Tax Guidance for Social Media Influencers: What You Need to Know

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With an increase in those earning income from social media and promotional activities, the Revenue Commissioners have issued a manual to reiterate that such income is liable to tax based on the application of ordinary tax rules.

Types of Taxable Income

Income derived from social media or promotional activities is chargeable to tax, even in circumstances where the activity is conducted on a casual basis only and is not the individual’s or company’s main business or main source of income.

Such income can be in the form of subscriptions, advertising, sponsorship, brand ambassadorship or endorsement fees and may be monetary or non-monetary in nature. Where the receipt is in non-monetary form, i.e. goods/services, then the value of such must be determined and is regarded as income.

Determining If Social Media Activities Constitute a Trade

Whether the profits or gains derived from social media or promotional activities arise in the course of a trade is a question of fact, having regard to the particular facts and circumstances of each case and also having regard to the ‘badges of trade’ and caselaw.

Example: Full Time Influencer

Orla is an adventure travel enthusiast. She is a full-time travel blogger and regularly posts content on various social media channels. She receives income from sponsored blog posts and affiliate marketing. Orla’s social media activity is carried out on an ongoing, frequent basis with the intention of making a profit. Her activity has the characteristics of a trade. She is obliged to return the income as Case I income.

Deductible and Non-Deductible Expenses

In computing the profits assessable to tax, certain expenses may be deducted provided they are:

  • Revenue and not capital in nature,
  • Incurred wholly and exclusively for the purposes of the trade, and
  • Not specifically disallowed in law.

When considering if an expense was incurred wholly and exclusively for the purposes of the trade, one should be aware that if the expense has both a business and non-business purpose then the entire expense is disallowed, e.g. clothes. Similarly, hair and make-up expenses are also disallowed.

If carrying on a trade, a deduction for capital expenses, in the form of capital allowances, may be available. However, if the income is derived from ad-hoc activities, then no deductibility is permitted for capital expenses.

Example: Casual Influencer

John is a full-time software developer who enjoys mountain hiking in his spare time. He pays an annual subscription to an online map and trails app. He posts reviews of trails and landscape photographs online on social media channels one or two times a year. People with occasionally contact John to purchase a photograph he’s posted on social media. He is obliged to declare the profit from the online activities. When calculating the taxable profit from the activity, he is allowed to deduct the costs of print, post and stationery incurred from sales of his photographs. The costs of the annual subscription to the hiking app or the cost of hiking clothing is not deductible, as the costs are a personal cost and not incurred directly in the provision of the social media content.  As John is not carrying on a trading activity capital allowances, e.g. on photographic equipment, are not available.

Business Structures and VAT Considerations

Such activities may be carried on by a person through a sole trade, partnership or a company.

In addition to Income Tax and Corporation Tax, persons carrying on a business need to be aware of their obligations to register and account for VAT should the value of their supplies exceed the relevant registration thresholds.

For further information on tax guidance for social media influencers, please contact us.

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Transborder Workers’ Relief: A Guide for Irish Residents Working Abroad

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With the rise in cross-border employment, Irish tax residents working abroad may qualify for a significant tax relief known as Transborder Workers’ Relief. This article outlines the key eligibility criteria and how the relief is calculated.

What is Transborder Workers’ Relief?

Transborder Workers’ Relief is a tax relief available to individuals who are resident in Ireland but work and pay tax in another country. The relief effectively removes the earnings from a qualifying foreign employment from liability to Irish tax, provided that foreign tax has been paid and is not refundable.

Who Qualifies?

To claim the relief, the following conditions must be met:

  • You must be resident in Ireland for tax purposes,
  • You must work full-time in another country that Ireland has a double taxation agreement for a continuous period of at least 13 weeks,
  • You must pay tax in the foreign country on your employment income and are not due a refund of the tax paid,
  • You must be present in Ireland for at least one day for every week worked abroad.

It is important to note that the relief does not apply if the individual receives Seafarers’ Allowance, Foreign Earnings Deduction (FED), or split year treatment. Additionally, one cannot claim relief if they or their spouse or civil partner are proprietary directors of the company for which they work abroad.

How is the Relief Calculated?

