Written Answers Nos. 121-140
121. Deputy Alan Farrell asked the Minister for Finance for an update on credit union SME lending in the State; the plans he has to assist credit unions in reaching an increased number of SMEs with their lending offering; and if he will make a statement on the matter. [30171/23]
View answerI thank the Deputy for his question.
This Government is encouraged by the growth in Credit Union lending to date. In total, SME lending has grown 12.4 % year on year to the end of March 2023. Credit unions with over €50 million in assets and reserves greater than 12.5% can notify the Central Bank that they intend to use a 10% combined SME and mortgage lending limit.
A number of enabling provisions in the Credit Union (Amendment) Bill, such as allowing for member referral and the establishment of corporate credit unions, will help future-proof and strengthen the sector for the years ahead. The Bill is currently progressing through the Oireachtas.
The introduction of corporate credit unions and member referral, should support greater collaboration between credit unions, facilitating a sharing of resources and greater access to funding for SME's. While member referral is not mandatory, it is a new option for making additional services available to members who can't access a service in their credit union.
122. Deputy Ruairí Ó Murchú asked the Minister for Finance if he will provide information from Revenue as to the numbers of employees with southern addresses and who are working in northern-based companies; the numbers of employees who work in southern companies and who have northern addresses; and if he will make a statement on the matter. [30109/23]
View answerI assume that this query relates firstly to the number of employees who reside in the State and who work for an employer which is located in Northern Ireland and secondly, to the number of employees who reside in Northern Ireland and who work for an employer which is located in the State.
With respect to the first category, employees who are resident in the State and who have employment income in Northern Ireland are chargeable to tax in the State on this income and are required to report it on a Form 11 self-assessment income tax return. Depending on the relevant circumstances, such income may qualify for Transborder Workers’ Relief under section 825A of the Taxes Consolidation Act 1997.
I have been advised by the Revenue Commissioners that it is difficult to provide statistics on the number of individuals with employments in Northern Ireland, due to the fact that such employees may not report the location of their foreign employment when completing a Form 11 or alternatively, the income may be reported as arising in the United Kingdom and not in Northern Ireland. I have, however, been advised by the Revenue Commissioners that, for the 2020 tax year, there were 1,655 taxpayers with a residential address in the border counties of Louth, Cavan, Monaghan, Donegal, Sligo and Leitrim who disclosed foreign employment income in their Form 11 income tax returns and/or who claimed Transborder Workers’ Relief for the year. As these employees live in border counties, it could be assumed that a number of these employments were held in Northern Ireland for the year. The 2020 tax year is the latest year for which this statistic is available.
With respect to the second category, I have been advised by the Revenue Commissioners that for the 2021 tax year, there were 10,623 taxpayers with a Northern Ireland address who were registered as an employee for PAYE purposes in the State. The 2021 tax year is the latest year for which this statistic is available.
Finally, as the Deputy is aware, the ESRI has been commissioned to undertake a research project in this area to report on the nature and extent of cross-border working on the island. This work is currently in progress.
123. Deputy Emer Higgins asked the Minister for Finance if he will provide a report on the ministerial trade visit to Money 20/20 Europe 2023 in Amsterdam; the way in which he supported IDA Ireland and Enterprise Ireland to achieve their objectives on this visit; and if he will make a statement on the matter. [29962/23]
View answerThe Minister of State for Financial Services, Credit Unions and Insurance attended Money 2020 in Amsterdam on Wednesday 7 June as part of a trade mission. The itinerary was developed by Enterprise Ireland and IDA Ireland. Money 2020 is the largest global fintech event attended by over 7,000 from the fintech community, including multinational companies, banking, investors, and start-up companies from across the world.
Minister Carroll McNeill attended several engagements throughout the day. Firstly there were engagements with exhibiting Enterprise Ireland client companies. They included Transfermate, Daon, Assure Hedge, Currencyfair, Know Your Customer and Fenergo.
A meeting was held with the Netherlands Foreign Investment Agency (NFIA) and its sister agencies, Innovation Quarter, Amsterdam in Business and Holland Fintech. Areas of discussion included the topics of common interest between the Netherlands and Ireland and the opportunities for Irish financial services companies to grow in the Netherlands.
