Cian O'Callaghan (Dublin Bay North, Social Democrats)
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13. To ask the Minister for Finance for an update on the Revenue Commissioners' review of the taxes paid by Irish real estate funds; and if he will make a statement on the matter. [5042/25]

Cian O'Callaghan (Dublin Bay North, Social Democrats)
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I start by congratulating Deputy Brabazon both on his election and on his maiden contribution. I know he has been a very hardworking, committed public representative for many years.

In 2020, the Minister said that investment funds were engaging in aggressive behaviour to avoid tax. He introduced a range of measures that were supposed to clamp down on this tax avoidance. Since then, these property investors have seen their tax halved despite growing the size of their portfolios by more than €8 billion during the same period. A review was commenced by Revenue in 2022 to investigate this tax avoidance. Where is this review? How many more years will the Minister allow this to continue?

Paschal Donohoe (Dublin Central, Fine Gael)
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The Deputy might clarify when he responds the source of the figure of €8 billion, please, so that we are clear on the particular point he is making.

I am advised by Revenue that in 2022 it commenced a compliance-based review of the Irish real estate fund, IREF, sector with one of its aims being to identify the reasons for the reduction in the amount of IREF withholding tax paid in 2021 relative to 2020, in each case arising from prior year taxable events. This gross payment data is published as part of Revenue’s annual corporation tax payments and returns publication.

I am further advised by Revenue that a large factor in the apparent reduction in tax collected in 2021 over tax collected in 2020 was the length of time it took for refund claims in respect of prior years to be received. Revenue also advise that some IREFs reported that the Covid-19 pandemic impacted the value of investment property, meaning they recorded losses in accounting periods ended in 2020.

I welcomed a recommendation of the Commission on Taxation and Welfare 2022 to undertake a review of the IREF regime. On 22 October 2024, my predecessor as Minister, Deputy Chambers, published the funds sector report “A Framework for Open, Resilient & Developing Markets”.

On IREFs, the funds review team recommended consideration of a public consultation to set out potential options for an entity-level tax for IREFs. Officials in my Department are reviewing this recommendation, as part of a wider consideration of the funds review report which I, in turn, will consider in due course.

Cian O'Callaghan (Dublin Bay North, Social Democrats)
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I will come back to the Minister on the source of that figure.

So that I am clear, is the review commissioned by Revenue in 2022 published? The Minister referred to the other reports and reviews that are going on but will he clarify if that review is published?

A report published by the Central Bank last year found that 78% of the homes owned by investment funds were bought as existing properties. The report also found that institutional landlords increased monthly rents by about 4.1% more than other landlords. These funds are driving up rents, increasing house prices and locking out first-time buyers. Will the Minister, at very least, close down these loopholes that are allowing them to get away with tax evasion? Was the Revenue review published?

Paschal Donohoe (Dublin Central, Fine Gael)
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The review was a compliance review undertaken by Revenue and therefore it would not publish a document in relation to that, respecting taxpayer confidentiality. However, it has indicated, as I shared with the Deputy, the tax payments that were made by that sector to the Exchequer over recent years. For 2023, that figure stands at €31.8 million. In 2017, that figure was €8.3 million. Therefore, there has been an increase in the tax paid.

We need a broader consideration of how we are going to deal with the housing needs that are so clearly there. I believe the Deputy acknowledges that in order to meet the housing needs which are only growing, the private sector must play a role. Part of how the private sector will do that is by allowing the savings and pensions in other parts of the world to be invested in providing homes here in Ireland.

We do need to deal firmly with tax compliance issues, as has been done, and we need to find ways by which more homes can be built.

Cian O'Callaghan (Dublin Bay North, Social Democrats)
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The Minister has been very selective in the years he quoted in relation to taxation.

The Minister knows well that the tax decreased. In fact, he said that there was aggressive behaviour to avoid tax. The purpose of the review conducted by Revenue was to look at how those loopholes could be shut down. Has there been any action on foot of that review, the results of which have not been published? Will the Minister be taking action? In 2017, the sector was much smaller and, of course, was paying less tax. This is a selective use of data.

Paschal Donohoe (Dublin Central, Fine Gael)
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Tá brón orm. I was only reading out a base figure in the interests of time. Let me be non-selective and read out all the figures for each year since 2017. Those figures are: €8.3 million, €28.2 million, €72 million, €73.8 million, €43.1 million, €37.6 million and €31.8 million, respectively. In recent years-----

Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Exactly. They have halved.

Paschal Donohoe (Dublin Central, Fine Gael)
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-----we have seen it at that figure. This is the reason Revenue instigated the compliance intervention that it did. I have made changes. I did so by means of tax legislation in order to ensure that issues that were being raised with me by Revenue were acted upon, and that happened. As soon as further information becomes available for the sector, it will of course be shared with the Deputy and made public.