Dáil Éireann debate -
Tuesday, 7 Feb 1995

Vol. 448 No. 6

Written Answers. - American Pensions for Irish Citizens.

Michael Creed

Question:

60 Mr. Creed asked the Minister for Finance if his attention has been drawn to the problems facing Irish citizens with American pensions who have had their entitlements reduced due to changes in the United States internal revenue law; and if he will make representations to the United States authorities on this matter with a view to alleviating the hardship that this change has caused. [2676/95]

Minister for Finance (Mr. Quinn)

I am aware of the issue raised by the Deputy. Under the terms of the United States Federal Security Act, 1982, non-resident aliens are liable to tax on social security payments at a rate of 30 per cent on 85 per cent of the social security payments, i.e. 25.5 per cent overall. Prior to 1 January 1995, the rate was 30 per cent on one half of the payment, i.e. 15 per cent overall.

Generally, in an international context, the tax treatment of such payments is catered for under the provisions of a double taxation treaty. However, the existing double taxation convention between Ireland and the United States, which is in existence for over forty years, does not contain any specific provisions relating to the taxation of social security payments.

Negotiations on a new convention between Ireland and the United States which were ongoing during the 1980s were suspended in 1990. The reopening of negotiations with the United States is currently under consideration. When these discussions recommence, this taxation matter will be raised by the Irish side.

However, in advance of the commencement of these discussions, representations are being made as a matter of urgency through the appropriate channels to the relevant US authorities on this matter.