Written Answers Nos. 263-282
263. Deputy John Connolly asked the Minister for Finance the reason individuals building on their own land have the land value taken into account in the approved valuation when assessing for the help to buy scheme; and if he will make a statement on the matter. [35681/25]
Amharc ar fhreagraThe Help to Buy (HTB) incentive is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous four years, subject to limits outlined in the legislation.
The legislation governing the HTB scheme is set out in section 477C of the Taxes Consolidation Act 1997 and outlines the definitions and conditions that apply to the HTB scheme.
In the case of a self-build property, section 477C(1) of the Taxes Consolidation Act 1997 defines the term “approved valuation” as “the valuation of the residence that, at the time the qualifying loan is entered into, is approved by the qualifying lender as being the valuation of the residence”.
As per above, the valuation of a self-build property is as approved by the lender and is determined in accordance with the Central Bank’s macro prudential rules. These rules stipulate the valuation as comprising the value of the site plus the cost of construction.
264. Deputy Aidan Farrelly asked the Minister for Finance the revenue raised from the dividend withholding tax applied to real estate investment trusts in each of the past ten years, in tabular form; and if he will make a statement on the matter. [35702/25]
Amharc ar fhreagra266. Deputy Aidan Farrelly asked the Minister for Finance the revenue raised in each of the past ten years from capital gains tax paid by real estate investment trusts, in tabular form; and if he will make a statement on the matter. [35704/25]
Amharc ar fhreagraI propose to take Questions Nos. 264 and 266 together.
The rules relating to Real Estate Investment Trusts (REITs) in Ireland are contained in Part 25A of the Taxes Consolidation Act 1997. The purpose of the REIT regime is to allow for a collective investment vehicle which provides a comparable after-tax return to investors as direct investment in rental property, by eliminating the double layer of taxation at corporate and shareholder level which would otherwise apply on a property investment via a corporate vehicle.
A REIT is generally exempt from corporation tax on the income and gains from its property rental business, which are instead taxed in the hands of the investor, provided the REIT distributes at least 85% of its property income.
In order to qualify as a REIT, a number of conditions must be satisfied including (but not limited to) the requirement that at least 75% of the aggregate income of the REIT must derive from its property rental business. The residual or non-property rental business is subject to corporation tax in the normal manner.
A further condition is the requirement for the REIT to be listed on the main market of an EU stock exchange within three years of becoming a REIT.
Dividend Withholding Tax (DWT) at the standard rate of 25% is generally deducted by the REIT from dividends paid to shareholders. The DWT is available as a credit against the shareholder’s Irish tax liability.
For Irish investors:
• Individuals are liable to tax at their marginal rates on dividends received, with credit for the DWT deducted;
• Corporates will be liable to tax at 25%, with credit for DWT; and
• Institutional portfolio investors are liable to tax on REIT dividends at 12.5%, this being the rate generally applicable to trading income.
Foreign investors are subject to the DWT at 25%. Those resident in treaty-partner countries may be able to reclaim some of this DWT under the relevant tax treaty. Tax treaty rates on dividends vary from treaty to treaty, but the most common rate applicable to small shareholdings would be 15% - this means that Ireland would retain taxing rights of 15% on dividends paid from Ireland.
In relation to questions 35702/25 and 35704/25, I am advised by Revenue that due to the low number of real estate investment trusts (REITs) operating in Ireland and Revenue’s obligation to observe confidentiality, it is not possible to provide the data requested.
Further detail is available in Revenue’s Statistical Disclosure Control Protocol, published on the Revenue website at www.revenue.ie/en/corporate/information-about-revenue/statistics/about/statistical-disclosure-control.aspx
265. Deputy Aidan Farrelly asked the Minister for Finance the revenue raised from the dividend withholding tax applied to Irish real estate funds in each of the past ten years, in tabular form; and if he will make a statement on the matter. [35703/25]
Amharc ar fhreagra267. Deputy Aidan Farrelly asked the Minister for Finance the revenue raised in each of the past ten years from capital gains tax paid by Irish real estate funds, in tabular form; and if he will make a statement on the matter. [35705/25]
Amharc ar fhreagraI propose to take Questions Nos. 265 and 267 together.
The Irish Real Estate Fund (“IREF”) regime was introduced by Finance Act 2016 and amended by Finance Act 2017 to address concerns over the use of collective investment vehicles by certain non-resident investors to minimise their exposure to Irish tax on Irish property transactions. IREFs are Irish funds, or sub-funds where the fund is an umbrella scheme, where at least 25 per cent of the value of the assets held by the fund is derived from Irish real estate assets (subject to certain exclusions).
