Dáil Éireann díospóireacht -
Tuesday, 25 Nov 1997

Vol. 483 No. 3

Written Answers. - Double Taxation Treaty.

Tony Killeen

Ceist:

186 Mr. Killeen asked the Minister for Finance the current position regarding the Ireland-US Double Taxation Treaty signed in July 1997; and the effects of this treaty on US social security pensions payable to Irish residents. [20317/97]

Minister for Finance (Mr. McCreevy)

The Ireland-US Double Taxation Treaty, which was signed on 28 July, 1997, comes into effect in the year after it has been ratified by both countries. It has since been ratified by the US and I have laid a Draft Government Order before the Dáil moving a resolution for approval of this treaty. It has been agreed that this issue will come before the Dáil on 25 November, 1997.

The absence from our current double taxation treaty with the US of a specific provision in regard to pensions has been a problem in recent years since the US introduced a withholding tax on social security pensions. This resulted in persons resident in Ireland and in receipt of such a pension being subjected to US withholding tax while also being liable to tax in Ireland on the basis of their residence. In the context of renegotiating the treaty over the last number of years, the Revenue Commissioners have made every effort to have a provision dealing with the matter included, as in this way, double taxation could be eliminated.

The new treaty provides specifically for pensions, including payment made under social security legislation, and provides that, with the exception of governmental service pensions which are dealt with separately they will be taxable only in the State in which the recipient is resident. This principle, which is bilateral, follows the OECD model convention to which Ireland adheres. It eliminates double taxation, as it awards the taxing right to either the US or Ireland, depending on which is the State of residence.