Thursday, 9 September 2021

Questions (213)

Aengus Ó Snodaigh


213. Deputy Aengus Ó Snodaigh asked the Minister for Finance if he will address a series of matters concerning refunded exit taxes (details supplied). [42857/21]

View answer

Written answers (Question to Finance)

I am advised by Revenue that Section 189 of the Taxes Consolidation Act 1997 (TCA) exempts permanently incapacitated individuals from Income Tax, Pay Related Social Insurance (PRSI), Universal Social Charge (USC) and Capital Gains Tax on the income arising and gains accruing from the investment, in whole or in part, of compensation payments which arise from an order under section 38 of the Personal Injuries Assessment Board Act 2003 or the institution by the individual of court proceedings in respect of personal injury claims. The injury must be such that the individual is permanently and totally incapacitated from maintaining himself or herself.

Furthermore, section 739G TCA applies an exit tax to collective investment undertakings and is generally deducted on the occurrence of a chargeable event. Such chargeable events can arise on the making of relevant payments or on the transfer by a unit holder of their entitlement to units (including on death). An exit tax must always be deducted from payments to investors with the exception of specific categories of investors such as a pension scheme, a life assurance company or a non-resident individual, provided the investment undertaking is in possession of the appropriate declarations in advance of the chargeable event.

A permanently incapacitated individual who is exempt from tax under section 189 on income from the investment of compensation payments arising from personal injury claims may be entitled to a repayment of the exit tax. Revenue confirmed a refund of exit tax has occurred in such circumstances, where the requirements of section 189 have been met.  However, where income or gains arise to, or are received by, the estate of a deceased individual, the exemption provided for in section 189 would not apply in those circumstances and consequently the repayment of any exit tax deducted cannot be made by Revenue.

As Revenue was never entitled to make repayments of the exit tax that arises under section 739G TCA to the estate of a deceased individual and there has been no change in the law to permit such refunds, I am advised that there has been no change in Revenue’s practice in relation to these matters.