Finance Act 2022
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Pan-European Personal Pension Product (insertion of new Chapter) | ||
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20. Part 30 of the Principal Act is amended by the insertion of the following Chapter after Chapter 2C: | ||
“Chapter 2D | ||
Pan-European Pension Product | ||
Interpretation | ||
787V. (1) In this Chapter, unless the context otherwise requires— | ||
‘approved retirement fund’ has the same meaning as it has in section 784A; | ||
‘contract of employment’ means— | ||
(a) a contract of service or apprenticeship, or | ||
(b) any other contract whereby an individual agrees with another person, who is carrying on the business of an employment agency (within the meaning of the Employment Agency Act 1971 ) and is acting in the course of that business, to do or perform personally any work or service for a third person (whether or not the third person is party to the contract), | ||
whether the contract is express or implied or if express, whether it is oral or in writing; | ||
‘contribution’ means a payment made directly or indirectly by or on behalf of a contributor to the relevant PEPP contract of a PEPP provider for investment on the contributor’s behalf in accordance with the terms of the PEPP contract; | ||
‘contributor’ means an individual who enters into a PEPP contract with a PEPP provider; | ||
‘director’, in relation to a company includes— | ||
(a) in the case of a company the affairs of which are managed by a board of directors or similar body, a member of that board or body, | ||
(b) in the case of a company the affairs of which are managed by a single director or similar person, that director or person, and | ||
(c) in the case of a company the affairs of which are managed by the members themselves, a member of that company, | ||
and includes a person who is to be or has been a director; | ||
‘distribution’ has the same meaning as in the Corporation Tax Acts; | ||
‘earnings limit’ shall be construed in accordance with section 790A; | ||
‘employee’— | ||
(a) means a person of any age, who has entered into or works under (or where the employment has ceased, entered into or worked under) a contract of employment and references, in relation to an employer, to an employee shall be construed as references to an employee employed by that employer; and for the purposes of this Chapter, a person holding office under, or in the service of, the State (including a civil servant within the meaning of the Civil Service Regulation Act 1956 ) shall be deemed to be an employee employed by the State or Government, as the case may be, and an officer or servant of a local authority for the purposes of the Local Government Act 2001 , or of a harbour authority, the Health Service Executive or a member of staff of an education and training board shall be deemed to be an employee employed by the authority, the Executive or the board, as the case may be, and | ||
(b) in relation to a company, includes a director or other officer of the company and any other person taking part in the management of the affairs of the company; | ||
‘employer’ means, in relation to an employee, the person with whom the employee has entered into, or for whom the employee works under (or, where the employment has ceased, entered into or worked under), a contract of employment, subject to the qualification that the person, who under a contract of employment referred to in paragraph (b) of the definition of ‘contract of employment’ is liable to pay the wages of the individual concerned, in respect of the work or service concerned shall be deemed to be the individual’s employer; | ||
‘market value’ shall be construed in accordance with section 548; | ||
‘PEPP’ has the same meaning as in the PEPP Regulation; | ||
‘PEPP assets’ means the assets held on behalf of a contributor in a PEPP; | ||
‘PEPP beneficiary’ has the same meaning as in the PEPP Regulation; | ||
‘PEPP contract’ has the same meaning as in the PEPP Regulation; | ||
‘PEPP provider’ has the same meaning as in the PEPP Regulation and includes a person appointed by the PEPP provider in accordance with section 787AA(7)(ii); | ||
‘PEPP Regulation’ means Regulation (EU) No. 2019/1238 of the European Parliament and Council of 20 June 20193 ; | ||
‘PPS Number’, in relation to an individual, means that individual’s Personal Public Service Number (within the meaning of section 262 of the Social Welfare Consolidation Act 2005 ); | ||
‘registered PEPP’ means a PEPP that for the time being stands registered under Article 7 of the PEPP Regulation; | ||
‘relevant payment’, in relation to a PEPP, means any payment, including a distribution, made by reason of rights arising as a result of a PEPP contract and includes any annuity payable by reason of such rights; | ||
‘retirement annuity contract’ means a contract approved by the Revenue Commissioners in accordance with Chapter 2 of this Part; | ||
‘Revenue officer’ means an officer of the Revenue Commissioners; | ||
‘specified individual’, in relation to a year of assessment, means an individual whose relevant earnings for the year of assessment were derived wholly or mainly from an occupation or profession specified in Schedule 23A. | ||
