exceeds €60,000.00.
This will mainly affect individuals with high earnings from other E.U. member states who transfer to Ireland but have social security arrangements in their own country. Under E.U. law these individuals qualified for medical cards in Ireland and prior to Finance Act 2013 they would have been entitled to the reduced USC rate of 4%.