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Irish Revenue To Get New Powers To Probe Offshore Trusts

by Robert Lee, Tax-News.com, London

02 December 2008


Legislation included within the Irish Finance Bill gives the Revenue Commission new powers to investigate those suspected of avoiding Irish tax on capital gains earned in offshore trusts.

The extensive powers were granted to the Revenue in section 86 of the finance bill, which states:

"Provisions are being introduced to require the production on certain information in relation to Offshore Discretionary Trusts and the ability to inspect certain documentation held in respect of these Trusts."

Section 86 inserts a new section, 896A, into the Taxes Consolidation Act 1997 which provides for delivery of information by a third party where that party is concerned with the making of a trust and the settlor is resident in Ireland but the trustees are not resident in the state. In addition, the section provides that an authorised officer of the Revenue Commissioners may, by notice in writing, request a party to a settlement to provide details of the settlement.

The new provisions mean that the Revenue will have powers to demand information on accounts held by Irish citizens in offshore trusts, and the trusts will have to comply with Revenue’s request within a six-month period. The information will then be put into a database and cross-referenced to establish whether capital gains tax was paid on profits.

The proposed rules follow on from an initiative launched earlier this year when the Revenue gave Irish depositors the chance to declare untaxed amounts in held in banks, building societies and savings banks in return for reduced penalties.

Taxpayers who had EUR100,000 or more in aggregate in these accounts (which included funds not previously declared for tax) at any time between January 1, 2005 and December 31, 2007 have until September 15, 2009, to make a voluntary disclosure under the initiative, which began in May 2008.

According to the Revenue, those deciding to make a voluntary disclosure under this scheme will have any penalty applied to unpaid tax "substantially mitigated." In addition, they will not have their name published in the quarterly 'tax defaulters' list, nor will the Revenue launch investigations into their tax affairs with a view to prosecution.


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