A roundtable luncheon was held entitled ‘The future of regulation within the financial services industry and evolution of technology’. A variety of organisations attended including Enterprise Ireland, IDA Ireland, Leaders in Finance, De Nederlandsche Bank and companies including Corlytics, Fenergo, ID-Pal, Know your Customer, DigiTrust, CM.com, Lelieveldt and ING Bank. The topics discussed were rules based versus risk based approach to regulation and corporate transparency versus privacy.
Meetings were held between the Minister of State and representatives from IDA Ireland client companies and target companies. These meeting were important engagements in helping to highlight the significance of the financial services sector in Ireland and the importance of foreign direct investment to the economy.
The Minister of State also attended the Enterprise Ireland Client-Buyer Networking Canal Cruise which was attended by Enterprise Ireland companies, Dutch and EU buyers, and partners.
This trade mission was an important part of the implementation of the Update to Ireland for Finance strategy, in particular Theme 4: Regionalisation and Promotion. Part of this theme aims to maximise the potential that events like Money 2020 represent for international promotion of the international financial services sector to investors, individuals and companies.
The objectives for Enterprise Ireland included to promote Irish fintech companies on a global scale and to raise awareness of the breadth of Ireland’s financial services offering. The objectives for IDA Ireland were to promote Ireland as a world class investment location for international financial services companies and to continue to demonstrate the capacity of Ireland for investment from this sector in a post-Brexit and post-Covid environment.
The feedback received from Enterprise Ireland and IDA Ireland has been very positive in terms of the Minister of State’s participation and promotion of Irish fintech companies and the promotion of Ireland as a location for international financial services companies.
124. Deputy Pearse Doherty asked the Minister for Finance for an update on his Department’s review of the IREF and REIT tax regimes; his views on whether IREFs and REITs are paying sufficient tax; and if he will make a statement on the matter. [30177/23]
View answerInstitutional investors have an important role to play in the Irish property market. While it is important to facilitate collective investment in the Irish property market through appropriate regimes, it is equally important to ensure that, where such investment brings a profit, a fair share of tax is paid. Taxation occurs primarily at the level of the investor rather than within the fund as is common for investment funds generally. Additionally, in the case of both Irish Real Estate Funds (IREFs) and Real Estate Investment Trusts (REITs), withholding taxes apply on distributions to investors to ensure collection of tax revenues. In 2019, my predecessor Minister Donohoe made a number of significant amendments to both regimes to ensure appropriate levels of tax are paid by investors in Irish property.
In its 2022 Report, the Commission on Taxation and Welfare recommended that a review of the REIT and IREF tax regimes with regard to institutional investment in the Irish property market should be undertaken. This recommendation has been incorporated into the Terms of Reference for the “Funds Sector 2030” Review which I published on 6 April this year.
In line with the Terms of Reference, the Funds Review will consider:
“an examination of the regimes for Real Estate Investment Trusts (REITs) the Irish Real Estate Funds (IREFs) and their role in the property sector, including how they support housing policy objectives”
The work of the Review has now commenced and a public consultation paper will be launched later this month. I would encourage all stakeholders with an interest in matters relating to the IREF and REIT regimes, including Deputies, to fully engage with the Review. The Review Team will present a draft Report to me by summer 2024.
126. Deputy Thomas Gould asked the Minister for Finance the situations under which it would be considered appropriate to withdraw funds from the Ireland Strategic Investment Fund. [30087/23]
View answerThe NTMA controls and manages the Ireland Strategic Investment Fund (ISIF) in accordance with the National Treasury Management Agency (Amendment) Act 2014 (the “Act”) and has a statutory mandate to invest on a commercial basis in a manner designed to support economic activity and employment in the State.
Section 47 of that Act provides the basis for payments from ISIF to the Exchequer. It provides that the Agency shall make payments to the Exchequer for such amounts and at such dates as the Minister may direct following consultation with the Agency.
The payments or aggregate of such payments made by the Agency, with the exception of the specific disposal of a directed investment, shall not exceed 4 per cent of the value of the assets of the Fund at the end of the immediately preceding year.
In any event the Act provides that the Minister may not direct the Agency to make any payment to the Exchequer before 2025, with the exception of payments from directed investments.
As regards directed investments, where the Minister directs the Agency to dispose of a directed investment in whole or in part, the Minister may direct the Agency to make a payment or payments to the Exchequer, to invest, on terms and conditions specified in the direction, part or all of the proceeds in securities issued under section 54(1) of the Finance Act 1970 or securities guaranteed by the Minister or hold the payments pending a payment to the Exchequer or their investment.