(2) Subject to subsection (1), a word or expression that is used in this Chapter and is also used in the PEPP Regulation has, except where the context otherwise requires, the same meaning in this Chapter as it has in the PEPP Regulation. | ||
Relevant earnings and net relevant earnings | ||
787W. (1) For the purposes of this Chapter but subject to subsection (2), ‘relevant earnings’, in relation to an individual, means any income of the individual chargeable to tax for the year of assessment in question, being any of the following— | ||
(a) income arising in respect of remuneration from an office or employment of profit held by the individual, | ||
(b) income from any property which is attached to or forms part of the emoluments of any such office or employment of profit held by the individual, or | ||
(c) income which is chargeable under Schedule D and is immediately derived by the individual from the carrying on or exercise by the individual of his or her trade or profession either as an individual or, in the case of a partnership, as a partner personally acting in the partnership, | ||
but does not include any remuneration from an investment company of which the individual is a proprietary director or a proprietary employee. | ||
(2) For the purposes of this Chapter, the relevant earnings of an individual shall not be treated as the relevant earnings of his or her spouse or civil partner, notwithstanding that the individual’s income chargeable to tax is treated as his or her spouse’s or civil partner’s income. | ||
(3) For the purposes of relief under this Chapter, an individual’s relevant earnings shall be those earnings before giving effect to any deduction to be made from those earnings in respect of a loss or in respect of a capital allowance (within the meaning of section 2), and references to income in this Chapter (other than references to total income) shall be construed similarly. | ||
(4) For the purposes of this Chapter, ‘net relevant earnings’, in relation to an individual and subject to subsections (5) to (7), means the amount of the individual’s relevant earnings for the year of assessment in question less the amount of any deductions to be made from the relevant earnings in computing the individual’s total income for that year, being either— | ||
(a) deductions in respect of payments made by the individual, or | ||
(b) deductions in respect of losses or of such allowances mentioned in subsection (3), being losses or allowances arising from activities, profits or gains of which would be included in computing relevant earnings of the individual or of the individual’s spouse or civil partner for the year of assessment. | ||
(5) Where in any year of assessment for which an individual claims and is allowed relief under this Chapter there is to be made in computing the total income of the individual or of the individual’s spouse or civil partner a deduction in respect of any such loss or allowance of the individual referred to in subsection (4)(b), and the deduction or part of it is to be so made from income other than relevant earnings, then, the amount of the deduction made from that other income shall be treated as reducing the individual’s net relevant earnings for subsequent years of assessment and shall be deducted as far as may be from those of the following year, whether or not the individual claims or is entitled to claim relief under this Chapter for that year, and in so far as it cannot be so deducted, then from those of the next year, and so on. | ||
(6) Where an individual’s income for any year of assessment consists partly of relevant earnings and partly of other income, then, as far as may be, any deductions to be made in computing the individual’s total income, and which may be treated in whole or in part either as made from relevant earnings or as made from other income, shall be treated for the purposes of this section as being made from those relevant earnings in so far as they are deductions in respect of any such loss referred to in subsection (4)(b) and otherwise as being made from that other income. | ||
(7) An individual’s net relevant earnings for any year of assessment shall be computed without regard to any relief to be given for that year under this Chapter either to the individual or to the individual’s spouse or civil partner. | ||
(8) Notwithstanding anything in this section, for the purposes of relief under this Chapter an individual’s net relevant earnings shall not exceed the earnings limit. | ||
PEPPs - Method of granting relief for PEPP contributions | ||
787X. (1) Subject to the provisions of this Chapter, relief from income tax shall be given in respect of contributions to a PEPP by an individual chargeable to tax in respect of relevant earnings from any trade, profession, office or employment carried on or held by that individual. | ||
(2) Where relief is to be given under this Chapter in respect of any contribution made by an individual, the amount of that contribution shall, subject to this section, be deducted from or set off against the individual’s relevant earnings for the year of assessment in which the contribution is paid. | ||
(3) Where in relation to a year of assessment a contribution to a PEPP is made after the end of the year of assessment but on or before the specified return date for the chargeable period (within the meaning of Part 41A) the payment may, if the individual so elects on or before that date, be treated for the purposes of this section as paid in the earlier year (and not in the year in which it is paid); but where— | ||