The relief is calculated using a formula that determines the “specified amount” of Irish tax that can be relieved:

Specified Amount = (Total Irish Tax Due × Non-Foreign Income) ÷ Total Income

This means that the relief only applies to the portion of Irish tax attributable to the foreign employment income. You will not receive any credit for foreign tax paid if you qualify for transborder relief.

How to Apply

The relief is claimed through the annual income tax return (Form 11). Supporting documentation, such as foreign payslips, tax certificates, and travel records, may be required by Revenue.

Conclusion

Transborder Workers’ Relief can offer significant tax savings for Irish residents working abroad, but it requires careful planning and accurate reporting. If you think you may qualify, our tax team at Crowleys DFK is here to help.

 

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Residential Premises Rental Income Relief (RPRIR)

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Residential Premises Rental Income Relief (RPRIR)

The Residential Premises Rental Income Relief (RPRIR) was introduced in Budget 2024 to support the Irish rental market by incentivising landlords to retain properties for long-term letting. This article outlines the key features of the relief, eligibility requirements, and how landlords can benefit.

What is RPRIR?

RPRIR is a tax credit available to landlords who rent out qualifying residential properties. The relief is available from 2024 to 2027 and is designed to encourage continued participation in the rental market. The credit is valued at up to a maximum of €600 in 2024 and is set to increase in subsequent years.

Who Can Claim the Relief?

RPRIR is available to all individual landlords of ‘qualifying premises’. The relief is not available to companies or other entities such as trusts or partnerships.

Qualifying Premises:

A qualifying premises refers to a residential property owned by the landlord on 31 December in the year of assessment. The property must meet one of the following conditions:

1. It is occupied by a tenant:

  • under a tenancy registered with the Residential Tenancies Board,
  • let by the landlord to a public authority, or
  • subject to Part II of the Housing (Private Rented Dwellings) Act 1982, which pertains to formerly rent-controlled tenancies;

2. Alternatively, if the premises is not occupied by a tenant, the landlord must be actively marketing the property for rent.

In cases where RPRIR is claimed based on active marketing for rent, the landlord must provide evidence to support this claim, such as copies of advertisements for the letting.

Other Eligibility Criteria:

To qualify for RPRIR, a landlord must, on 31 December of that year, be:

  • compliant with their LPT obligations in respect of all qualifying premises, and
  • hold a valid Tax Clearance Certificate.

Conclusion

Residential Premises Rental Income Relief offers a valuable opportunity for landlords to reduce their tax liability.

For further guidance or assistance with your tax return, please contact us.

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Understanding the Residential Zoned Land Tax (RZLT)

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Residential Zoned Land Tax

What is the RZLT?

The Residential Zoned Land Tax (RZLT) was first introduced in the Finance Act 2021 and aims to increase housing supply by activating zoned and serviced residential development lands (including mixed-use lands) for housing. It is annual self-assessed tax, effective from 2025, calculated at 3% of the market value of applicable land.

The tax applies to land zoned for residential use and adequately serviced since 1 January 2022. Some properties are exempt from RZLT, such as existing homes that already pay the Local Property Tax (LPT).  These properties may still appear on local authority maps.

Local authorities are required to prepare and publish maps that identify the land within the scope of RZLT. These maps are updated annually on 31 January.

Who is required to register for RZLT?

RZLT is a self-assessed tax. Landowners whose land appears on the annually updated map must register for RZLT. Residential properties that pay the Local Property Tax (LPT) are exempt, unless their garden or yard is larger than 0.4047 hectares (one acre). In such cases, registration is required, but no tax will be due.

You can register through the Revenue Online System (ROS) or MyAccount. Once registered, Revenue will assign a unique identification number to your site. Non-compliance may result in penalties.

Valuation

RZLT is self-assessed, based on the market value of the site on the valuation date. This means the landowner must initially determine and declare the site’s market value to Revenue. Revenue guidance suggests the following resources which may be helpful when determining the value position:

  • Information from local estate agents or valuers;
  • Commercial property sales websites;
  • Newspapers or other media sources.

Revenue has emphasized the importance of comparing similar sites when using the suggested resources. These comparisons should consider factors like type, size, location, zoning, and planning permission status. Revenue may engage an expert to help determine the land’s value.