As the Act provides for a 2025 date as the earliest when the Minister can dispose of the assets of the Fund (other than for directed investments) the situations where a withdrawal from the fund is appropriate does not arise yet.
127. Deputy Richard Bruton asked the Minister for Finance for an update on credit union mortgage lending in the State; the plans he has to assist credit unions in reaching an increased number of first-time home buyers with their lending for retrofitting offering; and if he will make a statement on the matter. [30114/23]
View answerI thank the Deputy for his question.
As of March 2023 the total credit union mortgage book is €364 million. The average credit union mortgage is approximately €100,000. Mortgage lending in the sector is up 26.6% year on year to March 2023 and this growth demonstrates that there is demand for credit union mortgages.
Credit union mortgage lending is fragmented with 20 mainly industrial credit unions accounting for approximately 75% of mortgage lending. Credit unions with over €50 million in assets and reserves greater than 12.5% can notify the Central Bank that they intend to use a higher 10% combined mortgage and SME lending limit.
I believe that credit unions can help the entire mortgage market and fulfil a significant role nationally through increased collaboration and the creation of a compelling mortgage product offering.
Such a product could benefit from standardisation of rates and nationwide advertising.
I am currently aware that a number of stakeholders are currently working on a mortgage Credit Union Service Organisation (CUSO). The future strength of the credit union movement is dependent on its ability to work together to develop new and compelling products and services for its members.
In relation to retrofitting, the Government has significantly increased the funding available to support retrofit. My officials have been engaging with stakeholders to support increased credit union participation in retrofit loan schemes.
Finally, enabling provisions contained in the Credit Union (Amendment) Bill, such as allowing for member referral and the establishment of corporate credit unions, will further help credit unions provide a product for first-time home buyers.
129. Deputy John Lahart asked the Minister for Finance for a report on the trend in corporation tax revenue stream since just before the pandemic. [30037/23]
View answer131. Deputy Robert Troy asked the Minister for Finance his assessment of the vulnerabilities the public finances face from a revenue perspective. [30040/23]
View answer146. Deputy John Lahart asked the Minister for Finance his estimate of the level of windfall receipts since the start of 2022; and if he will make a statement on the matter. [30038/23]
View answerI propose to take Questions Nos. 129, 131 and 146 together.
Last year, corporation tax receipts amounted to €22.6 billion, more than double their position at end-2019 immediately prior to the onset of the pandemic and surpassing VAT for the first time to become, at least temporarily, the Exchequer’s second-largest source of taxation revenue. This continued a trend of rapid growth in corporation tax over the last decade, with receipts now standing at more than five times their level in 2013.
As I have stated on many occasions, this is a highly concentrated revenue stream, with almost 60 per cent of receipts paid by just ten companies. This leaves corporation tax receipts vulnerable to the business decisions of a small handful of highly profitable multinational firms. The exceptional increase in receipts over the last several years is, as a result, subject to extreme potential volatility and is not an appropriate basis on which to build permanent expenditure commitments.
Much of the increase in this revenue stream in recent years is not linked to developments in the domestic economy: this ‘excess’ or ‘windfall’ revenue is likely to be transient. Since Budget 2023, my Department has published a new metric, the underlying General Government Balance, which sets out the fiscal position if estimates of ‘windfall’ corporation tax are excluded.
In 2022, it is estimated that windfall corporation tax amounted to almost €11 billion. For this year, windfall corporation tax is estimated at almost €12 billion. This is around half of the entire corporation tax yield. Driven by windfall corporation tax, a headline General Government surplus of €10 billion is projected for 2023. However, if these receipts are excluded, a significant underlying deficit of €1.8 billion is in prospect for this year.
This is a clear vulnerability in our public finances, and this Government is taking steps to address this risk. €6 billion in windfall corporation tax receipts have been transferred to the National Reserve Fund to help rebuild our fiscal buffers. My Department has also published a scoping paper – Future-proofing the Public Finances – which sets out a number of proposals for a longer-term investment fund. This will enable Government to use some of this windfall to prepare for the structural fiscal challenges on the horizon, including the costs associated with an ageing population. Discussions on the design of such a fund are underway and I intend to bring a proposal to Cabinet in the coming weeks.