(a) the amount of that contribution, together with any contributions made by the individual in the year to which the assessment relates (or treated as so paid by virtue of any previous election under this subsection), exceeds the maximum amount of the reduction which may be made under this Chapter in the individual’s relevant earnings for that year, or | ||
(b) the amount of that PEPP contribution itself exceeds the increase in that maximum amount which is due to taking into account the income on which the assessment is made, | ||
the election shall have no effect as respects the excess. | ||
(4) Where in any year of assessment a reduction or a greater reduction would be made under this section in the relevant earnings of an individual but for an insufficiency of net relevant earnings, the amount of the reduction which would be made but for that reason, less the amount of any reduction which is made in that year, shall be carried forward to the next year of assessment, and shall be treated for the purposes of relief under this Chapter as the amount of a qualifying contribution paid in that next year of assessment. | ||
(5) If and in so far as an amount once carried forward under subsection (4)(and treated as the amount of a qualifying payment made in the next year of assessment) is not deducted from or set off against the individual’s net relevant earnings for that year of assessment, it shall be carried forward again to the following year of assessment (and treated as the amount of a qualifying payment made in that year of assessment), and so on for succeeding years. | ||
(6) Where relief under this Chapter for any year of assessment is claimed and allowed (whether or not relief is then to be given for that year), and afterwards there is made any assessment, amendment of an assessment, or other adjustment of the claimant’s liability to tax, there shall be made also such adjustments, if any, as are consequential thereon in the relief allowed or given under this Chapter for that or any subsequent year of assessment. | ||
(7) Where relief under this Chapter is claimed and allowed for any year of assessment in respect of any contribution, relief shall not be given in respect of that contribution under any other provision of the Income Tax Acts for the same or a later year of assessment. | ||
(8) Where approval of a PEPP is withdrawn pursuant to Article 8 of the PEPP Regulation there shall be made such assessments or amendment of assessments as may be appropriate for the purpose of withdrawing any relief given under this Chapter consequent on the grant of the approval. | ||
Claims to relief | ||
787Y. (1) Relief shall not be given under this Chapter in respect of a contribution to a PEPP except on a claim made to and allowed by a Revenue officer. | ||
(2) A person aggrieved by a decision of a Revenue officer in relation to a claim for relief by that person may appeal the decision to the Appeal Commissioners, in accordance with section 949I, within the period of 30 days after the date of the notice of that decision. | ||
PEPP - Extent of relief | ||
787Z. (1) Subject to this section, the amount which may be deducted or set off in any year in respect of contributions made by an individual to one or more PEPP products (in this section referred to as the ‘maximum allowable contribution’) shall not be more than— | ||
(a) in the case of an individual who at any time during the year of assessment was of the age 30 years or over but had not attained the age of 40 years, 20 per cent, | ||
(b) in the case of an individual who at any time during the year of assessment was of the age 40 years or over but had not attained the age of 50 years, 25 per cent, | ||
(c) in the case of an individual who at any time during the year of assessment was of the age of 50 years or over but had not attained the age of 55 years or who for the year of assessment was a specified individual, 30 per cent, | ||
(d) in the case of an individual who at any time during the year of assessment was of the age of 55 years or over but had not attained the age of 60 years, 35 per cent, | ||
(e) in the case of an individual who at any time during the year of assessment was of the age of 60 years or over, 40 per cent, and | ||
(f) in any other case, 15 per cent, | ||
of the individual’s net relevant earnings for that year of assessment. | ||
(2) Notwithstanding subsection (1), where the maximum allowable contribution would but for this subsection be less than €1,525, subsection (1) shall apply as if the said maximum allowable contribution were €1,525. | ||
(3) Where an individual is entitled to relief for a year of assessment under Chapter 2 in respect of a qualifying premium and in respect of any PRSA contribution (within the meaning of Chapter 2A), the maximum allowable contribution for that year of assessment, shall be reduced by the amount of such relief. | ||
Taxation of payments from a PEPP | ||
787AA. (1) Subject to subsections (2), (3) and (4)— | ||