Key Dates for Landowners

  • 27 January 2025: Registration for RZLT is live and available through Revenue Online System. Revenue have published guidance for the registration system.
  • 31 January 2025: Final maps are published by local authorities.
  • 01 February 2025: RZLT becomes chargeable for land that met the criteria on 01 January 2022 or during 2022.
  • 23 May 2025: Deadline for submitting the annual RZLT return and payment.  This return has to be submitted even if a deferral is being claimed.

Pay and File Obligations

An annual return must be submitted to Revenue, and any tax liability paid by 23 May each year, starting in 2025.

The RZLT legislation provides for surcharges and interest for non-compliance including late payment interest, failure to make timely returns and undervaluation of land. A penalty of €3,000 will apply where the landowner does not register for RZLT where required to do so.

Landowners are advised to maintain detailed records to allow Revenue to verify the RZLT due.

In certain circumstances, RZLT payment may be deferred.

2025 Rezoning Submission

Farmers can seek an exemption by requesting their land be rezoned to reflect its agricultural use.

Finance Act 2024 provides an opportunity for a rezoning request to be submitted to the relevant Local Authority in respect of land which appears on the revised map for 2025 published on 31 January 2025.

Where such a rezoning request is made, an exemption from RZLT may be claimed for 2025 where certain conditions are met.

To claim this exemption, you must register for RZLT and file a 2025 RZLT return by 23 May 2025.

Contact Us

If you require further guidance on the RZLT, please contact us.

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Understanding the EU VAT in the Digital Age (ViDA) Reforms: Key Points for Irish Businesses

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Understanding the EU VAT in the Digital Age (ViDA) Reforms: Key Points for Irish Businesses

The EU’s VAT in the Digital Age (ViDA) package will enter into force on 14 April 2025 and will be rolled out in stages. ViDA has been called the biggest VAT reform since the Single Market, but what is it and what does it mean for Irish businesses?

There are three pillars to the ViDA package:

  With effect from Key Points
Pillar 1 – Digital Reporting Requirements & eInvoicing 1 July 2030
  • eInvoicing will be mandatory for intra-Community B2B and B2G transactions
  • Data from the eInvoice must be reported in real-time to revenue authorities
  • Withdrawal of VIES returns/ EC Sales List reporting
Pillar 2 – Updated rules for the platform economy 1 July 2028 (voluntary)

1 July 2030 (mandatory)
  • Platforms facilitating supplies of passenger transport or short-term accommodation will become responsible for collecting and remitting VAT to tax authorities when their users do not
Pillar 3 – Single VAT Registration 1 January 2027

 

 
  • OSS Scheme extended to include B2C supplies of electricity and natural gas
1 July 2028
  • OSS Scheme further extended to include B2C supply and install contracts, and certain domestic supplies of goods and services by taxable persons not established in the Member State of consumption
  • New OSS module to report intra-Community movement of own goods
  • Mandatory reverse charge on B2B services received from non-established suppliers

Explanatory notes with detailed guidance on how ViDA should be implemented are currently being drafted at EU level. It is expected that Irish Revenue will publish implementation guidance for Irish businesses during 2025. Aligned with this, Irish Revenue is looking to modernise Ireland’s administration of VAT generally so there could be further changes to the Irish VAT system.

How Should Irish Businesses Prepare for ViDA Changes?

Irish businesses selling goods or services within the EU should take this opportunity to evaluate how the ViDA package will affect their VAT processes and registrations and take necessary actions to ensure they are ready for the ViDA changes.

Please contact us if you require assistance with preparing for these changes.

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New VAT Rules for Small Businesses | EU VAT SME Scheme

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New VAT Rules for Small Businesses (VAT SME Scheme)

The domestic VAT SME scheme allows small businesses to sell goods and services to their customers without charging VAT. In Ireland, the VAT registration thresholds are:

  • €42,500 for businesses supplying services; and
  • €85,000 for businesses supplying goods.

Irish businesses operating below these thresholds making supplies of goods and services within Ireland are not required to register and charge for VAT. However, up to 31 December 2024, if the Irish business made supplies in another EU Member State, there was no registration threshold and the business could have registration and filing obligations in the Member State where the supply took place.

