Michael McGrath (Cork South Central, Fianna Fail)
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In 2022, Revenue commenced a compliance based review of the IREF regime with the aim of identifying the reason(s) for the reduction, primarily but not exclusively in relation to IREF withholding tax paid by IREFs in 2021, in respect of IREF taxable events that occurred in accounting periods ended in 2020 relative to the amount of IREF withholding tax paid in 2020 in respect of taxable events that occurred in accounting periods ended in 2019.

The focus of the review is centred on a detailed analysis of the information contained in the 2020 IREF Financial Statements, IREF Withholding Tax Returns, and Form 1 (IREFs) Income Tax Returns.

The review encompasses the consideration of various risk factors and a key focus is the identification of cases for compliance interventions to ensure perceived tax risks are addressed. The analysis involves detailed examination, evaluation and comparison of tax returns and financial statements for a number of years. The analysis also includes a review of the transactions undertaken by IREFs and of the distributions made in order to ascertain if the distributions have been treated in accordance with the legislative provisions. While the review is on-going, some IREFs reported that the COVID-19 pandemic impacted the value of investment property, and realised/unrealised losses were recorded in the Financial Statements in accounting periods ended in 2020, which may have impacted the level of IREF WHT paid in that period relative to the previous period.

The work involved is highly technical and requires the interpretation and application of complex tax legislation and is not yet complete. If the review identifies any deficiencies in the legislative provisions for IREFs, this will be advised to officials in the Department of Finance.