Dáil Éireann Debate, Tuesday - 27 March 2018
94. Deputy Pearse Doherty asked the Minister for Finance his views on the concerns of the Central Bank that cash buyers such as international funds are putting home ownership beyond the reach of families; and his plans from a tax point of view to level the playing field. [13654/18]
Amharc ar fhreagraIn the 2016 Finance Act, my predecessor introduced provisions to address concerns raised in both the media and the Dáil regarding the use of section 110 companies and certain Irish collective investment vehicles by international investors to minimise their tax payments on Irish property transactions.
Section 22, Finance Act 2016 made certain changes to the taxation of qualifying companies, within the meaning of section 110 Taxes Consolidation Act 1997. The changes related to the taxation of profits which were derived from Irish land and buildings. Those changes took effect from 6 September 2016.
The 2016 Finance Act provided for the introduction of the Irish Real Estate Fund or IREF. The legislation was introduced to address concerns raised regarding the use of collective investment vehicles by non-resident investors to invest in Irish property. IREFs must deduct a 20% withholding tax on certain property distributions to non-resident investors.
A Real Estate Investment Trust or REIT is a quoted company, used as a collective investment vehicle to hold rental property. A REIT is exempt from corporation tax on qualifying income and gains from rental property, subject to a high profit distribution requirement to. A REIT provides the same after-tax returns to investors as direct investment in rental property, by eliminating the double layer of taxation at corporate and shareholder level which would otherwise apply.
I believe that the taxation regimes remain appropriate for these entities. The REIT regime is designed to prevent a double layer of taxation and the IREF regime is designed to protect the State's taxing rights over property, neither of these are favourable tax regimes.
My Department continues to monitor developments in the housing market, including residential property prices, on an ongoing basis. The current inflationary pressure in the residential market reflects an insufficient supply response to meet the current demographic demand for housing. To address this imbalance the outstanding bottlenecks in the housing market need to be tackled.
