Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

I move amendment No: 47:

In page 44, to delete line 40, and in page 45, to delete lines 1 to 20 and substitute the following:“(a) in relation to a unit holder in respect of which an IREF is not a personal portfolio IREF having regard to the IREF assets concerned (other than those referred in paragraphs (b) to (e) of the definition of ‘IREF assets’)—

(i) any profits or gains as shown in the income statement of the IREF in relation to the disposal of those assets where—

(I) such asset was held by the IREF, or an investment undertaking of which the IREF is a sub-fund, for a period of at least 5 years from the date on which it was acquired, and

(II) the disposal of such asset would be a disposal of a chargeable asset for the purposes of capital gains tax or corporation tax on chargeable gains and would otherwise form part of relevant profits of the IREF which are not chargeable to tax under section 739C,

and

(ii) any unrealised profits or gains as shown in the income statement of the IREF in relation to those assets where the disposal of such asset would be a disposal of a chargeable asset for the purposes of capital gains tax or corporation tax on chargeable gains and would otherwise form part of relevant profits of the IREF which are not chargeable to tax under section 739C,

and where such asset was acquired through a transaction in respect of which relief was availed of under section 615 or 617, excluded profits shall be calculated with reference to the market value of the asset on its acquisition,”.

As currently legislated, where an IREF holds an asset for more than five years there will be an exemption from the capital gains tax element of any distributions made to non-residents. The rationale for this is to encourage long term sustainable investment in the Irish property market. This amendment removes from section 22 the ability of an investor who has influence or control over the IREF to receive a distribution of capital gains without the operation of the new 20% withholding tax.

The purpose of the amendment is to ensure the IREFs cannot be used for tax planning and to ensure the protection of the Irish tax base. Where the distribution is made to a person who does not have influence or control over the IREF, gains on land held for more than five years can be distributed without the 20% withholding tax operating.

The proposal has been drafted in a balanced way to ensure the Irish tax base is protected where Irish property transactions are taking place within collective investment vehicles while not damaging the commercial property market in the long term. I commend the amendment to the House.

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