From 1 January 2025, the EU VAT SME scheme allows these small businesses the option to avail of the registration thresholds in other Member States. If eligible, these businesses will not have to register for VAT when supplying goods and services there.

To be eligible to use this EU VAT SME scheme in another Member State, an Irish business must:

  • be established for VAT purposes in Ireland only,
  • not exceed the domestic turnover threshold(s) of the other Member State(s) where supplies are made,
  • not exceed the Union turnover threshold of €100,000,
  • be registered in Ireland to use the scheme and file quarterly reports once registered. These reports declare the turnover of the small business in all EU Member States.

An Irish business wishing to register to use the scheme in other Member States must make a formal application to Revenue. If successful, it will receive an individual identification number with the suffix “EX”. This number must be provided on any invoices issued by the business.

Business customers located in other EU countries who receive an invoice with “EX” are not obliged to account for VAT using the reverse charge mechanism on that invoice. It is the business customer’s responsibility to check the VAT exempt status of the small enterprise using the SME verification check.

The EU VAT SME scheme is only open to small businesses established within the European Union. It does not apply to small businesses established in the United Kingdom, including Northern Ireland.

It is possible for a small business to avail of the EU VAT SME scheme in some Member States and the standard VAT regime or One Stop Shop scheme in others. As businesses that avail of the VAT SME schemes cannot reclaim VAT on their costs, each small business must assess the best option for them.

However, this new scheme will significantly reduce compliance for small EU-based businesses selling to other EU countries.

If you require further information or assistance, please contact us.

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Why Choose Ireland for Holding Companies?

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Holding Companies – Why chose Ireland for Holding Companies?Ireland is an attractive place to set up a Holding Company for many reasons as outlined below.

The main advantage of setting up a Holding Company in Ireland is the introduction of the new participation exemption which exempts qualifying distributions received by a holding company from its subsidiary from Corporation Tax in Ireland. Prior to this, the tax rate of dividends received from foreign subsidiaries was reduced to 12.5% in certain cases so the introduction of the new participation exemption is welcomed.

We have outlined the main benefits of setting up a Holding Company in Ireland below:

  • Dividend income between two Irish companies is exempt from tax in Ireland.
  • As mentioned above, there is a new participation exemption for foreign dividends which exempts qualifying distribution from corporation tax. The key conditions of this participation exemption are as follows:
    • Resident in and EEA state or a country which has a DTA with Ireland.
    • The recipient of the dividend must hold at least 5% of the shareholding of the paying company for an uninterrupted period of 12 months.
    • It must not be tax deductible in any other jurisdiction.
    • Made out of profits of the paying company.
    • The company must opt in for this exemption on a yearly basis.
  • There is also a participation exemption on the disposal of shares in a trading subsidiary company on shareholdings of at least 5 years that have been held for at least 12 months.
  • Dividend Withholding Tax (DWT) exemptions:
    • Group exemption – exemption from DWT if the Holding Company is a 51% parent of the paying company.
    • EU Parent Subsidiary – Provides an exemption from DWT on the dividends between parents and subsidiaries. The parent company must own 5% of the shares during an interrupted period of 2 years.
    • DTA DWT exemptions.
  • The tax rate for trading companies in Ireland is 12.5% and for passive income is 25%.
  • Expenses of managing a holding company are generally tax deductible in Ireland.
  • English speaking country.
  • Part of the EU.

CFC Rules Ireland

CFC rules prevent the artificial diversion of profits from controlling companies to CFCs (offshore entities in low-tax or no-tax jurisdictions). The Irish regime can be summarised as:

  • The charge applies to undistributed income of a CFC arising from non-genuine arrangements put in place essentially to avoid tax.
  • Such undistributed income is attributed for taxation purposes to the Irish controlling company, or connected company, where that company has been carrying out significant people functions (“SPF”) in Ireland.
  • There are exemptions for CFCs with low profits or low profit margin or where the CFC pays a comparatively higher amount of tax in its territory that it would have paid in Ireland.
  • The CFC rules will not apply where the arrangements under which SPFs are performed have been entered into on an arm’s length basis or are subject to transfer pricing rules.
  • Unless an exemption applies, undistributed income, with an Irish nexus by reference to Irish SPFs, which has been artificially diverted from Ireland, will fall to be taxed in Ireland.
  • To prevent double taxation, a credit will be available against the CFC charge for foreign tax paid on the same income.

We can assist on all aspects of setting up a Holding Company in Ireland whether it is incorporating the company, tax compliance and advice, or the preparation and audit of financial statements. If you wish to discuss, please contact us.

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New EU VAT Rules on Live Streamed & Virtual Events from 1 January 2025

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New EU VAT Rules on Live Streamed & Virtual Events from 1 January 2025

What are the new EU VAT changes?

Previously, VAT was applied to live-streamed and virtual events based on the location of the event itself, regardless of where the viewers were located or the status of the customer.

With effect from 1 January 2025, the provision of services such as live streaming of cultural, artistic, sporting, scientific, educational events, as well as online courses and conferences, provided to private individuals (i.e. not VAT registered), will now be subject to VAT where the customer is located.

The applicable VAT treatment for live streamed and virtual events will now be as follows:

  1. For Business-to-Consumer (B2C) supplies – the supplier will now be responsible to collect and remit VAT in the EU country where the customer is located. A pan-European €10,000 registration threshold applies for EU and NI businesses, and a nil threshold applies for non-EU established businesses.
  2. For Business-to-Business (B2B) supplies – the EU business recipient will continue to self-account for reverse charge VAT in their EU country of establishment.

This change is intended to bring the VAT treatment of virtual events into alignment with that of other telecommunication, broadcasting and electronically (TBE) supplied services (including streaming services or the delivery of other pre-recorded content).

What is an “Event” for VAT purposes?

To determine whether a business’s service offering falls within these new VAT regulations, it is necessary to determine what constitutes an “event” for VAT purposes.

Although EU VAT legislation does not clearly define the term “event,” the interpretation of this concept has been subject to review by both the Advocate General, the VAT Committee and the Court of Justice of the European Union (CJEU) with regards to the case of Skatteverket v Srf konsulterna AB CJEU (Case C-647/17)(March 2019).

The CJEU’s judgement in this case found that five-day accounting and management seminars provided by a Swedish company to private individuals in other EU Member States were taxable in each of those Member States as an admission to an “educational event” and subject to VAT where the customer was located.

In arriving at this decision, the CJEU considered a range of factors to determine what qualifies as an “event” for VAT purposes and these include:

  • Short Duration – An event is more limited in scope than an ongoing activity. An event typically lasts from a few hours to, at most, seven consecutive days. Longer-term courses/ training, which span weeks or months, are less likely to qualify as events.
  • Uninterrupted Activity – If a course runs over several consecutive days, it is more likely to be considered an event. A brief break in the schedule does not automatically disqualify it as such. In contrast, courses spread over several weeks with multiple breaks are less likely to be classified as events, falling instead under the category of training activities.
  • Planning – Events are typically planned in advance, with a predefined agenda and specific subject matter. This distinguishes them from more open-ended activities that may offer a general framework for education
  • Payment Method – The payment method – whether a subscription, periodic fee, or ticket – does not affect whether an activity qualifies as an event.

Businesses should carefully assess whether their services meet the criteria for an “event” under EU VAT regulations, taking into account factors like duration, continuity, planning, and the nature of the service.

What does this mean for providers of online events?

The VAT treatment for Business-to-Consumer (B2C) live streamed/virtual events has undergone significant changes, now requiring that VAT be due in the country where the customer is located. This shift will likely lead to increased compliance costs for businesses offering these services.

Suppliers of these events will now need to identify the location of their customers, and they may need to register and charge VAT in each EU country where their final customers reside (subject to relevant registration thresholds being exceeded).

There is a VAT registration simplification available, known as the VAT One Stop Shop (VAT OSS), to facilitate one single EU-wide registration to remit output VAT on supplies and to efficiently manage the VAT reporting for these services.

However, suppliers will face challenges in determining and monitoring the various applicable VAT rates across the EU for their service offerings which may impact pricing strategies, contracting processes, and invoicing procedures.

The impact on cross-border B2B supplies should be less significant, as business customers can continue to self-assess for VAT on the reverse charge basis in their country of establishment.

As the landscape for VAT compliance continues to evolve, seeking professional advice will be essential to navigating these changes effectively.

Should you require any assistance in this area, please contact us.

