Tax Amnesty for Irish taxpayers with undeclared foreign income, assets, gains or bank accounts
What is it?
Revenue are clamping down on Irish taxpayers with undisclosed ‘offshore’ income or gains. After 30 April 2017 it will no longer be possible to make a voluntary disclosure in relation to any matter directly or indirectly related to offshore matters. These new provisions were introduced in Finance Bill 2016 and are aimed at targeting taxpayers who are evading Irish tax on their non-Irish income and gains.
As a result of the new EU Council Directive on mandatory exchange of information, Revenue will now have access to records held by foreign tax authorities on Irish taxpayers’ affairs within their tax jurisdictions. There is no question that the Revenue will conduct a sweep of this information to identify Irish taxpayers with interests in foreign assets or who have foreign sources of income, to check whether they have disclosed these interests and accounted for any tax due on same, to Revenue.
Who does it apply to?
The new provisions potentially impact all Irish resident individuals and corporates who have any source of non-Irish income, gains, assets or bank accounts, including but not limited to the following:
- Foreign property/holiday home that is rented out
- Foreign investments/shares (this includes an account you hold with an investment broker and within your fund – there are a mix of Irish and non-Irish shares etc.)
- A foreign bank account
- Non-Irish property that was received as an inheritance or a gift
- Interest in a foreign trust
- Non-Irish pension
Please note that if you have a foreign property and you are not remitting the funds back to Ireland or you have a large mortgage on the property and the rental income is not sufficient to cover the full repayments – you still have an obligation to record and file this income with the Revenue and you may also have a tax liability due.
What should you do?
If you have any interest in non-Irish income, gains or assets and you have not included them in your income tax returns or previously reported them to Revenue then you should contact your tax advisor and arrange to make a voluntary disclosure to ensure all of your tax affairs are in order.
If you have foreign income, gains, assets etc. that you have previously reported to Revenue however you were not sure if they were treated correctly for tax purposes, again you should meet with your tax advisor and arrange for a review to be carried out.
If in any doubt please contact us, we would be happy to meet with you, discuss your situation and advise you whether you need to make a disclosure to Revenue or not on or before 30 April 2017.
When do you need to take action?
The deadline for making a voluntary disclosure to Revenue on any offshore matters is 30 April 2017, it’s fast approaching and there’s no extensions so if you need to make a disclosure you need to act fast.
What are the implications if you chose not to make a disclosure?
If you decide to bury your head in the sand and do nothing then please be aware the consequences are significant. You will not be able to make a qualifying disclosure in relation any undeclared offshore income or gains from 1 May 2017 onwards therefore;
- You will not be able to avail of the reduced penalty rates afforded by a qualifying disclosure. As such the penalties applied to the default will be much higher (up to potentially 100% of the tax liabilities due).
- In addition these higher penalty rates may be applied to other (non-offshore) defaults that occur after 1 May 2017.
- Depending on the level of default you may be published on Revenue’s list of tax defaulters, and
- You could face a referral to the Direction of Public Prosecution (“DPP”) for investigation with a view to criminal prosecution.
If you need to make a disclosure or you have any concerns please contact us or your tax advisor as soon as possible so that you can do so before 30 April 2017.
Please contact the author, Private: Aoife Murray for more details.