I propose to take Questions Nos. 186 and 188 together.
Finance Act 2016 introduced the Irish Real Estate Funds (IREFs) regime. The regime provides that the profits arising to an Irish fund from Irish property remain within the charge to Irish tax. An IREF is an investment undertaking where 25% or more of the value of the assets is derived from real estate assets in the State. Generally, where a unit holder receives value from the IREF an IREF withholding tax of 20% will apply.
On introduction in Finance Act 2016 the IREF regime provided for an exemption from IREF withholding tax on the distribution of profits that arose from holding Irish land or buildings for more than 5 years. Finance Act 2017 amended the legislation to remove this CGT exemption from 1 January 2019. An accurate estimate of expected revenue cannot be made as it would be dependent on the value of gains realised by IREFs as a result of transactions in Irish real estate assets.
Furthermore, non-resident IREF shareholders resident in treaty countries may be able to reclaim part of the IREF withholding tax if the relevant treaty allows. Given this interaction with tax treaties and that information is not available in relation to potential future IREF distributions to investors, an accurate estimate of any potential revenue from a change in the operation of withholding tax, including the removal of the CGT exemption or a potential increase in the rate, cannot be made.