Ultimately, however, the best way to guard against fiscal vulnerabilities is by continuing to pursue a sensible and appropriate budgetary policy that is balanced between continued investment in our public services and infrastructure and the long-term sustainability of our public finances. Government will set out the fiscal parameters for Budget 2024 in the forthcoming Summer Economic Statement, which will be published over the coming weeks.
130. Deputy Jackie Cahill asked the Minister for Finance his Department’s current projection for inflation in 2023; and if he will make a statement on the matter. [30042/23]
View answerThe Department of Finance published updated macroeconomic forecasts as part of SPU 2023 on 18th April which set out projections for inflation.
Having peaked at 9.6 per cent last summer, HICP inflation stood at 5.4 per cent in May – a decline of over 4 percentage points. This decline has been primarily driven by the significant easing in energy markets. Having peaked at around £4 per therm last August wholesale energy prices have begun to return to more normal levels and now stand at around £0.75 per therm. Assuming that there is no further disruption to energy supplies, headline inflation is expected to continue to ease over the course of this year. At the time of the SPU 2023, my Department forecast inflation to average 4.9 per cent this year.
‘Core’ HICP inflation (excluding energy and unprocessed food) has proven to be more persistent than headline inflation and is expected to decelerate more slowly as a result. The persistence of core inflation may, in part, reflect ongoing capacity constraints in the economy, particularly within the labour and housing markets, as well as lagged pass-through effects of the impact of the energy price spikes working their way through other sectors.
Due to continued uncertainty, there remain significant risks to the outlook for inflation. The balance of risks is titled to the upside, particularly with respect to core inflation, which is likely prove ‘stickier’ and more durable than in the SPU 2023 baseline assessment. With the economy operating at full employment, there is a possibility for a wage-price spiral to emerge due to capacity constraints in the labour market, leading to core inflation becoming more persistent.
Furthermore, the outlook for energy prices remains highly uncertain due to continued volatility in wholesale energy markets, and wholesale prices could move higher-than-assumed. Any further challenges to supply could see energy prices spike once again.
Reflecting the risk of higher energy prices or more persistent core inflation, a plausible upside inflation scenario was published in the SPU 2023, where price pressures remain higher for longer. Under this scenario headline inflation would average 5.8 this year, compared to 4.9 per cent under the baseline scenario.
132. Deputy Brendan Smith asked the Minister for Finance if he will ensure tax relief for parents in respect of accommodation costs for students attending further or higher education colleges is applicable in respect of all students, whether studying in this jurisdiction or elsewhere; and if he will make a statement on the matter. [30144/23]
View answer155. Deputy Brendan Smith asked the Minister for Finance if he will amend the conditions applicable to eligibility for the rental tax credit for parents of students in relation to accommodation costs while attending further or higher education college to include students studying outside of this jurisdiction; and if he will make a statement on the matter. [30145/23]
View answerI propose to take Questions Nos. 132 and 155 together.
The Finance Act 2022 introduced the Rent Tax Credit, which is provided for in s. 473B of the Taxes Consolidation Act 1997. This is an income tax credit of up to €500 per year (or up to €1,000 for jointly assessed couples) which may be claimed in respect of qualifying rent paid in 2022 and subsequent years to end-2025.
In relation to the question of parents paying rent for their children who are studying and in a tenancy outside the State, the purpose behind the rent tax credit is to assist as part of the overall response to the accommodation shortage in the private rented residential sector within the State. More specifically, the aim is to provide some financial assistance to renters in that particular sector who may face high rental costs and who do not receive any other housing supports from the State. As such, the eligibility criteria for the credit specify that the rental property concerned must be a residential property located in the State.
I have no plans, at present, to propose changes to this element of the credit nor to provide specific tax relief in respect of accommodation costs for students pursuing further or higher education outside of the State. However, the operation of the Rent Tax Credit will continue to be closely monitored by my Department in conjunction with Revenue and the question of whether any further adjustments are needed will be considered in the context of the Budget and Finance Bill processes later this year.
Full details of the conditions that apply are set out in the relevant Tax and Duty Manual (Part 15-01-11A) available on the Revenue website at the following link:
www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-credit/index.aspx.
134. Deputy Richard Boyd Barrett asked the Minister for Finance if he will introduce a cap on mortgage interest rates to prevent families being impoverished and forced into arrears by rising interest rates; and if he will make a statement on the matter. [30198/23]
View answerThe formulation and implementation of monetary policy is an independent matter for the European Central Bank (ECB) and, as the Deputy is aware, the ECB has increased official interest rates over recent months as it attempts to combat inflation.