IREFs are not subject to capital gains tax or dividend withholding tax. The tax code provides that the funds are subject to an IREF Withholding Tax (WHT) at a rate of 20% on distributions and redemptions to non-resident investors. Where appropriate declarations are in place, the legislative provisions exempt from IREF WHT, certain categories of investors such as life assurance companies, pension funds, investment undertakings and their EEA equivalents, charities, credit unions and Section 110 companies.
In addition to a 20% IREF WHT on distributions, a charge to income tax at the rate of 20% at the level of the IREF to counter the use of excessive debt and other payments to reduce distributable profits applies since the anti-avoidance measures were introduced in the Finance Act 2019. The three anti-avoidance measures introduced in the Finance Act include (i) a debt cap, to limit excessive leveraging and resulting interest, (ii) a property financing cost ratio, to limit excessive interest rates, and (iii) a “wholly and exclusively” test to limit excessive expenses.
The following table sets out the gross level of IREF Withholding Tax and Income Tax paid since the introduction of the IREF regime and subsequent measures.
Gross IREF WHT and Income Tax charge paid in the respective years
|
For Accounting Periods Ending 1st January to 31st December |
Year IREF Tax Paid |
Gross amount of IREF WHT deducted (€m) |
Income Tax Charge (€m) |
Total Gross IREF WHT Tax Deducted & Income Tax Charge Paid (€m) |
|
2017 |
2018 |
8.3 |
N/A |
8.3 |
|
2018 |
2019 |
28.5 |
N/A |
28.5 |
|
2019 |
2020 |
65.7 |
6.4 |
72.1 |
|
2020 |
2021 |
36.8 |
17 |
53.8 |
|
2021 |
2022 |
30.9 |
12.2 |
43.1 |
|
2022 |
2023 |
27.6 |
10 |
37.6 |
|
2023 |
2024 |
20.7 |
11.2 |
31.9 |
|
Total |
|
218.5 |
56.8 |
275.3 |
268. Deputy Pearse Doherty asked the Minister for Finance if he will bring forward a service level agreement between the Central Bank and the credit union movement as discussed during the Credit Union (Amendment) Act 2023 legislative process; and if he will make a statement on the matter. [35780/25]
Amharc ar fhreagraIn conjunction with the Credit Union (Amendment) Act 2023, a number of non-legislative actions were agreed in order to encourage transparency of regulatory engagement. One of these actions was the development of an Enhanced Engagement Protocol between the Central Bank and the credit union sector.
Throughout the Credit Union (Amendment) Act 2023 legislative process the Central Bank has been and still are very open to engagement and consultation with the sector.
The Central Bank has published an Open & Engaged Charter 2024-2026 which highlights the critical priority for the Central Bank to listen to stakeholders and engage in dialogue and learning. The Registry of Credit Unions (the Registry), the division within the Central Bank with primary responsibility for the registration and supervision of credit unions, guided by the Open & Engaged Charter, engages in a clear, open and transparent manner both with individual credit unions and credit unions as a collective. The Registry advises that it is currently drafting a Credit Union-specific engagement charter.
The Registry supports the sector through regular stakeholder engagement grounded in its statutory mandate, without impacting on the statutory independence of the Central Bank in the performance of its functions, or in the exercise of its powers in relation to credit unions.
Implementation of the Credit Union (Amendment) Act 2023, and the non-legislative actions to encourage transparency of regulatory engagement are critically important for the development of the credit union sector. It is for this reason that the Credit Union Advisory Committee (CUAC) has been requested by me to complete a series of reviews to assess progress with implementation. CUAC's reports will include review of the non legislative actions such as the Engagement Protocol.
CUAC's initial report dated 29 November 2024 noted that the Central Bank and the Representative Bodies 'welcome the development of an Enhanced Engagement Protocol between the Central Bank and the credit union sector and intend to engage on it during 2025'.
CUAC will continue to monitor all aspects of implementation of the Credit Union (Amendment) Act 2023, and associated non-legislative actions, and inform me accordingly.
269. Deputy Pearse Doherty asked the Minister for Finance his views on the Credit Union Stabilisation Fund levy paid by credit unions; the amount that has been collected each year by the fund since its inception; his plans for the future of the levy; and if he will make a statement on the matter. [35781/25]
Amharc ar fhreagraThe purpose of the Stabilisation Scheme is to have funds available, if needed, to assist credit unions whose reserves have temporarily fallen below the 10% minimum statutory reserve requirement but are otherwise considered by the Central Bank to be viable. To be eligible for consideration for stabilisation support, a credit union must have reserves of at least 7.5% of total assets but its reserves must be below 10% of total assets.
