Dáil Éireann Debate, Tuesday - 28 July 2020
258. Deputy Pearse Doherty asked the Minister for Finance the estimated full-year revenue in 2021 that would be raised by introducing a minimum dividend withholding tax rate of 33% on all dividends paid by IREFs; and if he will make a statement on the matter. [18768/20]
Amharc ar fhreagraAn Irish Real Estate Fund (IREF) is an investment undertaking where 25% or more of the value of that undertaking is made up of Irish real estate assets. The legislation was introduced to address concerns raised regarding the use of collective investment vehicles by non-residents to invest in Irish property.
Generally IREFs must deduct a 20% withholding tax on distributions to non-resident investors. Certain categories of investors such as pension funds, life assurance companies and other collective investment undertakings are generally exempt from having IREF withholding tax applied provided the appropriate declarations are in place. Non-resident investors from treaty resident countries may be able to reclaim some part of IREF withholding tax if the relevant tax treaty allows for this. Irish resident investors may be subject to the investment undertakings exit tax, at a rate of 41%.
The Deputy will be aware that a number of amendments were made to the taxation of IREFs in Finance Act 2019. Amendments were made to prevent the use of excessive debt and other payments to reduce distributable profits and to prevent the avoidance of tax on gains on the redemption of IREF units. In addition, the IREF return filing requirement was placed on a mandatory annual footing and the information which Revenue can request was increased to facilitate ongoing monitoring of the sector. These amendments were made to ensure appropriate levels of tax are paid by investors in Irish property.
I would like to advise the Deputy that due to the interaction with tax treaties, the taxation of distributions which varies from treaty to treaty, and because information is not available in relation to potential future IREF distributions to investors, an accurate estimate of any potential revenue from an increase in the withholding tax rates cannot be made.