The level of official interest rates influences the overall level of interest rates throughout the economy. However, the setting of retail lending rates by individual lenders is a commercial matter for that lender and I have no function or role in such decision making matters by financial institutions.
Despite this, there are a number of measures are in place to support households facing rising interest rates. In particular, the Central Bank has introduced a number of increased protections for variable rate mortgage holders which can which help mortgage holders identify lower cost mortgage options.
Firstly, it made changes to the Consumer Protection Code to require mortgage creditors to explain to borrowers how their non-tracker variable interest rates have been set and to clearly identify the factors which may result in changes to variable interest rates.
Secondly, it also increased the level of information lenders are required to provide their customers including where there is a possibility for the borrower to move to a lower ‘loan to value’ interest rate band and signpost the borrower to the Competition and Consumer Protection Commission's mortgage switching tool.
More recently, the Central Bank wrote to all regulated firms last November to set out its expectations on how regulated firms should support their customers. With respect to mortgages, the Central Bank is especially focused on ensuring that firms have the resources and arrangements in place to assess applications from existing and new or switching borrowers in a manner that is timely and based on prudent lending standards applied consistently across all applicants.
Further, as the Deputy is aware, Budget 2023 contained many measures to assist families with the increased cost of living. In addition, on 21 Feb 2023, an extra €1.2 billion was provided to help households and businesses to meet cost of living increases.
I am nevertheless very aware that some borrowers will experience repayment difficulty due to the current interest rate environment and the cost of living more generally. This is why the measures and protections contained in the Code of Conduct on Mortgage Arrears (CCMA) are important to highlight.
The CCMA sets out the process that entities must follow when a borrower is in or facing difficulties with their mortgage payments and it states that all arrears cases must be handled sympathetically and positively by the regulated entity, with the objective at all times of assisting the borrower to meet his or her mortgage obligations.
Also the other measures which are in place, such as the advice and supports available from MABS and others under the 'Abhaile' scheme and the personal insolvency frameworks which are delivering long term arrangements to insolvent borrowers are important and should be utilised by borrowers in mortgage difficulty.
On the issue of capping interest rates, the Governor of the Central Bank has set out that the Bank has serious reservations at the prospect of policy interventions that seek to regulate the setting of interest rates by financial institutions.
This is grounded on the appropriate responsibility for the management of risk as a core function of the financial system; the need to ensure a competitive market for consumers; the risk of interfering with the transmission of the ECB's monetary policy transmission mechanism; and the importance of fair price formation in an open market.
I believe that the consumer protection framework and supports available are the most appropriate means to support borrowers who are experiencing repayment difficulties due to rising interest rates.
Whereas imposing caps on mortgage interest rates has the potential for unintended consequences for current and future mortgage holders.
135. Deputy Pearse Doherty asked the Minister for Finance to provide an update on his engagement with Revenue with respect to the current tax rules regarding the importation of vehicles from Britain and the North and their impact on North-South trade and the domestic motor vehicle market. [30179/23]
View answerSince the UK left the EU Single Market and Customs Union, from 1 January 2021, the movement of goods from Great Britain into the EU is an importation from a third country and, in accordance with the terms of the Withdrawal Agreement, such goods must be declared to Customs, and are liable to customs duty (if applicable) and VAT at import. However, the EU-UK Trade and Cooperation Agreement (TCA) eliminated tariff duties for trade between the EU and Great Britain where the relevant rules of origin are met. This means that if vehicles are imported which are of UK origin, then a 0% duty applies, whereas duty of 10% applies to vehicles which are not of UK origin. In certain instances, Returned Goods Relief may apply where the vehicles were originally exported from the EU, have not been altered and are re-imported within three years of export from the EU. In very specific circumstances, relief from Value-Added Tax (VAT) may also apply where the goods are re-imported into the EU by the same economic entity that originally exported the goods out of the EU.
