Offshore account and trust holders in Ireland have little more than two weeks to inform the Revenue Commission of any undisclosed assets and income before it starts investigations into unpaid tax, the authority has warned.
The Revenue stated in a brief issued on August 12 that taxpayers have until September 1, 2009, to deliver a Notice of Disclosure to the Revenue regarding trusts and offshore structures. Any follow-up disclosure and payment of tax due must then be made by October 31, 2009.
According to the Revenue, the benefits of making an unprompted disclosure include “substantial mitigation” of penalties, omission from the tax defaulters list, and no risk of criminal prosecution.
Taxpayers who are already under enquiry or who come within certain excluded categories are precluded from making a qualifying disclosure, however.
The Revenue investigation, due to begin after the initial disclosure deadline on September 1, will focus on identifying undeclared tax liabilities by persons who have transferred or settled property, assets or funds to trusts or to offshore structures. The term "trusts and offshore structures" covers all categories of trusts – whether Irish or foreign – and offshore special purpose vehicles, entities, arrangements, agreements or rights – including, but not limited to, trusts, trust enterprises, foundations, establishments, offshore companies, nominee entities, employee/director benefit trusts and incentive plans, investment schemes/funds, and investment partnerships.
The investigation will include an examination of the tax returns and reporting compliance requirements of the individual transferors and settlors and will cover all historic years for which there are undeclared tax liabilities.
The Revenue will use its powers under the Taxes Acts to assist in any investigation. In addition, automatic reporting of information under the EU Savings Tax Directive and the exchange of information under the Tax Information Exchange Agreements will also be used to advance investigations.
Legislation included within the most recent 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 authorized 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 the 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 Revenue stated in a brief issued on August 12 that taxpayers have until September 1, 2009, to deliver a Notice of Disclosure to the Revenue regarding trusts and offshore structures. Any follow-up disclosure and payment of tax due must then be made by October 31, 2009.
According to the Revenue, the benefits of making an unprompted disclosure include “substantial mitigation” of penalties, omission from the tax defaulters list, and no risk of criminal prosecution.
Taxpayers who are already under enquiry or who come within certain excluded categories are precluded from making a qualifying disclosure, however.
The Revenue investigation, due to begin after the initial disclosure deadline on September 1, will focus on identifying undeclared tax liabilities by persons who have transferred or settled property, assets or funds to trusts or to offshore structures. The term "trusts and offshore structures" covers all categories of trusts – whether Irish or foreign – and offshore special purpose vehicles, entities, arrangements, agreements or rights – including, but not limited to, trusts, trust enterprises, foundations, establishments, offshore companies, nominee entities, employee/director benefit trusts and incentive plans, investment schemes/funds, and investment partnerships.
The investigation will include an examination of the tax returns and reporting compliance requirements of the individual transferors and settlors and will cover all historic years for which there are undeclared tax liabilities.
The Revenue will use its powers under the Taxes Acts to assist in any investigation. In addition, automatic reporting of information under the EU Savings Tax Directive and the exchange of information under the Tax Information Exchange Agreements will also be used to advance investigations.
Legislation included within the most recent 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 authorized 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 the 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.
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