In the 2016 Finance Act I introduced the Irish Real Estate Fund (IREF) legislation to address the issue of non-resident investors, who have been investing in Irish property through fund structures, avoiding a charge to tax on profits arising from Irish real estate.
An IREF is an investment undertaking in which 25% or more of the value of the assets is derived from IREF assets or where it is reasonable to consider that the main purpose or one of the main purposes of the investment undertaking is to acquire IREF assets or to carry on IREF business. The IREF must deduct a 20% withholding tax on certain property distributions.
'IREF assets' is defined as including, amongst other things, land in the State. Land in the State also includes an interest in land, such as a lease, and not simply freehold interests. Land in the State includes anything built on that land, such as a nursing home or a private health centre.
'IREF business' is defined as activities involving IREF assets, the profits or gains or which would be chargeable to tax. This is therefore not simply profits derived from the land, such as rental profits, but any profits from activities which involve the IREF assets. Therefore, the profits from a nursing home, for example, involve an IREF asset (land in the State) and are therefore IREF profits and within the charge to IREF withholding tax.