Paul McAuliffe (Dublin North West, Fianna Fail)
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119. To ask the Minister for Finance for a report on the operation of the living city initiative; and if he will make a statement on the matter. [43129/23]

Michael McGrath (Cork South Central, Fianna Fail)
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The Living City Initiative, provided for in Finance Act 2013 and commenced on 5 May 2015, is a tax incentive aimed at the regeneration of the historic inner cities of Dublin, Cork, Galway, Kilkenny, Limerick and Waterford. The scheme provides income or corporation tax relief for qualifying expenditure incurred in refurbishing/converting qualifying buildings which are located within pre-determined 'Special Regeneration Areas' . Such developments may include both residential and commercial elements.

The Living City Initiative was reviewed as part of the Tax Strategy Group process in 2022. This review is contained in the 'Property-Related Tax Issues, Tax Strategy Group 22/04' paper available on the Department of Finance website.

The review noted that the scheme is a very specific tax incentive, established in compliance with the Department of Finance’s Tax expenditure Guidelines, with the aim of encouraging businesses and home-owners back to the centre of Irish cities in order to preserve historic buildings in 'Special Regeneration Areas'.

Finance Act 2022 provided that the Living City Initiative be extended for a further five year period to 31 December 2027. The owner-occupier element of the relief was also enhanced in Finance Act 2022 for new entrants from 1 January 2023. Owner-occupiers may claim the relief over seven years rather than ten. Where they can’t absorb the deduction in-year, claimants will have the ability to carry forward relief up to a maximum of ten years after the expenditure is incurred.

Information in relation to the overall cost of the scheme is available on the Revenue website for the years 2013 to 2020, the latest year for which fully analysed data are available.

The estimated costs have assumed tax foregone at the 40% rate in the case of income tax and 12.5% in the case of corporation tax.

Take-up has been modest with circa 190 total claimants over the period 2015-2020, but has increased since inception. In relation to 2020, there were 50 claimants of the Living City Initiative and a maximum cost to the Exchequer of €0.3 million.

As with any tax expenditure, the Living City Initiative is kept under review. Decisions regarding tax incentives and reliefs, whether in respect of the introduction of new measures or the amendment of existing measures, are normally made in the context of the Budget and Finance Bill process. Such decisions must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines.