: I move:
That Dáil Éireann approves the following Order in draft:
Double Taxation Relief (Taxes on Estates of Deceased Persons and Inheritances and on Gifts) (United Kingdom) Order, 1978,
a copy of which Order in draft was laid before Dáil Éireann on 16th June, 1978.
This draft order confirms a Convention signed on behalf of the Government of Ireland and of the Government of the United Kingdom on 7 December 1977. A White Paper containing the text of the Convention has been laid before both Houses of the Oireachtas by the Minister for Foreign Affairs. Copies of the draft order containing the text of the Convention were laid before Dáil Éireann on 16 June 1978.
Section 66 of the Capital Acquisitions Tax Act, 1976, provides that an arrangement entered into with a foreign Government to afford relief from double taxation shall have the force of law here if the Government make an order accordingly. Before such an order can be made, a draft of the order must be laid before Dáil Éireann and a resolution passed approving it. Deputies will find the text of the Convention scheduled to the draft order now before the House. A separate memorandum has also been circulated with the draft order explaining the effect of the provisions.
The Convention sets out arrangements for the relief of double taxation as between Ireland and the United Kingdom on estates of deceased persons and inheritances and on gifts. The taxes in question are the Irish capital acquisitions tax, namely, gift tax and inheritance tax, and the United Kingdom capital transfer tax. The previous arrangements between the two states for the relief of double taxation on death became obsolete as a result of the abolition in both countries of the former death duties in 1975. The Convention is based on a Model Convention prepared by the Organisation for Economic Co-operation and Development, a body of which both states are members.
I will now briefly outline the main features of the Convention in the order in which they occur in the text of the Convention. Article 4 recognises the right of each state to claim domicile according to its domestic law. Where both states claim the domicile, rules are set out to determine which state takes precedence, that is, which state has the fiscal domicile.
Article 5 affirms that each state retains the right to levy tax according to its own law. It also deals with the situation where both Ireland and the United Kingdom have a claim for tax in respect of property situated in a third territory by setting out criteria for determining in any particular case whether Ireland or the United Kingdom should have the primary claim for tax in relation to such property.
Article 6 indicates how the situation of property shall be determined for the purposes of the Convention. Article 8 is the main provision dealing with the elimination of double taxation. The Article provides that each state will grant a credit against its own tax for any tax liability in the other state on property situated in the other state. In cases where domicile is claimed by both Ireland and the United Kingdom and property in a third territory is involved, the state with the secondary claim, as determined by Article 5, will be required to grant a credit for the tax of the primary state on the property in question. The Article also provides that in Ireland any credit being allowed in any particular case will be given only to the person who actually pays the tax imposed in Ireland and the United Kingdom.
Article 9 declares that a claim for a credit or for a repayment of tax in accordance with the Convention has to be made within six years from the date of the event in respect of which the claim is made. Article 11 provides for consultation between the Revenue authorities of the two states in order to eliminate any element of double taxation that may arise contrary to the provisions of the Convention.
Article 14 deals with the dates of operation of the Convention. The Convention is retrospective to the introduction of capital acquisitions tax in Ireland and of capital transfer tax in the United Kingdom. It shall, therefore, be effective in Ireland from 28 February 1974, in respect of gift tax, and from 1 April 1975 in respect of inheritance tax, and it shall be effective in the United Kingdom from 13 March 1975 in respect of capital transfer tax on a death, and from 27 March 1974 in respect of capital transfer tax on other occasions.
In conclusion, I recommend that Dáil Éireann approve the draft order.