I propose to take Questions Nos. 129 and 130 together.
Finance Act 2013 introduced the regime for Real Estate Investment Trusts (REITs) in Ireland. The function of the REIT framework is not to provide an overall tax exemption but rather to facilitate collective investment in rental property by removing a double layer of taxation which would otherwise apply on property investment via a corporate vehicle.
Property rental income and gains arising are exempt from tax within the REIT and are taxed at the investor level when distributed through dividend withholding tax at 20%. The legislation requires that 85% of all rental income profits be distributed annually to shareholders. The REIT is subject to corporation tax on income and gains not arising from the property rental business of the REIT. Distributions to certain limited classes of investors such as pension funds and charities do not suffer the withholding tax as they are more generally exempt from tax.
Given the important implications which developments in the property market can have for the economy, my Department actively monitors developments in this sector on an ongoing basis. In this context, the Deputy may be aware, as part of the 2018 Finance Bill process I committed that my officials would undertake a report on REITs, IREFs and Section 110 companies as they invest in the Irish property market. This report was presented to the Tax Strategy Group in July and is available on my Department's website.
There are currently four REITs operating in the Irish property market. Information in relation to the property held by REITs, taken from the 2018 published annual reports of the companies, is summarised in the TSG paper referred to in the above paragraph and is available here: https://assets.gov.ie/19114/2de9c469825a47418526e1d5c217b44c.pdf
I am advised by Revenue that, as there as fewer than 10 REITs, it is not possible to provide analysis such as the effective tax rate, due to Revenue’s requirement to protect taxpayer confidentiality.