Pearse Doherty (Donegal, Sinn Fein)
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241. To ask the Minister for Finance the tax treatment of Irish REIT shares which are given as share based remuneration to employees of Irish REITs. [27116/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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Where an Irish REIT gives shares in that company as remuneration to its employees, the shares are taxable as perquisites under section 112 of the Taxes Consolidation Act, 1997 and they are treated the same as shares in any company that are awarded or given to its employees. The shares are also liable to USC and employee PRSI.

Where an employer awards shares to an employee free or at a discount, they are taxed within the PAYE system. The value of any shares awarded, or the value of any discount, is treated as notional pay at the time the shares are given to the employee. The related income tax, USC and PRSI liability is remitted by the employer company with the relevant P30 return.

Any dividend income from the shares is liable to tax under Schedule F and, if the shares are disposed of, any gain made is liable to Capital Gains Tax in the normal way.

The Deputy will be aware that there are a number of Revenue approved employee financial participation schemes, which provide limited income tax relief, such as approved profit sharing schemes and savings-related share option schemes. These are available to all Irish employer companies, including an Irish REIT.

Pearse Doherty (Donegal, Sinn Fein)
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242. To ask the Minister for Finance if non-resident shareholders in Irish REITs are not subject to capital gains tax upon disposal of their shareholding provided that there is an uplift in the value of their REIT shares. [27117/17]

Pearse Doherty (Donegal, Sinn Fein)
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243. To ask the Minister for Finance the anti-avoidance measures which would prohibit a person from changing to a non-resident in order to avoid capital gains tax upon disposal of their shareholding provided there is an uplift in the value of their REIT shares. [27118/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 242 and 243 together.

I am advised by Revenue that if a non-resident shareholder disposes of his or her shares in an Irish REIT, there is no charge to capital gains tax in accordance with section 29 Taxes Consolidation Act (TCA) 1997.

Typically, non-resident persons are chargeable to capital gains tax on disposals of relevant assets. Those assets include land and buildings situated in this country (including unquoted shares which derive their value or the greater part of their value from such assets), minerals in this country or any rights, interests or other assets in relation to mining or minerals or the searching for minerals and assets associated with a trade carried on in this country through a branch or agency.

As REITs are publicly listed real estate companies and quoted shares are excluded from the definition of relevant assets under section 29 TCA, there is no charge to capital gains tax for non-resident shareholders disposing of their shareholding in an Irish REIT.

Section 29A of the Taxes Consolidation Act 1997 is designed to counter the avoidance of Capital Gains Tax (CGT) by individuals who become temporarily non-resident for tax purposes by providing that certain assets disposed of by an individual in any year of non-residence are deemed to have been disposed of and reacquired at their market value on the last day of the year in which the individual left the State to reside elsewhere, thus imposing a CGT charge.

However, this charge will only arise where the individual is not taxable in the State for a period of 5 years or less before again becoming so taxable and only to the extent that he disposes of those assets during that period and was domiciled in Ireland prior to departure.

The assets concerned are a holding of the issued share capital in any company (wherever located) with a value of either 5% or more of all that company’s issued share capital or exceeding €500,000.

For disposals made on or after 23 December 2014, where there is an increase or a decrease in the market value of assets between the last day of the year of departure and the date those assets are disposed of, the market value of the assets on the date they were disposed of will be treated as their market value for the purpose of the CGT charge.