Tax Refunds on ARF Distributions for Non-Residents

Revenue changes to Tax Refunds on ARF Distributions for Non-Residents

Background

On the 22^nd December 2017 Revenue issued an ebrief which affects all non resident ARF holders. Revenue have stopped automatically making repayments of Irish tax deductions on ARF distributions to non residents where the client has also been taxed on the distribution in their country of residence.

In order to get a tax refund the individual will need to establish:

• What element of the increased value of the fund is interest and where was it earned?*.
• What element of the increased value of the fund relates to dividend/distributions and where were they earned?*.
• What element of the increased value of the fund was rent and where was it earned?*.
• What element is the original capital of the ARF? **
• Is there a Capital Article in the relevant double taxation agreement? **.
• What element of the increased value of the fund is capital growth and where was it earned?*.

In each case you need to examine the treatment of each element to ascertain the tax provisions applying as per the relevant double taxation agreement.

*Refunds will not be granted on income/capital gains derived from some Irish assets or in respect of the original capital (subject to Capital Article note).

 ** Ireland has double taxation agreements with Capital Articles with a small number of countries including Germany & Belarus (but not the UK or US)

If your client intends to move overseas in retirement it might make sense to consider this move before retirement. For people, who are already overseas, refunds will be dealt with on a case by case basis.  There is no clarity around the precise treatment of refund claims by Revenue.

To discuss how this might impact your clients please contact us  on 01 2375500 or at justask@harvestfinancial.ie