I propose to take Questions Nos. 330 to 333, inclusive, together.
The Finance Act 2013 inserted Part 25A into the Taxes Consolidation Act 1997 which introduced the tax regime for the operation of Real Estate Investment Trusts (REIT) in Ireland. A REIT is a collective investment vehicle designed to hold properties in a tax neutral manner. I am informed by Revenue that there are currently three REIT established and operating in Ireland.
Part 25A provides, inter alia, that a REIT must distribute to its shareholders at least 85% of property income by way of property income dividends. In the absence of the REIT tax legislation, non-resident REIT shareholders would not have had any liability whatsoever to Irish tax on REIT dividends. In order to ensure that tax from foreign REIT investors is retained in the State, the REIT tax legislation specifically provided that Dividend Withholding Tax (DWT) would apply to REIT dividends at the standard rate of income tax of 20%. As such, a non-resident REIT investor who might otherwise be exempt from DWT enjoys no exemption in respect of dividends paid by a REIT. However, non-resident REIT investors from countries with which Ireland has a tax treaty may be able to reclaim some part of this DWT if the relevant tax treaty allows for this.
The taxation of dividends varies from treaty to treaty, but commonly a source state would retain the right to a withholding tax of up to 15% on dividends paid from that state. Subject to specified exceptions within the treaties, the reduced rate applying to dividends paid to investors resident in the countries mentioned in the Deputy's question, as provided for in the respective double taxation agreements, are as follows: 15% in USA, Canada, United Kingdom, Germany and Switzerland; 10% in China; 0% in Spain and Australia; and in the case of France and Austria no reduction in the 20% rate applies. Where the investor is a corporate and holds, generally, 25% or more of the voting power in the company paying the dividend the withholding tax rate can be further reduced.
As no dividends were paid by Irish REITS until 2015, no DWT was deducted in either 2013 or 2014, and consequently no claims for repayment of DWT were made by non-resident investors in either of those two years. In 2015, DWT amounting to €5,267,914 was collected in respect of dividends paid by Irish REITS, and DWT amounting to €67,955.13 was refunded to non-resident investors in respect of REIT dividends paid in 2015.