See below, in tabular format, the amount that has been collected each year by the Stabilisation Fund since its inception. Data has been extracted from the annual Credit Union Fund audited accounts.
|
Year |
Amount collected (millions) |
|
2015 |
€3.119 |
|
2016 |
€3.258 |
|
2017 |
€3.521 |
|
2018 |
€2.857 |
|
2019 |
€2.996 |
|
2020 |
€3.014 |
|
2021 |
€0.304 |
|
2022 |
€0.301 |
|
2023 |
€0.301 |
|
2024 |
- audited information is not yet available |
|
Total paid by Credit Unions to 2023 |
€19.671 |
In 2023, the then Minister of State and Minister for Finance requested the Department of Finance to complete a comprehensive review of the Stabilisation Fund. In July 2024, the consultation paper was published.
The Stakeholders consulted included: the Central Bank of Ireland, the Irish League of Credit Unions (“ILCU”), the Credit Union Development Association (“CUDA”), the Credit Union Managers Association (“CUMA”), the National Supervisors Forum (“NSF”) and a random selection of 20 credit unions operating in the Republic of Ireland as of 26 April 2024. The consultation paper was published on the Departmental website and any credit union not randomly selected was free to make a submission on the consultation.
The consultation closed on 27 September 2024. Since then, officials have been engaged with the European Commission on some technical queries arising from the consultation on the Stabilisation Fund. Officials are now approaching the end of that process and following that, will complete the Feedback Statements and draft recommendations for consideration by myself and the Minster for State. I hope to conclude this consultation process shortly.
270. Deputy Pearse Doherty asked the Minister for Finance his views on the Credit Institutions Resolution Fund levy paid by credit unions; the amount that has been collected each year by the fund since its inception, his plans for the future of the levy; and if he will make a statement on the matter. [35784/25]
Amharc ar fhreagraThe purpose of the Credit Institutions Resolution Fund (CIRF) is to provide a source of funding for the resolution of financial instability in, or an imminent serious threat to the financial stability of, a credit union.
See below, in tabular format, the amount that has been collected each year by the Resolution Fund since its inception. Data has been extracted from the annual CIRF audited accounts.
|
Year |
Amount collected (millions) |
|
2012 |
€2.445 |
|
2013 |
€9.621 |
|
2014 |
€9.299 |
|
2015 |
€7.310 |
|
2016 |
€7.659 |
|
2017 |
€8.099 |
|
2018 |
€8.587 |
|
2019 |
€7.939 |
|
2020 |
€4.996 |
|
2021 |
€5.001 |
|
2022 |
€5.000 |
|
2023 |
€4.370 |
|
2024 |
€1.870 |
|
Total |
€82.196 |
In 2023, the then Minister of State and Minister for Finance requested the Department of Finance to complete a comprehensive review of the Resolution Fund. In July 2024, the consultation paper was published.
The Stakeholders consulted included: the Central Bank of Ireland, the Irish League of Credit Unions (“ILCU”), the Credit Union Development Association (“CUDA”), the Credit Union Managers Association (“CUMA”), the National Supervisors Forum (“NSF”) and a random selection of 20 credit unions operating in the Republic of Ireland as of 26 April 2024. The consultation paper was published on the Departmental website and any credit union not randomly selected was free to make a submission on the consultation.
The consultation closed on 27 September 2024. Since then, officials have been engaged with the European Commission on some technical queries arising from the consultation on the Resolution Fund. Officials are now approaching the end of that process and following that, will complete the Feedback Statement and draft recommendations for consideration by myself and the Minster for State. I hope to conclude this consultation process shortly.
271. Deputy Pearse Doherty asked the Minister for Finance his views on the appropriateness of the regulation of the buy-now, pay-later products; and if he will make a statement on the matter. [35785/25]
Amharc ar fhreagra272. Deputy Pearse Doherty asked the Minister for Finance for an update on the implementation of recommendation 11.2 of the retail banking review; if he will ensure that the recommendation is prioritised given the rise in buy-now, pay-later products; and if he will make a statement on the matter. [35786/25]
Amharc ar fhreagraI propose to take Questions Nos. 271 and 272 together.
The Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Act 2022 provides that any person whose business, directly or indirectly, provides credit, including credit which is termed as 'buy now pay later' (BNPL) type credit, or hire purchase or consumer hire agreements to consumers now falls within the regulatory remit of the Central Bank of Ireland.
Following on from this legislative change, the Central Bank then amended its regulatory framework and consumers who enter into BNPL credit agreements are now protected by the Bank’s consumer protection framework including key provisions of the Consumer Protection Code 2012 (Chapter 2 General Principles, Chapter 5 Knowing the Consumer and Suitability and Chapter 9 Advertising), the Minimum Competency Code 2017, and the Minimum Competency Regulations 2017.
Furthermore, the revised Code, which takes effect on 24 March 2026, builds on the protections of the existing Code and it will apply in full to the provision of BNPL agreements ensuring that customers of these credit providers are afforded the same protections as customers of other credit providers.
In addition, the new EU consumer credit directive, which is due to be transposed later this year and to come into effect in 2026 will also apply to BNPL agreements.
