Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
PROPERTY INVESTMENT FUNDS are to be hit with tax avoidance clampdown measures tonight.
As part of Budget 2020, Finance and Public Expenditure Minister Paschal Donohoe said that following a review of Irish Real Estate Firms (IREFs), Revenue flagged that some firms are “engaged in aggressive behaviour to avoid tax”.
Tonight, new anti-avoidance measures are to be passed by the Dáil by a financial resolution.
Donohoe told reporters that he has “real concerns” about how these companies are managing expenses and about the level of stamp duty being paid.
What are IREFs and REITs?
IREFs, also known as Real Estate Investment Trusts (REITs) are companies whose main activity is the ownership and management of property-related assets.
These include commercial properties such as offices, warehouses, and hotels, and also residential such as apartments.
“I have concerns about the level of tax they are paying,” said the minister, adding that he has expectations in terms of how tax is paid in Ireland, and therefore has “decided to act on that today”.
“We’re going to change them this evening. I also become aware of issues in relation stamp duty and how it is being paid in relation to transactions within that sector. That needs to change and that forms part of the resolution tonight,” he said.
He stated that these firms do have a role to play in terms of the delivery and building of new houses, but said issues were brought to his attention in relation to apartments and commercial properties.
When asked about the clampdown and what revenues it might raise for the Exchequer, Donohoe said he had not mentioned figures in his Budget speech as the vast majority of transactions that take place are covered by the current and existing tax laws.
“I didn’t put a figure against that, because it’s very difficult for me to make a call at this point,” he said in relation to what amounts of money the new tax avoidance measures might generate.
Sinn Féin’s Pearse Doherty said today that this government “laid out the red carpet to cuckoo funds and speculators” which has resulted in prices being pushed up and young people being “locked out of the property market and locked in to an unaffordable rental system”.
“This Budget appears to have heeded some calls from Sinn Féin in tackling serious tax avoidance among property investors through REITs and IREFs. Not least the Capital Gains exemption for properties sold when they’ve been held by REITs for three years or more,” said Doherty.
He said property funds “have made a fortune from the property crisis” and “used the rules of the game” to avoid paying millions of Euros in tax.
Ibec stated today that the increase in non-residential stamp duty to 7.5% for REITs is “surprising”, while Duncan Lyster, Managing Director of Lisney said:
“Minister Donohoe also spoke of changes to REITs in terms of new taxation measures, particularly in relation to capital gains and the distribution of proceeds from the disposal of a rental property. We don’t as yet have full details on these measures, but we await the specifics with interest.”
To embed this post, copy the code below on your site
Years to late
@bmul: Their paying no tax on rental income and on capital appreciation! Fairness? They need to be heavily taxed like all Irish citizens. They bring nothing to the market
Hopefully they pay their fair share. There has to be a level playing field, at the moment, they may be complying with Irish tax law technically, but not with the spirit of the law. We need fairness.
Until the taxes imposed on the public are in any way felt by the politicians who get ridiculous salaries,unvouched expenses and allowances noting is going to change.
It never will hurt them even after they leave and the facilities they enjoy in the capital is a bonus so the hammering goes on and on .
Don’t worry some well paid accounts have already found a new loophole purposely left wide open to get round that way of avoiding paying the correct taxes…
@Bobby Neary: and by “found” you mean they will have been heavily involved in the writing of the legislation and actively told what the loopholes are.
I presume he means the “ Vultures “ but as already been said they will find a way to avoid paying the proper amount of taxes! The government doesn’t work for the people anymore ( if they ever did in the first place is debatable) all they are interested in is themselves & their wealthy buddy’s! Can anyone else spot the way Pascal has been coached into trying to be more assertive? He obviously been getting lessons from Terry Prone.
What about Vulture funds? Paying no tax , was this an arrangement with the now invisible Michael Noonan the man who attempted to cover up Hep C scandal when in charge of Health.
Guess who will pay for the increased expense this companies incur? People that are working hard and paying the rent, and the city council which pays for housing of social vulnerable persons. In other words, us people will end up paying for this, as these companies need to keep their shareholders happy with the same profit margins.
Cheers!
@Victor Lungu: normally I would agree that any cost gets passed on to the consumer but in this case supply is limited in relation to demand so they would already be charging the highest they can for rent. Until now they haven’t been deciding to charge less because the rental market isn’t very competitive.
And if individuals are to pay these taxes companies should too to create a level playing field between small time investors and these funds.
Almost every budget I have heard for the last 11 years has promised that they are finally closing loop holes that average citizens were not able to avail of. This genuinely and not so clandestinely is more of the same. If you are a vulture fund landlord, you will be fine. Anyone else, it’s a warning to get out now!
If using loop holes to avoid tax, can they now be taxed retrospectively if proven ?
Quote. “Paschal Donohoe said that following a review of Irish Real Estate Firms (IREFs), Revenue flagged that some firms are “engaged in aggressive behaviour to avoid tax”. Unquote, but it’s ok for the people’s government to defend Apple et all to the tune of many billions. Classic example of one law for the elite and another for Joe and Jane, Peadar agus Maire.
Please cop on to the political realities in Ireland.
The establishment parties are in coalition to maintain the status quo of sharing power, & just enough voters are allowing that format to date.
These are the haves, who did not suffer much in the economic collapse, & who will vote to protect that political construct.
The have nots, & the next generation of voters, need to opt for parties that will build public housing, for rent & not for sale, to ensure that affordable rents are available to low income families.
Private, speculative home building should not be the primary method of housing provision in Ireland, but an alternative choice.
Let’s get back to the political choices made in poorer 1950- 1970′s, before the carpetbaggers got control.
Stamp duty is only payable on purchases, the
Reits are still exempt from tax on rental income and no Dividend Withholding Tax is being paid by their non resident shareholders. Zero taxes on the high rents they are charging. This is deemed ok?
FG are afraid to take these on..
NAMA. IRES. Beacon South Quarter… Government. Building Standards. DLRCOCO. Vulture Funds… Tax??? Foreign Investment.
I hope it goes up 4% a year, too.
have your say