1. www.pwc.com
Presentation to
Dublin Chamber of
Commerce
Tim O’Rahilly
Private Client Services
30 November 2011

2. Overview
1. Current Tax Environment
2. Budget 2012
3. Trends in Tax-Efficient Structuring
2
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Current Tax
Environment

4. Current taxation environment
• Huge changes to tax system in last 3 years to cope with
crisis in public finances
• Climate for business remains generally positive
- Incentives for new businesses, new employees
- 12.5% corporate tax rate remains, despite challenges
• Situation more challenging for individuals....
- New taxes
- Restrictions on reliefs
PwC Slide 4

5. Recently introduced taxes:
• Income levy (superseded by USC)
• Carbon tax
• Non Principal Private Residence Charge (NPPR)
• Universal Social Charge
• Pension fund levy
• Domicile Levy
• Household charge (to come)
Combined with...
• Increases in rates / reduction in bands & credits
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6. Challenges for Individuals...
• Income level at which top tax rate is hit (single person)
Single Person
US (Boston) $373,650 40.3%
Germany €250,731 45%
Spain (Madrid) €175,000 44.9%
UK £150,000 50%
France €70,830 41%
Ireland €32,800 48%
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7. Personal Tax: Future Directions
Income Tax 2011 2015
Marginal Tax Rate 52% - 55% ?
Property & Other Reliefs Mainly Phased Out? ?
Share Options Gains 52% tax ?
Pensions 2011 2015
Pensions Earnings Cap €115,000 Relief only at standard rate?
Max Tax-Free Fund €2.3M €1.5M
Max Tax-Free Lump €200,000 ?
Sum
CGT & CAT
CGT and CAT Rates 25% 30%?
CAT Parent-Child €332,084 €250,000?
Threshold
Business / Dwelling Currently untouched Flagged for limitation /
House Reliefs abolition
June 2011
PwC Slide 7

8. Corporation Tax: External Pressures
12.5% remains in place despite external
pressures...
 CCTB
 Discussion of Irish tax rate in context of EU
negotiations
 US Developments
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Budget 2012
What can we expect?

10. Budget 2012
• Context
• 4 year plan
• Medium Term Fiscal Statement
• Recommendations of Commission on Taxation (2009)
• Expected Changes
November 2011
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11. November 2010 – 4 year plan
2011 2012 2013 2014 Total
€m €m €m €m €m
Income Tax 1,245 260 210 160 1,875
Pensions 260 225 225 155 865
Tax Expenditures 405 100 100 60 665
Site Value Tax - 180 175 175 530
Carbon Tax - 220 - 80 300
Capital Tax - 145 - - 145
Value Added Tax 310 260 570
Other measures 110 - - - 110
TOTAL 2,020 1,130 1,020 890 5,060
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12. Budget 2012
€m
Tax required 1,600
Carry Forward 600
New 1,000
VAT 670
Household Charge 160
CGT & CAT: Rates & Reliefs 100
Misc 70
Total 1,000
November 2011
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13. What’s in Store....Income Tax?
• Scope for further increases in income tax?
 General acceptance that “tipping point” been reached
• Annual Property Tax?
 Needs to raise €160M
 Cost per household €100 - €200?
• Other Measures
 Strengthening of residence rules / removal of remittance basis?
 Review of effectiveness of anti-tax avoidance measures?
November 2011
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14. What’s in store.....VAT?
• Proposals in the area of VAT, Excise Duties and Carbon Tax are being
examined
• Programme for Government commitment that any increase in VAT will
limit the standard rate of VAT to 23%”
• VAT rates 1991 – 2011
o 1 March 1991 21%
o 1 January 2001 20%
o 1 March 2002 21%
o 1 January 2009 21.5%
o 1 January 2010 21%
• Impact on a fragile retail economy?
• Will VAT receipts rise?
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15. What’s in Store.... Capital Taxes
Rate
 30% rate?
 Tiered rates?
Abolition of Reliefs?
 Retirement relief / Business property relief / Agricultural relief
 Thresholds
 Loss relief
 CGT / CAT offset
 Principal private residence relief
November 2011
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Trends in Tax Planning

17. Current Trends
High Earners Restriction limits use of traditional reliefs (patent income,
capital allowances etc) for High Net Worth individuals
Other avenues being explored:
-> personal service companies
-> employee incentivisation - growth shares
-> restructuring of debt
November 2011
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18. Personal Service Companies
• Planning for the future/structuring for a tax efficient exit
• Deferral/mitigation of Income Tax & Capital Gains Tax (CGT)
• Tax-free reinvestment
• Tax efficient cash extraction
• Retain competitive edge – measures to avoid accounts information being
publicly available
• Various options depending on requirements, current cash resources,
timescale etc
June 2011
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19. Tax Planning around Employee
Incentivisation – Growth Shares
Management
Ordinary
Shares
„B‟ Shares
Company
June 2011
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20. Debt restructuring
Previously...
• individuals held property in own name
• capital allowance schemes meant rent could be earned tax-free
• no restriction on interest deductibility
No longer viable introduction of High Earner’s Restrictions and
broad application of Income Levy / Universal Social Charge
 now more efficient for both property and debt to be held in a company
 restructuring of debt / agreement of bank required
June 2011
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Tim O’Rahilly
Marie Flynn
Private Client Services

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Thank You