In relation to the central credit register (CCR), that register was established by the Central Bank under the Credit Reporting Act 2013 (the Act). The Act provides a threshold of reporting to the CCR of €500. It also provides that Credit Information Providers must enquire on the CCR when considering a credit application for €2,000 or greater and may enquire when considering credit applications for a lower value.
The Retail Banking Review set out a wide range of recommendations to improve the sector and customers' experiences. Each recommendation identified the body or bodies responsible for delivery of that recommendation and, where appropriate, contain timelines for delivery of the recommendations.
Regarding the CCR fee structure, the CCR has been established on the general basis that all costs associated with its establishment and operation will be recouped over time. The Central Bank has committed to keeping the fee structure under review after a period of operation in light of actual usage or other relevant developments or enhancements to the CCR and in that regard it can be noted that the Central Bank reduced the fee to €3.00 per enquiry for lenders with effect from 1 January 2024.
My Department will continue to liaise with the Central Bank and all relevant stakeholders on the on-going management and operation of the CCR, including its fee structure and reporting thresholds.
273. Deputy Pearse Doherty asked the Minister for Finance the number and value of loans issued by credit union below €2,000, to the end of March in each of the years 2023, 2024 and 2025; and if he will make a statement on the matter. [35787/25]
Amharc ar fhreagraThe following information has been provided by the Central Bank Of Ireland and is extracted from quarterly prudential returns submitted by credit unions to the Central Bank Of Ireland. The credit union financial year runs from 1 October to 31 September. The Deputy has asked for specific information to March each year, hence the information in tabular form below is from 1 October to the 31 March i.e. 6 months from the beginning of the credit union financial year.
New Loans Issued with a balance of €2,000 or less by Credit Unions from 1 October to 31 March
|
For the period |
Number of loans |
Value of loans |
|
1 October 2022 to 31 March 2023 |
110,661 |
€122.05m |
|
1 October 2023 to 31 March 2024 |
106,986 |
€118.98m |
|
1 October 2024 to 31 March 2025 |
97,900 |
€109.17m |
Total number of loans outstanding with a balance of €2,000 or less by Credit Unions at 31 March
|
For the period |
Number of loans |
Value of loans |
|
At 31 March 2023 |
142,627 |
€140.46m |
|
At 31 March 2024 |
138,078 |
€136.14m |
|
At 31 March 2025 |
131,774 |
€129.8m |
One of the core objectives of the credit union is to provide its members with loans and support the needs of its members. The provision of loans for amounts less than €2,000 is one of many measures of credit union delivery to its members.
274. Deputy Roderic O'Gorman asked the Minister for Finance if there are regulatory measures that can be taken to address the failure of certain banks to pass on ECB interest rate cuts to customers; and if he will make a statement on the matter. [35801/25]
Amharc ar fhreagraThe formulation and implementation of monetary policy is an independent matter for the European Central Bank (ECB).
The ECB increased official interest rates over the course of 2022 and 2023 as it moved to combat excess inflation. However, since last summer it has reduced official interest rates on eight occasions, the most recent of which came into effect from 11 June 2025. These monetary policy changes, taken together with a change to its operational framework for implementing monetary policy last September, have resulted in a reduction of 2.35% in its main official lending rate to 2.15%.
While changes in the level of official interest rates will feed through to the wider economy, it does not have a uniform impact. In a market economy the determination of retail and business lending rates are commercial decisions for individual creditors and other factors, such as the cost of wholesale and retail funds, risk appetite, contractual terms, creditor status, operational costs, expected return, competition and desired market segment, will also be relevant.
Due to their particular contractual arrangements, most tracker mortgage borrowers will, as the ECB reductions work through the system, see their mortgage interest rate decline in line with the reduction in the main ECB lending rate.
However, in the case of other variable rate mortgages the pass through of monetary policy rate changes, either upwards or downwards, is less rigid than is the case with tracker mortgages. In this regard the transmission of monetary policy rate changes happens with long and variable lags. The Central Bank has indicated that this was true as rates were rising and it also notes that this is also the case as ECB policy rates move lower.
However, in general, recent Central Bank data indicates that the average interest rate on outstanding mortgages held by bank and ‘non-bank’ regulated entities has declined over the past year. This is welcome and, from a general perspective, now that the ECB is reducing official interest rates the Government expects all mortgage creditors to keep their lending rates under review and where mortgage rates had in the past increased in line with ECB increases they should now, in this new interest rate environment, also appropriately adjust downwards. The Central Bank will continue to liaise with regulated entities on this matter.
The Central Bank has put in place a range of measures to protect consumers who have or who are taking out a mortgage.
Specifically in relation to non-tracker variable rate mortgages, the existing Central Bank Consumer Protection Code requires all regulated mortgage creditors to explain to borrowers how their non-tracker variable interest rates have been set, and to clearly identify the factors which may result in changes to variable interest rates.
