Dáil Éireann debate -
Wednesday, 5 Jun 1996

Vol. 466 No. 4

Written Answers. - US Social Security Beneficiaries.

Tom Kitt

Question:

72 Mr. T. Kitt asked the Minister for Finance whether recent changes made to social security benefits and pensions in the United States will mean that 28 per cent tax will now be deducted from monthly pensions for Irish citizens living in the United States and that these changes will not apply for persons who lived in Northern Ireland and are now resident in the United States; and if he will make a statement on the matter. [11373/96]

Tánaiste and Minister for Foreign Affairs (Mr. Spring)

I am informed that, under the provisions of the US Federal Social Security Act, 1982, persons in receipt of US social security pensions are liable to US tax where their income exceeds a certain threshold. The rate of tax applicable, starting at 15 per cent and rising to 39.6 per cent will depend on the amount by which that threshold is exceeded. This is the case for all recipients of US Social security pensions, resident in the US, irrespective of their nationality. While the Deputy raises the question of a disparity in the US authorities' taxation treatment of US-resident recipients of social security pensions. I have been informed that no such disparity on the basis of the recipient's country of origin applies.

The following position applies in the case of recipients of such pensions resident in Ireland. Generally, non-US resident recipients of US social security pensions are subject to a withholding tax at an effective rate of 25.5 per cent — being 30 per cent of 85 per cent of the pension payable. This is the present position for Irish-resident recipients of US social security pensions and is something which has caused concern to the pensioners in question. These concerns arise in part from the fact that UK-resident recipients of US social security pensions are not liable to the US withholding tax as a result of the provisions of the US-UK Double Taxation Agreement. A similar exemption for Irish-resident recipients is not provided for under the current Ireland-US Agreement. However, this issue is being discussed with the US tax authorities as part of the current renegotiation of the Ireland-US Double Taxation Agreement.