Under the terms of the Protocol on Ireland/Northern Ireland, the movement of goods between Northern Ireland and the EU effectively is regarded as a movement within the EU. However, a particular issue has existed in relation to used cars – known as “margin scheme cars” – following a significant change that the UK unilaterally made on 14 January 2021 which impacted considerably on the application of the Withdrawal Agreement and the Protocol. The UK introduced significant changes to the VAT regime for used cars imported from Great Britain into Northern Ireland and extended the scope of the Margin Scheme to them. Under the Margin Scheme, a car dealer simply accounts for VAT on his or her gross profit margin on the sale of a used car, i.e., on the difference in the trade-in and resale prices. While the UK had signalled that it would approach the European Commission to seek changes to the rules that apply under the Withdrawal Agreement/Protocol, they instead moved unilaterally on 14 January 2021 and published new rules that applied retrospectively from 31 December 2020. The UK then asked the Commission for a permanent derogation from the VAT Directive to allow them to operate the scheme, but the Commission refused on the basis that the Margin Scheme cannot be applied on sales in Northern Ireland of second-hand cars imported from any third country including Great Britain and would result in opportunities for significant abuse.
The UK’s extension of the scheme created a significant tax avoidance possibility here whereby the trade in used cars from Great Britain to this State could avoid customs duty and VAT if they were moved through Northern Ireland. To counteract the tax avoidance opportunities this presented, Revenue revised its published guidance in February 2021 indicating that used cars imported from Great Britain into Northern Ireland after 31 December 2020 could only be subsequently imported into the State and re-registered here after they were declared to Customs and customs duty (if applicable) and VAT at import were paid. This ensured that the cars were liable for VAT and Duty on the same basis as used cars brought into the State directly from Great Britain. The additional paperwork requirements were kept to a minimum with a simplified Supplementary Import Declaration (SID) being required which allowed the VAT on import to be paid.
This approach addressed the risk for Ireland of substantial tax avoidance that had been posed since the UK’s January 2021 announcement, should parties who were importing used vehicles from Britain into the State decide to route the transaction via Northern Ireland. The aim was to bring equal tax treatment to used car imports from Great Britain into the State, whether they were imported through a direct or an indirect route. It was made clear that the approach was temporary in nature, pending a resolution to the issue between the UK and the European Commission. This response was agreed and put in place following extensive consultation between my Department, the Revenue Commissioners and other Government Departments.
Since 1 May 2023, the UK Government has introduced a new scheme – known as the Second-Hand Motor Vehicle Payment Scheme (SHMVPS) – which replaces the Margin Scheme for second-hand vehicles that dealers buy in Great Britain, move to Northern Ireland, and then resell. The UK’s SHMVPS Statutory Instrument was laid on 25 January and the related guidance was published at the same time. When the Windsor Framework was announced on 27 February 2023, the UK Government’s guidance material on the Framework referred to the SHMVPS. The new scheme allows car dealers who are VAT registered in Northern Ireland and other Member States to reclaim the VAT element of the vehicle cost if the vehicle is purchased in Great Britain and removed or exported from there by the purchaser or by the Great Britain dealer. This means that Irish car dealers will now be in the same position as Northern Irish car dealers when purchasing a qualifying vehicle from Great Britain. The UK guidance information explains that claims will be accepted from 1 August 2023, and that from October 2023 the margin scheme will no longer apply in respect of cars moved between Great Britain and Northern Ireland.
As explained, Revenue’s approach was temporary in nature in response to the UK operating outside the remit of the Withdrawal Agreement/Protocol by allowing the margin scheme to apply to used cars imported from Great Britain into Northern Ireland. The approach ensured that the same treatment was applied to used cars imported from Great Britain regardless of whether the cars entered the State directly or were routed through Northern Ireland. In light of the UK’s recent introduction of a new arrangement and present wind-down of its previous arrangement, Revenue is currently considering its impact and I expect updated guidance to be published shortly.
136. Deputy Richard Bruton asked the Minister for Finance the extent of the domestic financial services and the international financial services sectors in Ireland, in terms of the number of people employed and the value to the Exchequer by way of corporation taxation; his views on the future growth of both these sectors in Ireland; and if he will make a statement on the matter. [30113/23]
View answerOverall, the financial sector accounted for some €2.7 billion of corporation tax receipts in 2022. This was around 12 per cent of the corporation tax yield. According to the CSO, corporate taxes paid by the financial sector were split broadly equally between domestic (48 per cent) and foreign owned (52 per cent) financial corporates in 2021. A breakdown of the financial sectors corporation tax receipts for 2022 is not yet available from the CSO.
