What is a Tax Clearance Certificate
A Tax Clearance Certificate (TCC) is a written confirmation from Revenue that a person’s tax affairs are in order at the date of issue of the certificate. In some instances a certificate may be issued to a customer who has tax arrears provided such arrears are covered by an instalment arrangement that has been agreed with Revenue.
Purpose of the Tax Clearance Scheme
The purpose of the Tax Clearance Scheme is to ensure that persons (residents and non-residents) who derive an economic benefit from:
- A licence/permit to conduct certain activities in the State, and/or
- Receipt of contracts/grants, subsidies and other payments from the State
Are in compliance with their tax obligations. Residents and non-residents apply for general tax clearance. However the following may apply for tax clearance but are not categorized as general tax clearance:
- PAYE customers may also need to get tax clearance in certain circumstances: PAYE Applicants
- The Standards in Public Office Act 2001 (SIPO) applied tax clearance requirements to persons elected to the Dail or Seanad, judicial appointees and senior office appointees: Persons covered under the Standards in Public Office Act (SIPO) 2001
Apart from situations where a person is legally required to produce a TCC in order to meet his/her legal obligations, Revenue is also obliged to issue a certificate, where requested, to any customer whose tax affairs are in order.
When is a general TCC required?
- Public Sector Contracts – A condition of obtaining a Public Sector Contract (Section 1095 Taxes Consolidation Act 1997) of a value of €10,000 or more, (inclusive of VAT), within any 12 months period, is that the contractor is required to produce either a valid C2 certificate or a general TCC. Such contracts can involve the purchase, hiring, leasing of goods, services or property by public authorities. Examples of the types of goods/services covered in such contracts are plant hire, cleaning or security, consultancies for management, legal or design services. The tax clearance requirement applies even where the provision of goods or services is not the subject of a formal written contract.
- Grant Payments – Also under Section 1095, T.C.A. 1997 payment of State/Public Authority grants, subsidies and similar type payments, by Government Departments and public authorities, of a value of €10,000 or more, within any 12 months period, including for example, industrial and farm development grants is subject to the person holding a current general TCC.
- Licences and certain schemes – A current TCC is required, by law, for the operation of the types of business situations listed in the following table:
- Small Public Service Vehicles (SPSVs) or Vehicles Drivers (SPSVDs)
From 2nd August 2004 a taxi, wheelchair accessible taxi, hackney or limousine licence or a licence to drive such vehicles will not be granted or renewed unless the applicant produces to the licensing authority (i.e. the local authority, on an annual basis, or Gardaí, every 5 years, as appropriate) a TCC issued by Revenue under Section 1095 of the Taxes Consolidation Act 1997.
The application to be used in both instances is the general tax clearance application form pdfTC1 (PDF, 259KB) regardless whether the applicant is self-employed or a PAYE applicant. If a person is not registered for Income Tax or PAYE e.g. a person on social welfare wishing to obtain a taxi driver’s licence, this person should complete the general tax application clearance form TC1 quoting their Personal Public Service Number (PPS Number)
Holders of existing licences, who have outstanding tax issues, should arrange to put their tax affairs in order without delay in order to avoid a situation where the renewal of a licence must be refused due to the non-production of a TCC.
- Capital Gains Tax Clearance – Section 980 of the Taxes Consolidation Act 1997, obliges the purchaser of certain assets to withhold 15% of the purchase price of that asset from the vendor and remit it to Revenue as Capital Gains Tax, unless the vendor holds a general TCC or a CG50A. This section applies to assets over €500,000 in value (from 2003 onwards) and, usually, though not exclusively, arises in context of land/property sales.The CG50A capital gains tax clearance certificate is applied for on a CG50 application form (see Application Fomrs). While it is still possible to use the CG50 procedure the following can also be accepted by the purchaser (in lieu of the CG50) as sufficient authority to make the payment for the asset without deduction of the 15%A current tax clearance certificate issued under the normal tax clearance schemes,
A certificate of authorisation (C2 cert.), or
A tax clearance certificate issued specifically for the purposes of section 980 (deduction from consideration on disposal of certain assets)
- Charities – When applying for a public sector contract a charitable body must be in possession of a current TCC, which is obtainable from their local Revenue District
Where a public sector grant, subsidy or similar type payment is being applied for, an applicant who has a Charity (CHY) Number does not require a TCC. Their CHY number must be quoted to the public body awarding the payment and that public body may require further confirmation. Where requested the Charities Section of the Revenue Commissioners will issue a confirmation letter as to the CHY number of the charity.A CHY Number is applied for through the:
Office of the Revenue Commissioners,
St. Conlon’s Road,
Co. Tipperary.For further information please telephone (LoCall) 1890 254565, Fax 067-32916 or email: firstname.lastname@example.org
Where a charitable body is not in possession of a CHY number a TCC is required when applying for a public sector grant, subsidy or similar type payment.
- Criminal Justice Legal Aid Panel – Under the Criminal Justice (Legal Aid) (Tax Clearance Certificates) Regulations, 1999 where a solicitor is a PAYE employee and is applying for tax clearance for the purposes of the Criminal Justice Legal Aid Panel a general TCC may be issued to him/her. Before a TCC may issue to a PAYE employee the employers tax affairs must be in order (where the employer is a partnership, the partnership must also be tax compliant). The new Criminal Justice Legal Aid Panels start on 1st December each year. Solicitors applying for a TCC for the Criminal Legal Aid Panel cannot apply on-line. Download application form pdfTCI (PDF, 259KB) and forward it to your local tax district).
- Other Circumstances – The Finance Act 2002 permits any company/individual to apply for a TCC.
A list of 20 business situations requiring tax clearance