Finance Bill 2016: Irish Real Estate Funds

Proposals to apply a 20% withholding tax on payments to non-resident investors and certain Irish resident investors in Irish real estate funds (IREFs) have been published in the Finance Bill on 20 October 2016.

The proposals have been presented as a measure to seek to protect the Irish tax base in respect of profits from Irish real estate which were not being taxed through the use of Irish funds. The Minister for Finance had previously indicated that targeted proposals in relation to the use of investment funds in the Irish property market were being considered.

While the proposals are an unwelcome development for international investors who have invested in Irish real estate through Irish regulated funds, the publication of the Finance Bill provides some certainty as to the form, timing and scope of the proposed measures while also excluding pension funds and other classes of investors. Further amendment to the proposals and consultation is likely as the Finance Bill progresses.

 

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