The domestic economy is poised to grow at a robust pace this year, with the pace of growth expected to pick-up over the course of the summer as inflation continues to ease. The financial services sector will have an important role to play in ensuring the resilience of this growth, by enabling broad based and sustainable investment across the domestic economy. This role takes on particular significance given the rapid tightening of monetary policy over recent months, and the greater financing burden faced by both businesses and households.
In relation to the international financial services sector specifically, the current estimate from the enterprise agencies IDA Ireland and Enterprise Ireland is that direct employment in this sector stood at around 56,000 at the end of 2022. This is an increase of over 3,000 in the numbers employed compared to the end of 2021. In addition to these high-value jobs, there are many more thousands of people who are employed indirectly in professional services for which the international financial services sector generates a demand.
Ireland for Finance is the whole-of-Government strategy for the further development of Ireland’s international financial services sector. The Update to Ireland for Finance was launched in October 2022 and its vision is for Ireland to continue to be a top-tier location of choice for specialist international financial services and to enhance and protect our future competitiveness. The employment target of the updated strategy is to achieve a further net increase of 5,000 people in direct employment in the international financial services sector (above the target set out in the previous iteration of the Ireland for Finance strategy). This target applies for the period of the updated strategy, from January 2023 to December 2026.
The nature, scale and complexity of Ireland’s international financial services sector is changing and will continue to change in a number of ways as a result of the financial services investments won in recent years, including both firms relocating from the UK following Brexit and firms looking to set up operations in the EU for the first time. The industry in Ireland has become broader and more diverse with more firms carrying out a greater range of regulated activities than at any time.
138. Deputy Colm Brophy asked the Minister for Finance if he is satisfied with progress to date on the Women in Finance Charter, which was developed in partnership with various stakeholders (details supplied), whereby signatories of the charter commit their organisations to improving the number of women in management and board-level positions to achieve better gender balance and a more inclusive working environment. [30024/23]
View answerThe Women in Finance Charter was developed over a number of years by the industry representative associations, Banking and Payments Federation Ireland, Financial Services Ireland, Insurance Ireland and Irish Funds, with support from government, as part of the Ireland for Finance strategy. It was launched in April 2022. Theme 3 of the Update to Ireland for Finance strategy is Diversity and talent and the Women in Finance Charter is an important part of this theme. Improving gender balance in senior roles in international financial services, and the broader financial services sector, has the capacity to bring benefits to organisations, including better decision making.
Firms that sign the Charter publicly commit to targets to increase the representation of women at specific levels within their firm. Progress against these targets is measured annually and publicly communicated.
The industry representative associations have commissioned the ESRI to undertake a comprehensive analysis of the data that signatory firms provide outlining their targets for increasing gender balance at all management levels
For the launch of the Charter last April there were 60 signatories in total, of which 56 signatories completed the baseline survey with the ESRI and 54 signatories have completed the full data reporting process. The firms include organisations from banking, insurance, funds and professional services, for example, the legal profession.
The ESRI's first Annual Report on the Charter was launched yesterday and shows overall progress has been good on the achievement of the targets that were set by the signatory firms. However, there is a lot of work to do in achieving greater gender balance in the financial services sector and in encouraging more firms to sign the Charter and to complete the data reporting process.
Ensuring that the Charter is supported on an ongoing basis is extremely important and in that regard, a Steering Group for the Charter has been established. My Department is represented on the Group and officials are playing an active role in supporting the core objectives of the Charter. Furthermore, as this is part of the IFS Strategy Minister of State Carroll MacNeill, in her role as Minister with specific responsibility for the Strategy is very engaged in this policy space. Other members include the four industry bodies, the two Co-Chairs of the Balance for Better Business Review Group, 30% Club, 100 Women in Finance, 100 Women in Finance Early Career, the Financial Services Union and the Department of Enterprise Trade and Employment. The Department of Enterprise Trade and Employment provides the Secretariat. The Group has met three times to date.
Comprehensive information relating to the Women in Finance Charter, which includes guidance notes, a baseline data template and an annual reporting template is available on the Balance for Better Business website www.betterbalance.ie/partners/ The industry representative associations are the points of contact for firms that would like to find out more details about the Women in Finance Charter.
In December 2022, all employers with more than 250 employees published their first gender pay gap reports, a new legal requirement in Ireland. It is important to note that the data showed the financial services sector has challenges in this area.
