On 22 February 2019, the Government published the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019 (the “Bill”) The Bill is an important measure proposing legislative action across a number of areas which will be required in the event of a no-deal Brexit. In particular, the Bill contains provisions in relation to taxation, social welfare, protection of employees, financial services and healthcare.
Part 6 of the Bill addresses taxation matters, dealing specifically with income tax, corporation tax, capital gains tax, VAT, stamp duty and capital acquisitions tax. It seeks to ensure that certain provisions of Irish tax legislation will continue to apply to those currently benefitting from such provisions when the UK ceases to be an EU or EEA (which is the EU countries plus Norway, Iceland and Liechtenstein) Member State. Some of the main aspects of the taxation elements of the Bill are outlined below.
From an income tax perspective, the Bill outlines amendments to existing legislation in the areas of KEEP (Key Employee Engagement Programme), EIIS (Employment and Investment Incentive Scheme), artist income exemption, relief for third level college fees, mortgage interest relief, sportsperson’s relief, seafarer allowance and fishers tax credit. In most cases, the Bill expands current legislative definitions to include the UK, which will allow existing arrangements to continue in the immediate future for those who seek to rely on such reliefs.
In terms of corporation tax, provisions of the Taxes Consolidation Act 1997 will be amended so that relief for charges on income for corporation tax purposes will continue to apply in relation to interest and other annuities, annual payments, patent royalties and other payments paid to banks, stock exchanges and discount houses in the UK. For several credits and reliefs, the definition of “relevant Member State” will be extended to include the UK. This includes group loss relief, reconstruction or amalgamation relief, tax credit for R&D expenditure, and start up relief.