Issue 61 of Tax Briefing comments on the tax implications of the Single Payment Scheme for farmers, Value Added Tax on New Share Issues and Capital Allowances in respect of Private Hospitals.

Tax Implications Of The Single Payment Scheme

European Council Regulation 1782/2003 established a scheme under the Common Agricultural Policy to significantly amend the availability of Subsidies/ Direct Aid to farmers within the EU. This gives rise to tax issues in relation to the treatment of receipts under the revised scheme, and Revenue's interpretation is set out here.

New Share Issues - Value Added Tax

A recent European Court of Justice decision in the Kretztechnik AG case has necessitated revisiting the issue of VAT deductibility in relation to new share issues. Broadly Revenue state that they will implement the judgment fully where the circumstances of the Kretztechnik case are replicated. They also comment that deductibility will extend to companies who decide to raise new capital by means of a rights issue, i.e., giving existing shareholders the right to apply for a given number of new shares in proportion to their existing holdings. Revenue claim that they do not regard the judgment as applying to costs associated with the issue of bonus shares, on the grounds that such issues “are essentially a means of distributing profits rather than the raising of new capital”.

Capital Allowances in respect of Private Hospitals

Capital allowances are available in respect of capital expenditure incurred on the construction or refurbishment of buildings used for the purposes of a trade which consists of the operation or management of a qualifying private hospital. These allowances are subject to significant limitations and constraints regarding eligibility, which the article discusses.

The full text of the Tax Briefing, which also includes articles on ROS, Health Expenses, and the Cooperative Compliance framework is available at http://www.revenue.ie/publications/txbrefng/tb61/frameset.htm