139. Deputy Emer Higgins asked the Minister for Finance his views on Ireland’s bid to host the new EU AML Authority; if Ireland having a strong AML, legal and administrative framework will assist in this bid; the next steps that will be taken to advance Ireland’s bid; and if he will make a statement on the matter. [29963/23]
View answerThe new EU Anti Money Laundering Authority - AMLA - will be established on foot of an EU Regulation that was published in July 2021 and expected to be adopted later this year. AMLA will be a significant EU institution, tasked with supervision - either directly, or indirectly - of obliged entities in the financial services sector in the first instance and eventually, those in the non-financial sector. The supervision will be in respect of the entities' compliance with EU anti money laundering and countering the financing of terrorism ("AML/CFT") rules and standards. In effect, it will oversee implementation of the forthcoming EU "single rulebook" on AML/CFT matters and is expected to provide harmonised guidance and regulatory technical standards to national supervisors, such as the Central Bank of Ireland. For it to have full authority in these matters, it will take over the AML/CFT competences from the European Banking Authority.
On 24 March, the Government decided to signal Ireland's interest in hosting the new EU Anti Money Laundering Authority, "AMLA". Nine other countries are also bidding - France, Germany, Belgium, Luxembourg, Latvia, Lithuania, Spain, Italy and Austria - and others may yet do so.
AMLA was due to be established in January this year, but the decision about the host location has been delayed, as a new framework has to be developed in relation to the selection criteria and selection processes to be effected when the EU is establishing new EU institutions, beginning with AMLA. Following an ECJ ruling in July 2022, there is now a greater role for the EU Parliament in the selection process and settling on an agreed framework, between the EU Council and Parliament, is taking some time. Nevertheless, the indications are that the process will conclude this year. We have a good sense of what many of the criteria for selection of the host country will be, including that AMLA should be able to establish immediately, in the host country and do so with full independence; it should have access to a skilled labour force in the country; there should be appropriate social welfare, educational and medical care for AMLA staff and their spouses and children; there should be adequate training opportunities in AML/CFT matters; and there should be a balanced geographic spread of EU institutions across the entire of the EU.
The EU Parliament is keen that an added consideration, in terms of deciding on the host country, should be its AML/CFT framework, but there is no consensus on this yet. However, if our AML/CFT framework is to be scrutinised, I am confident we will not be found wanting, as it is robust and last year, the Financial Action Task Force, which is the global standard setter in all matters AML/CFT-related, noted the "significant progress" made by Ireland in strengthening its framework over the last few years.
While we await the final criteria in relation to the selection process, my officials have been preparing the groundwork for Ireland's formal bid, compiling the information that will likely be sought by the EU co-legislators tasked with assessing Member States' applications. Officials have also collaborated closely with our embassies, reaching out to counterparts at official level across the EU, to highlight the benefits of locating AMLA in Ireland and seeking their support for our bid. Underpinning all of those efforts, has been a significant volume of information and advice provided by many Government Departments, agencies, semi-State agencies and the private sector, all of whom have been highly supportive of the proposal to host AMLA here. I have also had conversations with some of my ministerial colleagues from other EU member States to seek their support for the Irish bid. All of this work is ongoing and will intensify over the coming months when the process finally officially gets underway.
I believe Ireland is a great location for this important new EU authority. We have a significant financial services sector, built over decades, that will be subject to AMLA’s direction and the new single rulebook. Within that sector, there is good AML/CFT compliance as we have a robust framework which will be further enhanced by this new agency. Hosting it here will only add to Ireland’s and the EU’s compliance with international standards.
140. Deputy Alan Dillon asked the Minister for Finance his perspectives on the report concerning the factors influencing the cost and accessibility of finance for residential development; and if he will make a statement on the matter. [30207/23]
View answerThe Department of Finance, through the Housing for All Investment Workstream, commissioned a report on the drivers of the cost and availability of finance for residential development during 2022.
The key findings from this Report in relation to funding is that there has been reasonable availability of both debt and equity for viable residential development.
However, increasing global macro-economic headwinds in 2022 have created a differentiated landscape for apartment and housing development. There remains reasonable access to capital for housing development, but availability of funding has been significantly curtailed for capital intensive apartment development.
The report finds that, in general, the Irish developer community remains equity constrained since the aftermath of the Global Financial Crisis and securing equity is key to unlocking the overall finance required for construction.
The findings and recommendations from this report are being explored through the Housing for All Investment Workstream.
