Finance Bill hits vulture funds and tax dodgers
Published 21/10/2016 | 02:30
Vulture funds that snapped up billions of euro of Irish property assets will be hit with a new 20pc tax from January.
The Finance Bill introduced a withholding tax that must be collected by fund managers before profits are distributed to investors, so it will be paid regardless of where the owners are based.
It brings the tax treatment of foreign funds into line with the rules for Irish investors. It follows public disquiet at the tax-free profits being reaped by mostly big US funds that bought assets here at knock-down prices during the crash.
The new rules apply to company structures that had been favoured by those investors to cut their taxes, in some cases to nothing, including qualifying investor alternative investment funds (QIAIFs) and Irish collective asset management vehicles (Icavs).
It follows a move in September restricting use of Section 110 companies, a low tax structure originally developed to support the growth of the IFSC that has also been used to slash taxes for funds that snapped up distressed Irish assets here after the crash.
The new tax applies to investment vehicles holding 25pc or more of Irish assets, but investor classes such as pension and insurance funds are exempt.
Meanwhile, Irish tax evaders got a reprieve in the bill to get their affairs in order.
The Budget introduced a new 'strict liability' criminal offence to help prosecute serious offshore tax evasion. The tougher rules come into force on May 1, so those currently in default still have a chance to straighten out their tax affairs.