Mattie McGrath (Tipperary South, Independent)
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345. To ask the Minister for Finance if the exemption from income tax, capital gains tax and capital acquisitions tax on payments made to the women impacted by the failures in the Cervical Check national screening programme, announced in Budget 2025, can be extended to those who received settlements after developing the sleep disorder narcolepsy from the Pandemrix swine flu vaccine; and if he will make a statement on the matter. [16710/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Section 30 of Finance Act 2024 amended the Taxes Consolidation Act (TCA) 1997 and the Capital Acquisitions Tax Consolidation Act (CATCA) 2003 to provide for certain tax exemptions in respect of CervicalCheck payments. These exemptions apply to payments made under the CervicalCheck non-disclosure ex-gratia Scheme, the CervicalCheck Tribunal Act 2019 and CervicalCheck claims which are concluded by way of settlement or court order.

The exemptions introduced by section 30 are not applicable to payments arising in the circumstances outlined by the Deputy. In the absence of full details regarding the exact nature of the payments concerned, it is not possible to provide a definitive answer on the correct tax treatment of same. However, some general guidance on the potential tax treatment of the payment has been provided by Revenue and is set out below.

Finally, and as the Deputy will appreciate, decisions regarding taxation measures are made in the context of the annual Budget and Finance Bill processes, at the appropriate time, and having regard to the sound management of the public finances and my Department’s Tax Expenditure Guidelines.

General Guidance:

Taxation of damages - revenue or capital

In general, the tax treatment of compensation and damages will follow the treatment which would have applied to the recipient had the sum not been paid under a court order or settlement. Therefore, a careful consideration of the background facts and circumstances will be required to determine the appropriate tax treatment. The general position is set out below.

Income Tax treatment

Where a settlement payment is not income in nature, it will be outside the scope of income tax. The facts and circumstances of the settlement payment will determine whether it is or is not within the scope of income tax.

Capital Gains Tax treatment

Capital Gains Tax (CGT) applies where the character of the payment is capital in nature.

If it is the case that the settlement amount is considered a capital sum, it should be noted that where a capital sum is obtained by way of compensation or damages for any wrong or injury suffered by an individual, e.g. physical injury, libel or slander (whether in respect of personal or professional reputation), etc., it is not chargeable to CGT, by virtue of section 613(1)(c) of the Taxes Consolidation Act (TCA) 1997.

Tax exemption for investment income and gains

Section 189 TCA 1997 exempts permanently incapacitated individuals from Income Tax, PRSI, USC and CGT on the income arising and gains accruing from the investment, in whole or in part, of compensation payments which arise from an order under section 38 of the Personal Injuries Assessment Board Act 2003 or the institution by the individual of court proceedings in respect of personal injury claims. The injury must be such that the individual is permanently and totally incapacitated from maintaining himself or herself.

The exemption only applies to an individual whose aggregate of the income and gains derived from such compensation payments exceeds 50% of the aggregate total income and total chargeable gains (including allowable losses) of the individual for the year of assessment.

Capital Acquisitions Tax treatment

The CATCA 2003 provides for a number of reliefs and exemptions from Capital Acquisitions Tax (CAT). For example, section 82 CATCA 2003 provides that the receipt of bona fide compensation or damages payments are not gifts or inheritances and are therefore exempt from CAT. The types of compensation and damages that are deemed not to be gifts or inheritances are:

• any bona fide compensation or damages received for any wrong or injury to a person, his/her property, reputation or means of livelihood;
• any bona fide compensation or damages received for any wrong or injury resulting the death of another person.

Tax relief for health expenses

Section 469 TCA 1997 provides for tax relief where an individual proves that he or she has incurred costs in respect of qualifying health expenses.

Comprehensive guidance in relation to tax relief for health expenses is available on the Revenue website at www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-12.pdf.