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Employee Share Incentive Schemes

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Employee Share Incentive Schemes

Employee share incentive schemes can serve as an effective alternative to bonuses. They not only offer tax savings for employees, but also promote greater participation and loyalty within the company. There is also a tax saving of employer PRSI for the employer where remuneration is by way of equity participation when compared to cash or other benefits.

Depending on the type of scheme, employees might need to hold onto the shares for several years before they can enjoy the tax benefits.

One of the key considerations when implementing a share plan is the valuation of the shares. Accurate valuation from the outset is crucial to ensure the proper taxation of the awards, such as growth shares and restricted shares.

In this article we consider the following type of employee share incentive schemes:

  1. Share option schemes
  2. Restricted Stock Units (RSUs)
  3. ‘KEEP’ share option schemes
  4. Growth/Flowering Shares
  5. Restricted Shares

1. Share Options

This is an option granted by a company to its employees to subscribe for shares at a pre-determined price at some point in the future.  The option must be exercised in order for the employee to get beneficial ownership of the share. Prior to exercise, the employee does not have any rights relating to the shares. The employee pays taxes on any profit made when they eventually exercise the shares. There’s a deadline to exercise this option (usually 7 years) to avoid tax issues on granting. The burden for withholding tax is now placed on the employer for all options exercised on or after the 1st of January 2024. CGT is chargeable on any subsequent disposal of the shares.

2. Restricted Stock Units (RSU’s)

This scheme awards free shares to employees, and usually vest after a set period (can be time-based or performance-based). Employees are taxed on the market value of the shares at vesting, similar to a salary, and the employer withholds the tax. There are no tax implications at the grant. Conditions outlined in a plan document must be met before shares are issued.

3. Key Employee Engagement Programme (KEEP)

This is a tax advantageous share option scheme introduced specifically for certain qualifying SME companies for their employee or directors. Employees do not pay taxes when they exercise the option to buy shares. Instead, they pay capital gains tax (33%) when they eventually sell the shares. There are several conditions to be satisfied which can make KEEP challenging, including that options must be granted at market value. However, due to the tax benefits, KEEP is worth considering when deciding on what plan to utilise.

4. Growth/Flowering Shares

Growth shares are a special class of ordinary shares that generally have a low or nil value until a certain target or hurdle is reached by the business. The growth share is subject to income tax, USC and PRSI on award and must be valued for tax purposes. This type of share award can be attractive where the owners wish to share in future growth in the value of the company. CGT will be payable on any growth in value.

5. Restricted Shares

 Restricted shares are subject to income tax, USC and PRSI at the date of award. There is an abatement on the taxable value available under Section 128D which reduces the taxable value by 10% per year of restriction up to a maximum of 60%. There is a claw back of income tax if restrictions lifted or varied before the end of the restricted period. CGT will be payable on any growth in value.

If you are considering implementing an employee share incentive scheme and require advice on choosing the right plan to implement, please do not hesitate to contact us.

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Share Scheme Reporting Obligations

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Share Scheme Reporting ObligationsThere are several annual reporting obligations for employers and trustees who operate share schemes for their employees which are due by 31 March following year end.

The return to be filed is dependent on the type of share award or share option involved.

Form Name Plan Type
ESA                                                          Restricted Share Units (RSUs) – Share & Cash Settled

Discounted/Free/Matching Shares

Employee Share Purchase Plans (ESPP)

Restricted Shares

Convertible Securities

Forfeitable Shares

Phantom Shares

Stock Appreciation Rights

Growth/Hurdle/Flowering Shares

Other shares
RSS1 Share options and other rights
KEEP1 KEEP share options
ESS1 Approved Profit Sharing (APSS) Schemes
SRSO1 Save As You Earn (SAYE) schemes
ESOT1 Employee Share Ownership Trust (ESOT) schemes

Revenue are actively reviewing Share Scheme Reporting Forms and raising enquiries where there are discrepancies between the Forms and information reported via PAYE and/or employees personal tax reporting.

It is therefore more important than ever that employer Share Scheme Reporting is completed accurately and on a timely basis.

Deadline

The annual return must be filed on or before 31 March.

Contact us

If you require assistance with the preparation and submission of any of these returns, please contact us.

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