Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

Information published in the 2019 annual reports relating to this area and the organisations involved indicates that the total value of REITs in the Irish market is €3.7 billion, 28% of which is residential and 72% commercial. That information only became available this year. We examined the matter this year based on financial information produced less than 12 months ago. I do not think the Revenue or the Department of Finance should spend all their time every year examining every report. It is sometimes necessary to prepare a report, make changes if necessary and then see how it works after a couple of years, but this matter was examined within the past year based on financial information published less than 12 months ago. The fact that the matter was examined based on the annual reports that have been published recently means there is up-to-date information available.

Reference was made to REITs being largely concerned with the rental market and that they focus mainly on the office premises market. Investment decisions were made on the basis of being able to rent certain city centre properties etc., but Covid is changing the complexion of the city centre and where people wish to live. People may wish to live closer to the area from which they originally came. That will work its way into a much wider planning issue in the Dublin region in particular.

On the basis that REITs are obliged to distribute 85% of their property profits annually for taxation in the hands of their shareholders, there is no taxation issue to be dealt with here. Matters contained in the Finance Bill may stray into the broader issue of planning or apartment blocks versus houses, but those are really matters for the housing side. I know the Seanad will be dealing with the issue of housing. From a taxation point of view, 85% of the profits are distributed and they are taxed fully in the hands of the recipients. That may be at the top rate of tax. In some cases, the profits may be taxed at a much higher rate than the corporation tax rate. There are double taxation agreements in the context of investors not resident outside the State. There is a dividend withholding tax. When REITs declare a dividend each year, which must be a minimum of 85% of their profits, 25% must be deducted by way of dividend withholding tax. That is taken into consideration in the double taxation agreement. Some other countries may only have a dividend rate of 15%, which is kind of the norm. In Ireland, we can be sure that a dividend withholding tax of 25% applies to all those dividends.A significant level of taxation is being obtained in this area but only where the REITs make a profit. Let us be clear. Anybody who invests a lot of money and has an empty building that they cannot rent is not making profit. We are only talking those who make a profit. Every property that has been referred to here, the empty properties and the apartment blocks that are under construction, have not yet yielded a rent roll and have not yet produced a penny or profit. The investment has all been one way, that is, into construction of housing and office blocks. There will be no profit out of those until they begin to get rent roll to make a profit. The profit comes long after the original investment and even when there is a profit, there is a withholding tax and the recipient pays that tax at the highest rate.

As I said, the most recent information is based on last year's annual reports which were only published earlier this year. The information we have is only six months old so I do not see the reason we would need to do a report every six months. We have good current information and those annual reports will be coming out again early next year for the end of this financial year and everybody will be able to see some of those reports at that stage. It will assist the wider discussion. I would not like to see the Department of Finance or Revenue having to stop its work and do a detailed report every six months when a company or sector of society issues an annual report. We have current information.