Dáil Éireann Debate, Tuesday - 1 June 2021
255. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question Nos. 311 and 312 of 18 May 2021, the amount of IREF dividend withholding tax deducted for 2017, 2018 and 2019 in gross terms and in net terms after refunds in instances in which a person is entitled to receive a distribution without the deduction of DWT on account of a double taxation agreement. [29147/21]
Amharc ar fhreagra256. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question Nos. 311 and 312 of 18 May 2021, the amount of IREF dividend withholding tax deducted for 2019 that was and was not attributable, respectively, to provisions under Finance Act 2017 that ended the exclusion from the IREF DWT of the distribution of capital gains on the disposal of assets which had been held for more than five years, which became effective from 1 January 2019. [29148/21]
Amharc ar fhreagraI propose to take Questions Nos. 255 and 256 together.
The Irish Real Estate Fund (IREF) legislation was introduced by Finance Act 2016 to address concerns raised regarding the use of collective investment vehicles by non-residents to invest in Irish property. An IREF is an investment fund, or a sub-fund, which derives 25% or more of its market value from assets acquiring their value directly or indirectly from real estate in the State.
As an investment undertaking, the profits of the IREF are not taxed within the fund, but instead are subject to tax in the hands of the investors. IREFs are subject to a 20% withholding tax on distributions to non-resident investors. Irish resident individuals/corporates are subject to investment undertakings tax. 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.
The legislation governing the taxation of IREFs provides that an investor resident in a country with which Ireland has a double taxation agreement (DTA) may reclaim any excess withholding tax incurred above the rate specified in the relevant DTA where the investor owns less than 10% of the units in an IREF. The table below sets out details of the number and value of reclaims processed by Revenue up to the period ended 30 April 2021. The reclaims processed total €3,319,159. The bulk of the repayments relate to IREF WHT deducted in the tax period ended 31 December 2019.
|
Date of repayment |
Number of reclaims |
Amount of reclaims € |
|
2021 |
<10 |
2,521,414 |
|
2020 |
34 |
773,538 |
|
2019 |
<10 |
24,207 |
The gross amount of IREF WHT arising and paid for the periods 2017, 2018 and 2019 were previously provided to the Deputy and are set out in the following table.
|
2017 € |
2018 € |
2019 € |
|
|
IREF Withholding Tax paid |
8,321,359 |
28,229,097 |
65,759,048 |
|
Income tax charge paid* |
n/a |
n/a |
6,211,720 |
*The Finance Act 2019 contained a number of anti-avoidance measures for IREFs. IREFs are regarded as having income subject to income tax where they have excessive debt or expenses that are not wholly or exclusively for the purpose of their business. For the three-month period to 31 December 2019, €6.2 million income tax was paid by IREFs.
In respect of question 29148/21, Section 19 of Finance Act 2017 removed the exemption referred to by the Deputy in respect of disposals occurring on or after 1 January 2019. It is not possible to estimate the amount of IREF withholding tax paid in 2019 directly attributable to the removal of this exemption, as this would have required taxpayers to declare information no longer relevant in filing their tax returns - i.e. to advise if a gain would have been excluded if it had arisen in a prior year. I can however advise that in 2019, no IREF indicated on the returns filed that it had availed of the exclusion of profits in respect of a profit distribution arising from a property sale.