(a) the amount or value of any assets that a PEPP provider makes available to, or pays to, a PEPP saver or beneficiary or to any other person, including any annuity where the whole or part of the consideration for the grant of the annuity consisted of assets which, at the time of application of the said assets for the purchase of the annuity, were PEPP assets, shall, notwithstanding anything in section 18 or 19, be treated as a payment to the PEPP saver of emoluments to which Schedule E applies and, accordingly, the provisions of Chapter 4 of Part 42 shall apply to any such payment or amount treated as a payment, and | ||
(b) the PEPP provider shall deduct tax from the assets at the higher rate for the year of assessment in which the assets are made available unless the PEPP provider has received from the Revenue Commissioners a revenue payroll notification (within the meaning of section 983) for that year in respect of the PEPP saver. | ||
(2) A PEPP provider shall be liable to pay to the Collector-General the income tax which the PEPP provider is required to deduct from any assets of a PEPP by virtue of this section and the individual beneficially entitled to assets held in a PEPP, including the personal representatives of a deceased individual who was so entitled prior to that individual’s death, shall allow such deduction; but where there are no funds or insufficient funds available out of which the PEPP provider may satisfy the tax required to be deducted, the amount of such tax for which there are insufficient funds available shall be a debt due to the PEPP provider from the individual beneficially entitled to the assets in the PEPP or from the estate of the deceased individual, as the case may be. | ||
(3) Subsection (1) shall not apply where the assets made available from a PEPP are— | ||
(a) an amount made available, at the time assets of the PEPP are first made available to the PEPP saver, by way of lump sum not exceeding 25 per cent of the value of the assets in the PEPP at that time, | ||
(b) an amount transferred to an approved retirement fund in accordance with section 787AB, | ||
(c) an amount made available to the personal representatives of the PEPP contributor in accordance with section 787AB(1), | ||
(d) an amount the PEPP provider makes available from the PEPP assets, to such extent as may be necessary, for the purpose of discharging a tax liability in relation to a PEPP saver, under the provisions of Chapter 2C of this Part, in connection with a relevant payment to the PEPP saver, or | ||
(e) an amount made available from a PEPP, where the PEPP is a vested PEPP (within the meaning of section 790D(1)), for the purpose of— | ||
(i) reimbursing, in whole or in part, an administrator (within the meaning of section 787O(1)) in respect of the payment by that administrator of income tax charged on a chargeable excess in respect of the PEPP contributor, or | ||
(ii) payment by the PEPP provider of the amount, or part of the amount, of the appropriate share (within the meaning of section 787R(2A)(b)) of a non-member (within the meaning of section 787O(1)) (being the PEPP saver) of income tax charged on a chargeable excess, | ||
under the provisions of Chapter 2C of this Part. | ||
(4) For the purposes of this Chapter, the circumstances in which a PEPP provider shall be treated as making assets of a PEPP available to an individual shall include— | ||
(a) the making of a relevant payment by the PEPP provider, | ||
(b) any circumstances whereby assets cease to be assets of the PEPP, | ||
(c) any circumstances whereby assets cease to be beneficially owned by the PEPP saver, and | ||
(d) any circumstances in which an annuity paid from the assets in a PEPP is— | ||
(i) an annuity for the life of the PEPP saver or the PEPP beneficiary concerned, | ||
(ii) an annuity for the life of the PEPP saver concerned or the widow, widower or surviving civil partner of the PEPP saver concerned, or | ||
(iii) an annuity— | ||
(I) for a term certain (not exceeding 10 years) notwithstanding the death of the PEPP saver or the PEPP beneficiary within that term, | ||
(II) payment of which may be terminated or suspended on marriage or remarriage or in other circumstances, or | ||
(III) which can be assigned by will or by distribution on intestacy. | ||
(5) Without prejudice to the generality of subsection (4), the circumstances in which a PEPP provider shall, for the purposes of this Chapter, be treated as making assets of a PEPP (including a vested PEPP within the meaning of section 790D(1)) available to an individual shall include the use of those assets in connection with any transaction which would, if the assets were assets of an approved retirement fund, be regarded under section 784A as giving rise to a distribution for the purposes of that section and the amount to be regarded as made available shall be calculated in accordance with that section. | ||
(6) For the purposes of subsection (9), the PEPP provider of a vested PEPP of a kind referred to in paragraph (b) of the definition of ‘vested PEPP’ in section 790D(1) shall be treated as making the assets of the PEPP available to the PEPP contributor on the date the contributor attains the age of 75 years or, where the contributor attained the age of 75 years prior to the date of passing of the Finance Act 2022, on the date of passing of that Act. | ||
(7) At any time when a PEPP provider— | ||
(a) is not resident in the State, or | ||
(b) is not trading in the State through a fixed place of business, | ||
the PEPP provider shall, in relation to the discharge of all duties and obligations relating to a PEPP which are imposed on the PEPP provider by virtue of the PEPP Regulation, this Chapter, Chapter 2C and section 125B of the Stamp Duties Consolidation Act 1999 — | ||