Also mortgage providers are required to issue an annual notification to variable rate mortgage holders and at fixed rate maturity for fixed rate holders, which among other items shows a summary of alternative mortgage products available from that provider.
Furthermore, under the revised Consumer Protection Code, which will come into force in March 2026, mortgage lenders will be required to include within these notifications a personalised euro savings estimate alongside each alternative mortgage refinancing option presented.
In addition, the mortgage industry has introduced several measures to support borrowers who wish and are in a position to switch their mortgage. This includes the provision of an aligned industry wide set of initial eligibility criteria to facilitate people switching their mortgage from a non-bank to a bank.
More recently the BPFI has launched a website, entitled 'it's in your interest', to further encourage and assist the mortgage switching process.
However, the decision on whether or not to provide new credit in any particular case, or the amount of credit to provide, remains a commercial matter for an individual lender.
275. Deputy Jen Cummins asked the Minister for Finance for his plans to address the current situation in a residential site (details supplied) in accessing home insurance which is preventing people buying the apartments. [35947/25]
Amharc ar fhreagraAs Minister for Finance, I have policy responsibility for the development of the legal framework governing financial services regulation, including for the insurance sector.
As you will appreciate, I cannot comment on individual cases or intervene in disputes that individuals may have with their bank or insurance provider.
In relation to the general issue of mortgages, there is a broad legal and regulatory framework which governs the provision of residential mortgage credit to consumers. However, within this general regulatory framework it is then a commercial matter for individual lenders to determine their own lending policies and loan underwriting criteria, including in relation to the nature and type of collateral acceptable for mortgage lending purposes. Therefore, the decision to grant or refuse a mortgage application, or to set any appropriate conditions which will have to be fulfilled in order to drawdown mortgage credit (such as a requirement on the prospective borrower to put in place an appropriate policy of insurance on the property which is to act as security for the mortgage loan) is a business matter for an individual lender.
In terms of the challenges associated with obtaining flood cover, please be aware that the provision of such cover is a commercial matter for insurance companies, based on an actuarial assessment of the risks they are willing to accept. Government cannot interfere in the provision or pricing of insurance, or direct as to what cover is provided, as is reinforced by the EU framework for insurance (Solvency II Directive). Insurance arrangements—whether for an individual or an Owners' Management Company—depend primarily on the contractual relationship between the insurer and the insured. Decisions on whether to offer cover, the level of premiums, and the specific terms of policies are made by insurers on a case-by-case basis.
Insurance Ireland have previously advised that insurers generally consider claims history, local flood risks, and any mitigation works undertaken by the OPW or local authorities when assessing applications. The Government remains committed to protecting Ireland’s present and future generations by investing in climate adaptation measures to manage the impacts of extreme weather.
Under the National Development Plan, €1.3 billion is committed to the delivery of flood relief schemes over the lifetime of the plan to 2030, which will protect around 23,000 properties. To date, 55 flood schemes have been completed at a cost of €550 million, protecting over 13,000 properties and delivering an estimated €2 billion in avoided damages.
Consumers seeking further guidance can visit www.understandinginsurance.ie or contact Insurance Ireland at 01-676-1820 / feedback@insuranceireland.eu for detailed information about insurance premiums or additional assistance. Brokers Ireland also offers support and access to a wide range of insurance products via 01-661-3067 / insurancequeries@brokersireland.ie.
The Department of Finance will continue to monitor and assess flood insurance matters, including through its participation in the OPW and Insurance Ireland Working Group. I wish to assure the Deputy that these matters remain a priority for this Government and efforts continue to be made to encourage a responsive approach from the insurance industry.
276. Deputy John Lahart asked the Minister for Finance the number of proposals in the Interdepartmental Pensions Reform and Taxation Group report from 2020 that have been implemented; the number not yet been implemented; the expected timeline for those not yet implemented; and if he will make a statement on the matter. [36059/25]
Amharc ar fhreagraThe Interdepartmental Pensions Reform and Taxation Group (IDPRTG) was established to carry out a number of tasks set out in the Roadmap for Pensions Reform 2018 -2023. The Roadmap set out the need to promote long-term pension saving to address income adequacy in retirement, in particular for low income earners.
The IDPRTG is chaired by the Department of Finance, and includes representatives from the Department of Public Expenditure and Reform; the Department of Social Protection (DSP); the Office of the Revenue Commissioners; and the Pensions Authority. In 2020 the IDPRTG published a report which set out a number of actions to aid in the harmonisation and simplification of supplemental pensions.
A number of reforms suggested by the IDPRTG 2020 report been implemented or are actively being progressed. From a Department of Finance perspective, multiple changes to tax legislation have been introduced that have helped simplify the pensions landscape, including Personal Retirement Savings Accounts (PRSAs).
