Robert Troy (Longford-Westmeath, Fianna Fail)
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201. To ask the Minister for Finance if he has given consideration to implementing changes to the local property tax penalty system for self-employed taxpayers; and his views on whether it may be more appropriate to apply such penalties to the self-assessed taxpayers tax records rather than applied in the current form. [58497/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I assume the Deputy is referring to the Local Property Tax (LPT) late filing surcharge that is provided for by section 38 of the Finance (Local Property Tax) Act 2012 (as amended).

Section 38 makes provision for a surcharge to be applied where a person files their annual self-assessed tax return (whether it is in respect of income tax, corporation tax or capital gains tax) on or before the appropriate due date for filing the returnand, at that point in time, their LPT pay and file obligations are not up-to-date. The amount of the LPT-related surcharge that is generated will be equal to 10% of the income tax, corporation tax or capital gains tax chargeable.

In effect, the surcharge is applied as if the income tax, corporation tax or capital gains tax return has been filed more than 2 months late. If the income tax, corporation tax or capital gains tax return is actually filed after the appropriate due date for filing the return, a late filing surcharge will be applied to that return and an LPT-related late filing surcharge will not also be applied. So there is no question of a double penalty being applied.

Where a person incurs an LPT-related surcharge and they subsequently bring their LPT payments and returns up-to-date, Revenue will cap the surcharge at 100% of the person’s LPT liability. In recognition of the high LPT compliance rate shown by self-employed taxpayers to date, this year in the Finance (Local Property Tax) (Amendment) Act 2021, I provided for a 50% reduction in this cap. This means that where the amount of an LPT-related surcharge exceeds 50% of a person’s LPT liability and the person subsequently brings their LPT obligations up to date, the surcharge payable will be capped at 50% of their LPT liability. This change will take effect from 1 January 2022.

In addition to this change, I am advised by Revenue that in acknowledgement of the requirement for all residential property owners in the State to file an LPT return for the 2022 to 2025 valuation period during the busy income tax return filing period, outstanding LPT returns or payments for 2022 did not trigger a surcharge for the 2020 Form 11 return. It should be noted, however, that any outstanding LPT returns or payments for 2021 or earlier years would have resulted in an LPT-related surcharge being triggered.

The Deputy has asked me for my views on whether it may be more appropriate to apply such penalties to self-assessed taxpayers’ tax records rather than applied in the current form.

The background to the introduction of the LPT-related surcharge was the need to provide a balance between the LPT compliance measures that applied to property owners who were employees and those that were self-assessed. In the case of employees, Revenue can make it mandatory for an employer to deduct the LPT liability at source from a person’s salary, in the same way that income tax and PRSI is deducted. A similar compliance measure is not generally possible where tax is not deductible at source: an exception is the deduction of LPT from certain EU payments made to farmers by the Department of Agriculture, Food and the Marine; non-compliance with LPT obligations will also affect a person’s tax clearance status. It is within this context that the surcharge was introduced.

As the rationale for providing for this balance in LPT compliance measures still exists, I do not propose making any further changes to the basis on which the LPT-related surcharge is applied.However, as noted above, as a result of changes I made to the LPT legislation this year, self-assessed taxpayers that incur an LPT-related surcharge and subsequently bring their LPT obligations up-to-date will benefit from the reduced cap in the surcharge to 50% of their LPT liability from 1 January 2022.

Thomas Pringle (Donegal, Independent)
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202. To ask the Minister for Finance if a refund of the UK VAT rate is due in a situation in which a person uses the An Post AddressPal service and is charged UK VAT then Irish VAT on the UK Vat rate and a customs clearance fee plus shipping and delivery with regard to the operation of VAT post-Brexit; and if he will make a statement on the matter. [58767/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that electronic Customs import declarations are now required for all parcels / packages coming from non-EU countries including those coming through the postal system regardless of the value of the goods being sent. Since 1 July 2021, all goods imported to the Union, regardless of their value, are liable to VAT. In addition, all goods valued at €150 or more may be liable to a Customs duty charge.

The Customs value on which Customs duty is calculated is the cost of the goods plus the transport costs (including postage), any insurance fees and any handling charges to deliver the goods to the EU. VAT is calculated on the Customs value, plus any Customs duty applicable. In addition, postal operators and courier businesses may charge an administration fee for the delivery of the goods.

Generally, a UK retailer does not charge UK VAT on goods which are being exported from their territory. However, some delivery services use a proxy address in the UK. In these instances, from the perspective of the UK retailer and the operation of the VAT system in the UK, this appears as a sale within the UK, and not an export, and as a result is liable to UK VAT. When calculating the Customs value upon importation to Ireland, the invoice value is used in the calculation. Where the invoice value includes UK VAT then this will be included in the calculation of the Customs Value.

The charging of VAT in the UK including any refund of UK VAT, is a matter for the retailer in the UK.