(i) enter into a contract with the Revenue Commissioners enforceable in a Member State of the European Communities in relation to the discharge of those duties and obligations and in entering into such a contract the parties to the contract shall acknowledge and agree in writing that— | ||
(I) it shall be governed solely by the laws of the State, and | ||
(II) that the courts of the State shall have exclusive jurisdiction in determining any dispute arising under it, | ||
or | ||
(ii) ensure that there is a person resident in the State, appointed by the PEPP provider, who will be responsible for the discharge of all of those duties and obligations and shall notify the Revenue Commissioners of the appointment of that person and the identity of that person. | ||
(8) The Revenue Commissioners may by notice in writing require a PEPP provider or the person appointed in accordance with subsection (7)(ii), as the case may be, to provide, within 30 days of the date of such notice, such information and particulars as may be specified in the notice as they may reasonably require for the purposes of this Chapter, and, without prejudice to the generality of the foregoing, such information and particulars may include— | ||
(a) the name, address and PPS Number of the PEPP saver, | ||
(b) the name, address and PPS Number of any person to whom any payments have been made, or to whom any assets have been made available, by the PEPP provider, and | ||
(c) the amount of any payments and the value of any assets referred to in paragraph (b). | ||
(9) Notwithstanding subsection (1), where assets of a PEPP are treated under subsection (4) or subsection (6) as having been made available to an individual, the provisions of section 784A(4) shall apply as if assets of that PEPP at the time of death of that individual were assets of an approved retirement fund. | ||
Approved Retirement Fund option | ||
787AB. (1) At any time assets of a PEPP are allowed to be made available to a PEPP beneficiary, that individual may opt to have those assets transferred to an approved retirement fund and the PEPP provider shall make that transfer. | ||
(2) The assets that a PEPP provider shall transfer to an approved retirement fund in accordance with subsection (1) shall be the assets available in the PEPP at the time the election under that subsection is made less any lump sum the PEPP provider is permitted to pay without deduction of tax in accordance with section 787AA(3)(a). | ||
(3) Where an individual opts in accordance with subsection (1), sections 784A and 784B shall apply as if that option were an option in accordance with section 784(2A). | ||
Exemption of PEPP | ||
787AC. (1) Exemption from income tax shall, on a claim being made in that behalf, be allowed in respect of income derived from investments or deposits of a PEPP if, or to such extent as the Revenue Commissioners are satisfied that, it is income from investments or deposits held for the purposes of the PEPP. | ||
(2) (a) In this subsection, ‘financial futures’ and ‘traded options’ mean respectively financial futures and traded options for the time being dealt in or quoted on any futures exchange or any stock exchange, whether or not that exchange is situated in the State. | ||
(b) For the purposes of subsection (1), a contract entered into in the course of dealing in financial futures or traded options shall be regarded as an investment. | ||
(3) Exemption from income tax shall, on a claim being made in that behalf, be allowed in respect of underwriting commissions if, or to such extent as the Revenue Commissioners are satisfied that, the underwriting commissions are applied for the purposes of the PEPP, and in respect of which the PEPP provider would, but for this subsection, be chargeable to tax under Case IV of Schedule D. | ||
Allowance to employer | ||
787AD. (1) For the purposes of this section— | ||
(a) a reference to a ‘chargeable period’ shall be construed as a reference to a ‘chargeable period or its basis period’ (within the meaning of section 321), and | ||
(b) in relation to an employer whose chargeable period is a year of assessment, ‘basis period’ means the period on the profits or gains of which income tax for that year of assessment is to be finally computed for the purposes of Case I or II of Schedule D in respect of the trade, profession or vocation of the employer. | ||
(2) Subject to subsection (3), any sum paid by an employer by way of contribution to a PEPP of an employee shall for the purposes of Case I or II of Schedule D and of sections 83 and 707(4) be allowed to be deducted as an expense, or expense of management, incurred in the chargeable period in which the sum is paid but no other sum shall for those purposes be allowed to be deducted as an expense, or expense of management, in respect of the making, or any provision for the making, of any contributions under the PEPP contract. | ||
(3) The amount of an employer’s contributions which may be deducted under subsection (2) shall not exceed the amount contributed by that employer to PEPP products in respect of employees in a trade or undertaking in respect of the profits of which the employer is assessable to income tax or corporation tax, as the case may be.”. | ||