Aindrias Moynihan (Cork North-West, Fianna Fail)
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208. To ask the Minister for Finance if real estate investment trusts are subject to tax on income derived from real estate, either rental or disposal; if he is examining any review of their situation; and if he will make a statement on the matter. [26788/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The rules relating to Real Estate Investment Trusts (REITs) in Ireland are contained in Part 25A of the Taxes Consolidation Act 1997. The purpose of the REIT regime is to allow for a collective investment vehicle which provides a comparable after-tax return to investors as direct investment in rental property, by eliminating the double layer of taxation at corporate and shareholder level which would otherwise apply on a property investment via a corporate vehicle.

A REIT is generally exempt from corporation tax on the income and gains from its property rental business, which are instead taxed in the hands of the investor, provided the REIT distributes at least 85% of its property income.

In order to qualify as a REIT, a number of conditions must be satisfied including (but not limited to) the requirement that at least 75% of the aggregate income of the REIT must derive from its property rental business. The residual or non-property rental business is subject to corporation tax in the normal manner.

A further condition is the requirement for the REIT to be listed on the main market of an EU stock exchange within three years of becoming a REIT.

Dividend Withholding Tax (DWT) at the standard rate of 25% is generally deducted by the REIT from dividends paid to shareholders. The DWT is available as a credit against the shareholder’s Irish tax liability.

For Irish investors:

• Individuals are liable to tax at their marginal rates on dividends received, with credit for the DWT deducted;
• Corporates will be liable to tax at 25%, with credit for DWT; and
• Institutional portfolio investors are liable to tax on REIT dividends at 12.5%, this being the rate generally applicable to trading income.

On 22 October 2024, following Government approval, my predecessor published the ‘Funds Sector 2030: A Framework for Open, Resilient & Developing Markets’ a wide-ranging review of the funds and asset management sector. The Review fulfilled a recommendation of the Commission on Taxation and Welfare 2022 report which called for “an examination of the regimes for Real Estate Investment Trusts (REITs) the Irish Real Estate Funds (IREFs) and their role in the property sector, including how they support housing policy objectives”.

The report of the Funds Review team noted that following an initial flow of firms, the REIT regime now consists of one firm and therefore has not developed sufficient scale since 2013 and that there is therefore not a strong case at present for any significant amendments to the REIT regime.