A Comprehensive Guide to the Biennial Preventive Concordat

Overview of the Biennial Preventive Concordat

The Revenue Agency has released Circular 18/E 2024, consisting of the definitive guide for the Biennial Preventive Concordat (C.P.B.).
This document consolidates applicable regulations, aiming to clarify taxpayer concerns before the enrollment deadline of October 31, 2024.

The Biennial Preventive Concordat is essentially a mutual agreement between the taxpayer and the tax authority regarding the taxes owed over a two-year period.

Structure of the Circular

The circular is structured into three main sections: the first is general, outlining the requirements and exclusions for participation in the C.P.B.

The second section delves deeper into two categories: taxpayers using the ISA indices and those who opt for the flat-rate scheme.
Notably, for flat-rate taxpayers, this C.P.B.
is trialed only for the 2024 tax year, thus limiting its efficacy to that single year.

The final part of the circular features a FAQ section where the Revenue Agency addresses common inquiries.

Summary of Key Points

The guide addresses several important elements regarding the C.P.B., including:

• Excluded participants
• Income determination for the taxable base
• Filing obligations for participants
• Exit conditions from the C.P.B.
• Limits associated with the C.P.B.
• Calculation of tax advances
• Implications of reported income exceeding declarations
• Specific cases

Excluded Participants

The circular specifies that taxpayers with confirmed tax debts cannot enroll unless they clear such debts before the deadline, with remaining liabilities under €5,000.

Additionally, failing to submit income declarations in any of the three previous tax years, as required, also disqualifies participants, along with any involvement in tax offenses.

Income Determination for the Tax Base in the C.P.B.

This segment clarifies that the agreement defines taxable income for businesses and self-employment, while standard VAT compliance continues to apply.

Declaring Obligations for C.P.B.
Participants

Taxpayers agreeing to the Revenue Agency’s proposal must declare both the agreed amounts and actual figures for the specified periods, complying with all regular accounting and filing requirements.

Exit Conditions from the C.P.B.

Taxpayers may exit the C.P.B.
early in various situations including significant income reductions exceeding 30% or changes in business operations.

Limits of the Biennial Preventive Concordat

While the C.P.B.
sets a taxable base, it’s important to note that it does not affect VAT calculation and may limit eligibility for certain deductions and benefits.

Advances Calculation

Specifically for 2024, tax advance calculations will require adjustments based on the concordat agreements impacting the previous declaration period.

Special Cases Addressed

The circular’s final section covers FAQs, including guidance for taxpayers involved in dual business activities, emphasizing distinct taxation proposals for each business.