Brendan Griffin (Kerry, Fine Gael)
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130. To ask the Minister for Finance why cohabitating couples are assessed as individuals by the Revenue Commissioners; if the option to be jointly assessed will be introduced; and if he will make a statement on the matter. [15809/23]

Michael McGrath (Cork South Central, Fianna Fail)
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The position is that where a couple is cohabiting, rather than married or in a civil partnership, they are treated as separate and unconnected individuals for the purposes of income tax. Each partner is a separate entity for tax purposes, therefore, cohabiting couples cannot file joint assessment tax returns or share their tax credits and tax bands in the same manner as married couples.

The basis for the current tax treatment of couples derives from the Supreme Court decision in Murphy vs. Attorney General (1980). This decision was based on Article 41.3.1 of the Constitution where the State pledges to protect the institution of marriage. The decision held that it was contrary to the Constitution for a married couple, both of whom are working, to pay more tax than two single people living together and having the same income. The Constitutional protection of Article 41.3.1 does not extend to non-married couples.

It is important to point out that if the tax treatment of married couples was to be extended to cohabiting couples, consideration would need to be given to the practicalities that would arise for Revenue if they were to administer such a system.

It would be very difficult for Revenue to administer a regime for cohabitants, similar to that for married couples. Married couples and civil partners have a verifiable official confirmation of their status. It would be difficult, intrusive and time-consuming to confirm declarations by individuals that they were actually cohabiting and to establish when cohabitation started or ceased.

There would also be legal issues with regard to ‘connected persons’. To counter tax avoidance, ‘connected persons’ are frequently defined throughout the various Tax Acts. The definitions extend to relatives and children of spouses and civil partners. This would be very difficult to prove and enforce in respect of persons connected with a cohabiting couple where the couple has no legal recognition.

To the extent that there are differences in the tax treatment of the different categories of couples, such differences arise from the objective of dealing with different types of circumstances while at the same time respecting the constitutional requirements to protect the institution of marriage.

There may be an advantage in tax legislation for a married couple or civil partners as regards the extended rate band and the ability to transfer credits. However, the legal status for married couples has wider consequences from a tax perspective both for themselves and persons connected with them.

Furthermore, the difference in tax treatment for married couples is not confined to Income Tax, and is also a feature of other tax heads, such as Capital Acquisitions Tax. Therefore, any changes in the tax treatment could only be considered in the broader context of the tax system and future social and legal policy development, given that the legal status of married couples has wider consequences than from a tax perspective.

It should be noted that the recent report of the Commission on Taxation and Welfare (CoTW) put forward no recommendation regarding the tax treatment of cohabiting couples. However, it did recommended a phased move towards individualisation of the Standard Rate Cut off Point as a step towards addressing disparities in the income tax system, facilitating increased employment, and decreasing the gap in the employment rate between men and women.

Should this occur, couples that are married or in a civil partnership would no longer be treated differently to cohabitants as each person would be treated as a single taxpayer without the option of being jointly assessed.

It should be noted that both the PRSI and Universal Social Charge are already applied on an individualised basis.

Finally, as signalled in the Budget, my Department has begun work on a review of the personal tax system having regard to the medium term and taking account of the recent report of the CoTW, and considering a range of personal taxation issues.

Brendan Griffin (Kerry, Fine Gael)
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131. To ask the Minister for Finance what rate of stamp duty applies to a commercial building that is being purchased to convert it to a domestic house; and if he will make a statement on the matter. [15811/23]

Michael McGrath (Cork South Central, Fianna Fail)
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Stamp duty on the sale of residential properties such as apartments and houses is chargeable at the rate of 1% where the consideration does not exceed €1 million. Where the consideration exceeds €1 million, stamp duty is chargeable at 1% on the first €1 million and 2% on the balance. Stamp duty at the rate of 7.5% applies to the sale of non-residential land, which includes commercial buildings.

Notwithstanding the higher rate of stamp duty that applies on the sale of non-residential land, section 83D of the Stamp Duties Consolidation Act 1999 provides for a partial refund of stamp duty paid on the sale of non-residential land where it is subsequently developed for residential purposes. This includes situations where an individual purchases a non-residential building and converts it for residential use. The repayment scheme is intended to encourage the building of houses and apartments.

Where section 83D applies, a refund amounting to some or all of the difference between the old non-residential rate of 2% and current rate of 7.5% may be claimed by the purchaser of the land. The main conditions for availing of the refund are that the purchaser must have paid 7.5% stamp duty when acquiring the land, construction work must have commenced within 30 months of the land being purchased and the residential development must be completed within 30 months of the commencement of construction operations. In cases where existing non-residential buildings are converted for residential use, Revenue is prepared to treat internal adaptation work as construction operations.

Revenue has published detailed guidance on the operation of section 83D, which is available on its website at

www.revenue.ie/en/tax-professionals/tdm/stamp-duty/stamp-duty-manual/part-07-exemptions-and-reliefs-from-stamp-duty/section-83d-residential-development-refund-scheme.pdf.