MINISTER FOR FINANCE Paschal Donohoe has said that there will be no change to the Property Tax rates until the start of 2020.
Speaking on RTÉ’s Morning Ireland, the Finance Minister said that he “favours” retaining the Local Property Tax as it provides funding for local authorities.
He confirmed reports that a review was underway to decide whether the rate at which Property Tax is calculated needed to be changed.
“My objective in relation to the future of property tax in our country is to avoid the dramatic changes and sudden changes in it which can cause difficulty for people.”
He said that he wanted to see “moderate, affordable and certain changes” to the tax, so that people would be sure of what they were paying.
The change to the rate of Property Tax that people pay won’t come into effect until 2020 at the earliest, as per the legislative deadline.
What is the Local Property Tax?
The Local Property Tax (LPT), which came into effect in 2013, is a charge on all households in the State (owners are liable, but those who are renting are excluded).
The LPT is a self-assessed tax where the homeowner calculates the amount of tax they owe based on a rough estimation of the value of their property. You can see Revenue’s valuation guide for estimating your home’s worth here.
Depending on what property price bandwidth you fall under, you pay a set amount of tax.
Although the LPT is paid annually, the payment is based on the value of your property from March 2013, which in most cases would mean a lower evaluation and a lower tax rate than if it was evaluated at today’s market price.
Here’s an example of current rates:
A reevaluation of how the Property Tax is calculated is due to take place in November of next year, the Finance Minister said today.
Apple Tax bill
The Minister for Finance also outlined the timeline on when the Apple Tax bill of €13 billion would be paid, and said he wasn’t concerned about Ireland’s reliance on the revenue it generated from taxing multinationals.
He acknowledged that almost 40% of corporate tax revenue could be linked to ten companies, but said that it would only become an extreme risk for Ireland if it didn’t look at what could happen in the future.
In response to reports that Apple would repatriate over €30 billion back to the US, and does it signal that Apples relationship with Ireland would change, Donohoe said:
I do not believe that our tax receipts are going to go down. My expectation is that our corporation tax would grow at the same rate that our economy would grow.
He said that he wouldn’t comment on an individual company, in the same way that he wouldn’t comment on an individual’s tax rate.
He added that he welcomed repatriation moves by companies, but said he did not believe that it would affect “all Ireland has to offer”.
The level of the rate, which is still below what America can offer, combined with everything else our economy and country offers will ensure I believe our competitiveness vis-a-vis that change.
He added that the Apple Tax escrow account was taking a significant amount of time and money to set up, and that this was because it would be one of the largest funds of its kind when it was complete.
“At the moment the tendering process on who will run the account are in the final stages of completion… I believe we will appoint the firms to do that work in the first quarter of this year. My expectation is that money will begin to flow into that account in the second and third quarter of this year,” he said.
When asked whether Ireland was losing interest because of the Apple payment, Donohoe gave the short reply: ”We’re not losing any money on this.”
It’s been reported by the Irish Examiner that Ireland has spent €4.6 million in legal bills over the Apple Tax bill; Donohoe confirmed that he expected that amount would grow over the year.
He said that the high costs were due “to the scale of the overall operation” as the fund would be “in the top ten largest funds of its kind in the world”.
When fund is up and running we will be managing a fund of many billions of euro. There’s many risks involved with that – I need to ensure the State is protected against this. We continue to disagree with the view of the [European] Commission in relation to this issue.
“It’s not the role of the Irish tax authorities to be a global tax collector,” he said.