You will find below a summary of the measures included in the 2012 Finance Bill that are relevant to Irish-domiciled investment products.
Real Estate Investment Trusts (REITs)
The Budget provides for the establishment of REITs in Ireland. While the structure and tax treatment of REITs has not yet been confirmed it is likely that:
- Qualifying income and gains of a REIT will be exempt from corporation tax
- The REIT will be required to distribute profits annually for taxation at investor level
- The REIT will be structured as a listed company
It is anticipated that an Irish-domiciled REIT will be similar in form to the REITs available in the UK.
Foreign Account Tax Compliance Act (FATCA)
Ireland is one of the first countries to agree a new Inter-Governmental Agreement (IGA) with the United States in relation to the US Foreign Account Tax Compliance Act (FATCA). The IGA will provide for automatic reporting and the exchange of information between the Irish and US tax authorities in relation to financial accounts held in Irish financial institutions by US persons. The IGA will significantly lessen the compliance burden that might otherwise apply and is thus a welcome development for the Irish funds industry.
Taxes on distributions made by investment funds will increase from 30% to 33% for payments made annually or more frequently and 33% to 36% for payments made less frequently than annually. The increased rates will apply to payments, including deemed payments, from 1 January 2013.
A property tax has been introduced at the rate of 0.18% on all residential properties valued at less than €1 million. Properties valued at over €1 million will be liable at 0.18% on the first €1 million and at 0.25% on the balance, with no banding applied. In the case of rental residential properties, the owner is responsible for the tax.
The market value of the property must be assessed by the owner. The Irish Revenue Commissioners will provide valuation guidance to which owners can refer. Alternatively, owners can use a competent valuer. The initial valuation will be valid up to and including 2016.
The property tax will come into effect on 1 July 2013 and as such only half of the tax will be payable in 2013.