1st February 2019
As a result of increased scrutiny towards tax compliance, the Revenue Commissioners, the Irish tax authority, have yielded a record €611 million last year from tax defaulters. This comes as the nation – which has often been cited as a tax haven, becomes far stricter in its compliance regulation after heavy international pressure to do so. The country has also been taking steps to modernise its tax collection systems, with big data and digital analytics now helping authorities collect lost revenue.
Despite this negative publicity, the country’s economy is booming, and presents a lot of opportunity for contractors, with the tech, life sciences and financial services sectors all flourishing. Ireland ranks sixth on the Index of Economic Freedom and fifth in the World Bank’s global GDP per capita tables. And with the latest reports from the European Commission predicting growth at 5.7% and 4.1% for 2018 and 2019, this doesn’t seem to be slowing. So what do contractors need to know about the Irish tax compliance crackdown?
Irish tax compliance: the numbers
Aside from the money reclaimed by tax defaulters, the figures also show that a total of €54.5 billion in tax and duty was collected by the agency last year from individuals and companies, while €13.5bn was collected on behalf of other departments, agencies and EU member states. This was a record for the country, reflecting their renewed dedication to tax collection and the effect that new legislation such as the 2016 Finance Act has had. It’s also indicative of the strength of growth in the Irish economy, with Revenue Commissioners chairman, Niall Cody, commenting that:
“During 2018, we completed 572,785 audit and compliance interventions, which yielded €572.6m, seized 158 unlicensed gaming machines, settled 22 tax avoidance cases yielding €5.7m and secured 17 criminal convictions for serious tax evasion and fraud. The vast majority of individuals and businesses pay the right amount of tax on time, however we are committed to targeting shadowy economic activity and tax evaders.”
This news comes following reports that Ireland has followed the example of many other nations by introducing technology such as data analytics to help in its fight against tax evasion. The Revenue Commissioners have revealed that they are taking advantage of the raft of new data made available through information-sharing agreements such as the Common Reporting Standards, and using it to identify potential tax fraud. The information is then cross-checked with social media accounts and previous tax returns to uncover any inconsistencies, a new practice that we have previously written about. This has gone so far that the Revenue has even appointed a chief analytics officer to lead its mining of taxpayer data.
Significant changes were also introduced to Irish tax collection in the 2016 Finance Act and since a voluntary disclosure deadline in May 2017, tax defaulters who use offshore facilities to hide undeclared income, accounts, or other assets are no longer able to submit a qualifying disclosure. Defaulters now face far larger penalties of up to 100% of tax evaded, publication in the Quarterly List of Tax Defaulters and potential criminal prosecution.
The legal bit
When it comes to contracting requirements, luckily, Ireland has a relatively similar set up to the UK. However, professionals should not be complacent when it comes to Irish tax compliance. With the automatic exchange of tax information across borders, freelance professionals are far more likely to find themselves on the wrong side of the law due to unintentionally incorrect tax reporting.
Contractors should be aware that they need to apply for a Personal Public Service (PPS) number once they have entered the country in order to access a medical card, social welfare and public health services. Without this, they will face a 50% emergency tax on their pay. Once a contract comes to an end, tax authorities must also be notified in order to de-register the individual.
In light of this global move towards more comprehensive and complex tax systems, contracting abroad can be a tricky landscape for many to navigate. Unfortunately, the administrative headache of international compliance and growing penalties for falling foul of legislation do not look like slowing down. Removing this administrative burden, reducing the risks of non-compliance and freeing up your time to get on with the job at hand is understandably the most desirable outcome for contingent workers. This can be achieved with the help of an expert contractor management service. Get in touch with the team today to find out more:
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