At present, there are 11 actions completed; and 18 actions are currently being advanced. There are a number of outstanding reforms highlighted in the report that are substantial and complex in nature and will require major policy work across a number of Departments and bodies. Further to this, careful sequencing and interdependency across other issues is necessary for implementation.
The IDPRTG has provided a valuable cross departmental forum where key policy stakeholders can engage, and the group remains committed to progressing outstanding actions and continuing pension reform going forward.
277. Deputy John Lahart asked the Minister for Finance if there are any plans for increasing the cap for PRSAs or introducing any changes on how employer contributions to PRSAs are capped; and if he will make a statement on the matter. [36060/25]
Amharc ar fhreagraPrior to 1 January 2023, where the combined contributions by an employer and an employee to the employee’s Personal Retirement Savings Account (PRSA) did not exceed the employee’s annual percentage limit, as set out in section 787E(1) Taxes Consolidation Act 1997 (TCA), the contributions were relieved from tax. The employee’s annual percentage limit is between 15% and 40% of “net relevant earnings”, varying depending on age, up to a maximum relieved salary of €115,000. However, where the combined employer and employee contributions exceeded the applicable threshold, the amount above the threshold was treated as a taxable benefit in kind (BIK) in the hands of the employee. In contrast for occupational pension schemes, employer contributions are not a BIK.
Section 22 Finance Act 2022 sought to remove the difference in BIK treatment between PRSAs and occupational pension schemes This section amended the Taxes Consolidation Act 1997, by abolishing the BIK charge on employer contributions to an employee’s PRSA. In addition, employer contributions to an employee’s PRSA were no longer counted towards an employee’s age and salary related percentage limits on tax deductible contributions. These changes were recommended by the Interdepartmental Pension Reform and Taxation Group (IDPRTG) with a view to improving, harmonising and simplifying the pension landscape in Ireland. It was expected that the amendment would likely result in a change in behaviour by encouraging increased PRSA contributions.
As with any change in tax policy, Revenue actively monitored developments since the introduction of the changes in Finance Act 2022.
From Revenue’s analysis of employer PRSA contributions in 2023, it appeared some cases suggested behaviour that was not in keeping with the policy intention of the changes. Revenue advised officials in my Department of these concerns.
Section 12 Finance Act 2024 addressed these concerns by providing for an “employer limit” on employer PRSA contributions of 100% of the relevant employee’s salary. Any contributions above the “employer limit” will be considered a taxable BIK for the employee and therefore subject to tax.
I would note that the process of ensuring that taxation relief is availed of in an appropriate manner is ongoing and continuous and involves Revenue and my Department working closely together to monitor developments, assess data and, where necessary, amend provisions to avoid misuse.
I have no plans to change these arrangements at present. However, these provisions, along with other pension taxation measures, are kept under review.
278. Deputy John Lahart asked the Minister for Finance if there are plans to harmonise pension tax relief so that the State contribution under AE is equivalent to the tax relief which people get on private pensions; if so, whether the harmonisation plans upwards or downwards; what other details can be provided on the plans; and if he will make a statement on the matter. [36061/25]
Amharc ar fhreagraThe introduction of the Automatic Enrolment Retirement Savings System, known as AE, is a landmark reform designed to get people to save for their retirement earlier thereby helping them to sustain a reasonable standard of living in their old age. It is also designed to support the long-term sustainability of the pension system more generally.
As the Deputy is aware the operation of AE is a matter for the Minister for Social Protection. However responsible for taxation policy including for the AE scheme lies with me as Minister for Finance and the legislation governing the taxation element of AE was provided for in Finance Act 2024.
My Department and Revenue worked closely with the Department of Social Protection to prepare these legislative provisions governing the taxation treatment of Auto Enrolment savings. As agreed by Government, the approach is to align as much as possible with the taxation of Personal Retirement Savings Accounts (PRSAs), other than for employee contributions.
Therefore the key distinction between the AE scheme and the “Exempt-Exempt Taxed” (EET) system of pension taxation provided to PRSAs and other pensions, in line with the approach agreed by Government, is that participants in the AE scheme will not be eligible for tax relief for their individual AE contributions. Instead, participants will benefit from a State “top-up” directly to their AE accounts. AE participants will benefit from a State top up of €1 for every €3 they contribute. In contrast under the EET system, tax relief on contributions is available at the individuals’ marginal rate of income tax.
I do not intend at this time to introduce arrangements to amend the current tax relief system for pensions contributions, which is a well-established system. The current tax relief for contributions will continue to apply for those making private and occupational pension contributions outside the AE system. As with all taxation, the provisions applying to AE and supplementary pensions remain under review and will continue to do so as the AE scheme becomes operational.
