How to Pay your NPPR Bill by Wednesday’s Deadline

June 28, 2010

This Wednesday, 30 June, is the final deadline for payment of the  €200 Non- Principal Private Residence (NPPR) charge for 2010.  From Thursday morning onwards, an extra charge of €20 per month will apply.

The charge applies to domestic properties, second homes, rental houses and apartments and other properties, except for an individual’s main residence.

If you are liable, you can pay this charge online at www.nppr.ie. This site is very easy and simple to use.

NPPR €200 Property ChargeIf you have used the website to pay your 2009 liability, simply follow the Login button on the homepage. You will be prompted for your Account Reference code and PIN password. If you don’t have these details to hand, you can have them emailed to you, by clicking on the ‘Lost Account Ref’ and ‘Lost PIN’ buttons. You will need your PPS number handy to retrieve your Account Reference code.

Once you manage to log in, you will see details of your registered property or properties. Then follow the remaining links and pay by credit card or laser/debit card.

If you haven’t used the site before, go to the ‘New Customer’ area of the home page, click on the ‘New Account‘ button and follow the steps to enter your personal and property details and pay the charge.

In my experience, the process should take only about 5 minutes or so. If you have queries, follow the FAQs (frequently asked questions) tab on the NPPR homepage.


Ivor Callely’s ‘Principal Private Residence’ Dilemma

June 25, 2010

Why Ivor Callely will be swotting the Revenue manuals on the Dublin-Cork train…

This morning, Senator Ivor Callely met with the  Seanad Eireann Committee on Members’ Interests, who are investigating his expense claims.

The Dubliner has been dogged by controversy, following recent reports that he claimed expenses of up to €80,000 for travel  from his Co. Cork holiday home to the capital.  The Committee held a rare public hearing today, to inquire into the matter.

Ivor Callely - Principal Private Residence - Dublin or Cork?Senator Callely claimed today that his house at Kilcrohane in West Cork was now his “Principal Private Residence”,  that he divides his time between Dublin and Cork, and that he is often seen in the vicinity of his Cork address.

Mr. Callely’s case has brought into sharp focus the often obscure concept of  “Principal Private Residence”, or PPR.  In the Irish tax code, this is the technical term  for one’s normal residence or home.

Whether or not a property is  a  ‘Principal Private Residence’ can make an enormous difference to one’s tax position.  For example, Capital Gains Tax is normally charged on gains arising from asset disposals.  However gains on disposal of a PPR are normally tax-free. The sale of a €1m property can generate huge Capital Gains Tax bills, but if it is the PPR of the seller, the tax will normally be zero.

Similarly, the inheritance of one’s family home is normally exempt from Capital Acquisitions Tax. On a more basic level, PPR’s are exempt from the annual NPPR levy on second homes.

In general I find that people take the concept of “Principal Private Residence” for granted, eg “my home is my home”.

Yet there are plenty of grey areas, and these can give rise to anomalies and complications:

  • If you are working in Dublin and return “home” to Kerry every weekend, is your PPR in Dublin (where you live for 4-5 days per week), or in Kerry where your family lives and where you keep the majority of your possessions?
  • If you own your own home in Galway and spend 12 months backpacking in Asia, is your PPR still in Galway, even though you sleep and base yourself in backpacker hostels on the other side of the globe?
  • If you are retired, live most of the year at your home in Ireland, and spend a few months each winter living in sunnier climes, where is your PPR during those winter months?
  • If a separated parent temporarily leaves the family home due to marital difficulties, their spouse and children continue to live there, and they contribute to the upkeep and maintenance of the family home, is this still their PPR, even though they are living elsewhere?

The Revenue Tax and Duty Manuals (published under Freedom of Information legislation) contain some very useful and extensive notes on the concept of PPR’s and how it applies in practice to Capital Gains Tax.  Although not exactly ideal bedtime reading, these notes are well-written and generally easy to read, considering their technical content.

As the Senator Callely “expenses” story unfolds, I expect that we will all learn a little bit more about PPR rules and how they apply in practice.

In the meantime, Ivor will be busily swotting the Revenue manuals. At least it will help him while away the endless hours on the Dublin-Cork train…


Start-ups’ Tax Relief is a Big Disappointment

June 14, 2010

Start-up Companies can now avail of a major new tax relief, but unfortunately it is not nearly as attractive as it sounds.

The Revenue Commissioners  this week published a detailed guide to the new Corporation Tax relief for new start-up companies.

How the Scheme Works

Qualifying companies will be fully exempt from Corporation Tax on profits up to €320,000 each year.  There is partial relief available for companies with taxable earnings above this figure. The relief applies for the first three years of trading.

To qualify a company:

  • must have been incorporated on or after 14 October 2008,  and
  • must commence trading in 2009 or 2010, and
  • must carry on a genuinely new trade.

If the company merely takes over an existing trade, or a part of a trade, carried on by another individual or company, it will not qualify.

Corporation Tax Exemption Yes Minister

Yes Minister, its a great idea, now how do we stop it working?

Some industry sectors are barred from claiming the relief.  These include:

  • land  and property development
  • mining exploration and extraction of natural resources
  • fishing or agricultural activities
  • export-related activities
  • agricultural production, processing or marketing
  • road freight and haulage
  • the coal sector

Is the Relief any good?

The relief will be a lucrative one for any company lucky enough to use it to the maximum extent possible. A €120,000 tax saving over three years is not to be sneezed at. That said, it is hard to tell just how many companies will benefit greatly from it – I suspect that very few will.

For a start, many prominent business sectors are excluded, presumably in order to comply with EU State Aid rules.

In addition, most start-ups don’t earn enough profits in the start-up phase to have large Corporation Tax bills. Many lose money in the early stages and only recoup these losses later on.  For the minority that are profitable from day one, our low 12.5% Corporation Tax rate isn’t exactly a massive burden.

I have yet to see a company fold because they couldn’t afford to pay their Corporation Tax bills, yet problems with other taxes, namely VAT, PAYE/PRSI  and Relevant Contracts Tax can cripple a business overnight.

And if a company generates large profits and avoids Corporation Tax on these earnings, they still face a substantial tax hit if they wish to distribute these profits to shareholders.

And finally…

This tax relief has been widely welcomed and hailed as a much-needed boost for enterprise.  I must confess that I disagree. In fact,  I can’t help viewing it as a major disappointment. It reminds me a bit of the culture of the old “Yes Minister” TV series, where worthwhile political initiatives were announced with great fanfare only be rendered useless by bureaucracy and red tape.

What do you think?