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The Commission on Taxation and Welfare’s report has been published with over 116 recommendations

On 20 October 2021 the Commission on Taxation and Welfare launched its public consultation - Your Vision, Our Future. Deloitte made its submission, focusing primarily on taxation matters, including key areas such as: inward investments, the SME sector, the residential property market and climate change. The Commission submitted its report to the Minister for Finance in July which published on 14th September. The Minister for Finance Paschal Donohoe TD welcomed the report of the Commission on Taxation and will provide an initial response to the recommendations as part of his Budget Statement on 27th September next. Overall, the report is a substantial document with over 116 recommendations, and we outline some of the main recommendations below. It is likely that there will be much debate into the future on these recommendations.

Main recommendations

Broadening the tax base

The Commission recommends:

  • Incrementally broadening the base of consumption taxes placing emphasis on limiting the use of zero and reduced rates of Value Added Tax. Further, the rate of Value Added Tax on those goods and services currently attracting a second reduced rate (currently 9 per cent) should be increased over time to the reduced rate (currently 13.5 per cent). The Commission also recommends that the reduced rate of 13.5 per cent should be increased progressively over time.
  • The phased increase in the Carbon Tax to €100 per tonne of carbon dioxide emitted by 2030, is implemented. Further, the equalisation of the rate of Excise Duty on auto-diesel and petrol in the short to medium term.
  • The Commission states that long-term over-dependence on Corporation Tax receipts poses significant sustainability risks and should be avoided.

Personal taxes and social insurance

The Commission makes a number of recommendations in the area of social insurance and personal taxation including: 

  • Age should be removed as a factor for determining the charge to Income Tax and Universal Social Charge and that rates of Universal Social Charge should be determined by income level and not by reference to any other eligibility criteria. The Commission recognises that the Universal Social Charge surcharge on non-Pay As You Earn (PAYE) income above €100,000 does not comply with the principle of horizontal equity and recommends that the tax treatment for all income earners should be aligned.
  • The Special Assignee Relief Programme (SARP) should be subject to further restriction and that its continuation should be subject to regular review as part of the tax expenditure review process.
  • A lower nominal rate of employee Pay Related Social Insurance (PRSI) should apply to earnings below the employee PRSI contribution threshold, currently €352 per week.
  • Those over State pension age should pay PRSI on all income other than social welfare payments.
  • Removing the PRSI exemption on supplementary pension income (occupational and personal pensions, and public sector pensions).
  • The rate of charge for PRSI on unearned income should remain aligned to the higher rate of PRSI applicable to employees on their income from employment generally.
  • That the rate of PRSI on self-employment income (Class S) should be aligned over time with the employer’s rate of Class A PRSI attaching to employments (currently 11.05 per cent).
  • Only one rate of employer PRSI equal to the higher rate (currently 11.05 per cent) should apply on all weekly incomes, and that the lower rate of employer PRSI, which currently applies on incomes up to €410 per week, should be gradually phased out.

Share based remuneration

The Commission notes that:

  • The Key Employee Engagement Programme (KEEP) is not achieving its objectives in its current form and recommends that KEEP should be reformed to broaden its use.
  • The exemption from employer PRSI on share-based remuneration should be limited through the introduction of an appropriate annual cap or, alternatively, by restricting the exemption to micro, small and medium-sized enterprises.
  • The taxation of employee share options should be moved from self-assessment to the Pay As You Earn (PAYE) system.


The Commission recommends:

  • Marginal tax rates should apply on all lump sums over the tax-free threshold. Further, there should be a single tax-free lump sum lifetime limit to include both pension lump sums and any ex-gratia termination payments received.
  • Approved Retirement Fund (ARF) assets should be treated for inheritance tax purposes in the same way as other assets where inherited by anyone other than the individual’s spouse.
  • The periodic benchmarking of the Standard Fund Threshold to an appropriate and fair level of estimated retirement income.


The Commission recommends:

  • Transfer of assets on a death is treated as a disposal for Capital Gains Tax purposes. The Commission recommends that the Capital Gains Tax Principal Private Residence Relief should be restricted over time.
  • Substantially reducing the Capital Acquisitions Tax Group A threshold (gifts/inheritances from parent to child), bringing the Group A threshold closer to the Group B and Group C thresholds.
  • The level of Agricultural and Business Relief available for Capital Acquisitions Tax be reduced and that the qualifying conditions for both reliefs be amended to incentivise and ensure active participation in the farm or business by the recipient.
  • Deposit interest income should be taxed at an individual’s marginal rate of Income Tax and Universal Social Charge.
  • The introduction of a lifetime limit on all disposals of businesses and farms to children that qualify for Retirement Relief.

Business taxes

The Commission recommends:

  • The Employment Investment Incentive Scheme (EIIS) should be extended and enhanced to support early-stage, high-risk and research and development-intensive businesses in attracting stable financial investment.
  • Entrepreneur Relief be extended to angel investors, subject to appropriate limits and conditionality.
  • Enhanced R&D relief measures be introduced which are targeted at small and micro-sized enterprises.
  • Consideration be given to a limited acceleration of the refundable element of the R&D tax credit from three years to one in order to support early-stage and research and development-intensive businesses.

Real estate

The Commission recommends:

  • The introduction of a Site Value Tax (SVT) on all land currently not subject to Local Property Tax. This includes all commercial (developed and undeveloped), mixed-use, agricultural, undeveloped zoned residential lands, and State-owned lands as well as all land on which derelict and uninhabitable premises sit. SVT should replace the existing system of Commercial Rates over time.
  • Revenues deriving from Local Property Tax (LPT) should increase to form a substantially larger share of total revenues through the adjustment of the basic rates of taxation and potentially through an adjustment of valuation bands. Further, in the case of multiple property owners, a Local Property Tax surcharge should apply to properties not occupied as the principal private residence of the property owner or a registered tenant. A Local Property Tax surcharge should be introduced for vacant properties.
  • The Help to Buy scheme be allowed to expire as planned at the end of 2022.
  • The Government undertake a review of the Real Estate Investment Trust framework, the Irish Real Estate Fund regime and the use of section 110 vehicles in this area.

Financial services

  • The Commission recommends that a working group be established to review and propose changes to the taxation of funds, life assurance policies and other investment products with the goals of simplification and harmonisation where possible. The working group should be established with a net revenue-raising or neutral mandate.

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