279. Deputy John Lahart asked the Minister for Finance If there any plans to simplify or align the rules for PRSAs and master trusts, specifically in relation to master trust contributions based on salary, age, and company service, and PRSA contributions with the limit of 100% of salary; if he agrees that there are very different rules for accessing benefits, either at retirement or on early retirement, in relation to tax-free lump sums, and different rules on death under each scheme, and that the funding for future and prior service opens up greater opportunities in a master trust, but not in a PRSA; and if he will make a statement on the matter. [36063/25]
Amharc ar fhreagraWhile there are differences in the treatment of occupational pension schemes and Personal Retirement Savings Accounts (PRSAs), these differences stem from the nature of the products.
I am advised by Revenue that “master trusts” are not currently defined in either pensions or tax legislation. For tax purposes, a master trust is treated as an occupational pension scheme which caters for more than one employer, and which is subject to the provisions of Chapter 1 of Part 30, Taxes Consolidation Act 1997 (TCA). An occupational pension scheme is linked to an employment, and one of the conditions for Revenue approval of an occupational pension scheme is that an employer must contribute to the scheme (section 772(2)(d) TCA).
Tax relief is granted for employer contributions to a pension under section 774(6) TCA. There is no specific limit on allowable employer contributions to an occupational scheme. Instead, the maximum permitted funding is related to the amount required to provide pension benefits for members of the scheme, related to their salary and service and subject to the limits on pension benefits in section 772(3) TCA.
A PRSA, by contrast, is a personal pension product, based on a contract between an individual and the PRSA provider. An employer has no obligation to contribute to an employee’s PRSA, and there is no link between the PRSA and a specific employment. A PRSA may in fact be taken out by a self-employed person rather than an employee. However, tax relief is available for employer contributions to an employee’s PRSA, subject to certain limits. Any amount of an employer contribution in excess of the “employer limit” is not deductible for tax purposes, and is treated as a taxable benefit in kind for the employee. The employer limit is defined in section 787E(1) TCA as 100% of the relevant employee’s emoluments in a tax year or, where an employee’s salary is lower in the current year by reason of unpaid leave, in the previous year. The employer limit imposes a cap on the amount of PRSA contributions that qualify for tax relief for employees and employers, just as the maximum funding rules impose similar restrictions for occupational pension schemes.
Employers may make “non-ordinary” or special contributions to an occupational pension to cover scheme liabilities. However, the maximum contribution an employer can make in a tax year to a PRSA for any individual employee is capped at 100% of that employee’s salary.
All employee or individual contributions to all pension products, including occupational pension schemes and PRSAs, are subject to the age-related percentage limits, ranging from 15% to 40% of emoluments, and to the overall income limit, currently €115,000.
As to retirement benefits, the earliest age at which an individual can take retirement benefits is usually age 60 years. However, the terms of an occupational pension scheme or a PRSA may provide that, in certain circumstances, an individual can retire and take benefits from age 50 years.
An occupational scheme may pay a pension to members or may arrange for a member’s entitlements to be paid as a pension by other means, such as via an annuity, or in some circumstances transferred to an ARF. PRSA holders may take their benefits directly from the PRSA, transfer them to an ARF, or take out an annuity.
There is an overall lifetime allowance of €200,000 on a tax-free lump sum, which applies to lump sums from all pension products. In the event the €200,000 lifetime allowance is exceeded, section 790AA(3) TCA applies excess lump sum tax at 20% on amounts between €200,000 and €500,000, and at 40% on amounts over €500,000. Subject to those tax provisions, occupational pension schemes can provide a lump sum of up to 1.5 times final salary (section 772(3)(f) TCA); where the member can avail of the ARF option, they can take a lump sum up to 25% of their entitlements; while a PRSA holder can get a lump sum of up to 25% of their savings, subject to the €200,000 limit.
Individual occupational pension schemes and PRSA contracts may provide for different terms and conditions about what happens on the death of a scheme member or PRSA holder. Many occupational pension schemes and PRSA contracts provide for payments to spouses, civil partners or dependants in the event of the death either before or after retirement of a scheme member or PRSA holder respectively.
I have no current plans to align the rules governing PRSAs and occupational pension schemes. As outlined above, both products serve distinct purposes within the pension landscape. However, these provisions, along with other pension taxation measures, are kept under review.
280. Deputy James Geoghegan asked the Minister for Finance for an update on the new action plan for insurance reform, with specific regard to flood insurance; if the action plan will recommend changes to the memorandum of understanding between the OPW and Insurance Ireland to increase obligations on insurance companies to extend coverage to people in low-risk flood zones; and if he will make a statement on the matter. [36106/25]
Amharc ar fhreagraAs Minister for Finance, I have policy responsibility for the development of the legal framework governing financial services regulation, including for the insurance sector. Working with stakeholders such as OPW and Insurance Ireland to enhance collaboration and information sharing on the climate protection gap is a key focus of the Government’s policy to develop a sustainable, planned and risk-based approach to managing flooding.As the relevant authority on flood risk management in the State, the OPW has established a Memorandum of Understanding (MoU) with Insurance Ireland. Under this arrangement, the OPW provide information on all completed flood defence schemes to Insurance Ireland. In turn, insurers take account of this information when assessing exposure to flood risk within these areas. Officials from the Departments of Finance; Housing and Local Government, along with other stakeholders engage constructively with this process on how the levels of insurance cover might be improved in areas where flood defence works have been completed.
As the Deputy has noted, the Government is currently developing a new Action Plan for Insurance Reform. This new Action Plan will focus on encouraging further competition in the market and working with stakeholders to enhance availability and affordability across all types of insurance, including flood insurance.
The public consultation phase of the Action Plan closed on Monday 19 May after a three-week period. Over seventy submissions were received from industry and community stakeholders. The new Plan will build on the progress of the 2020 Action Plan, which delivered significant achievements, most notably the rebalancing of the Duty of Care, reforming the Injuries Resolution Board, the introduction of new Personal Injuries Guidelines, the establishment of the Office to Promote Competition in the Insurance Market, the banning of price walking in home and motor insurance markets.
Minister of State Troy, together with officials in the Department of Finance, have reviewed the feedback received and are in the process of finalising a list of actions for the new Action Plan for Insurance Reform. The new Action Plan will focus on a number of actions set out under key themes, including the climate protection gap.
It is my intention that a draft Action Plan will be considered at the forthcoming Insurance Cabinet Sub-group meeting and subsequently that the final Acton Plan will be agreed at Government level. After that I would expect that we will be in a position to publish the new plan in line with our commitments in the Programme for Government. As the Deputy will appreciate, details of specific action points cannot be confirmed until they have been approved through the appropriate channels.
281. Deputy Barry Heneghan asked the Minister for Finance if he will review the current vehicle registration tax and VAT exemption limits for vehicles adapted for individuals with disabilities, given the €16,000 cap has remained unchanged for over two decades despite rising vehicle costs and taxes; if he will consider introducing index-linking to ensure these exemptions keep pace with inflation; and if he will make a statement on the matter. [36181/25]
Amharc ar fhreagraIt is assumed that the Deputy is referring to the Disabled Drivers and Disabled Passengers Scheme (DDS). The DDS provides relief from VRT and VAT on an adapted car, as well as an exemption from motor tax and an annual fuel grant.
The relief from Value Added Tax and Vehicle Registration Tax are generous in nature amounting to up to €10,000, €16,000, €22,000, €32,000 and €48,00 depending on the level of adaption required for the vehicle and whether the person is a disabled driver or disabled passenger as defined (i.e. that holds a Primary Medical Certificate).
It should be noted that the new VRT charging table does not necessarily result in increased VRT rates. VRT is an emissions-based tax and therefore the amount of VRT incurred will vary across different vehicle makes and models. Typically, the new rates structure will result in increases for high emission vehicles, and decreases for lower emission vehicles, supporting Government policy to tackle transport emissions. The amount of the remission or repayment of VAT and VRT is decided on the basis of the adaptation categories set out in Statutory Instrument 353 of 1994 (as amended).
Finally, the Deputy should note that my Department and I share concerns that the DDS is no longer fit-for-purpose and believe it should be replaced with a needs-based, grant-led approach for necessary vehicle adaptations that could serve to improve the functional mobility of the individual.
However, this is very much a matter for Government as my Department has oversight of the DDS only and does not have responsibility for disability policy.
Under the aegis of the Department of the Taoiseach, the sub-group convened to progress the National Disability Inclusion Strategy proposals for a needs-based, grant-aided, modern vehicle adaptation supports to replace the DDS, generated a report that was submitted to the Department of the Taoiseach. In considering this report, it has been proposed that a new grant-based scheme be developed and led by the Department of Transport.
The Department of Transport is beginning the development of this new scheme. The existing DDS remains with the Department of Finance and will continue to be reviewed in the context of the development of the new scheme by the Department of Transport.
282. Deputy Conor Sheehan asked the Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation for an update on the application for a Garda station (details supplied); and if he will make a statement on the matter. [36141/25]
Amharc ar fhreagraThe OPW will seek a suitable site for a new Garda Station in the Castletroy/ Annacotty area of Limerick when the Business Case process is complete and the long term requirements of An Garda Síochána in the area are confirmed.
A Business Case is required to comply with the provisions of the Infrastructure Guidelines where it is considered that the acquisition of a property is required. It is the responsibility of the Sponsoring Agency, in this case An Garda Síochána, to prepare this Business Case. An Garda Síochána are preparing an initial Business Case for nine sites, including Castletroy, throughout the country and the Office of Public Works have been engaging with them in this regard over the last number of months.
