Brian Morgan Solicitor writes about the new Capital Gains Tax Clearance procedures which now apply in Ireland since October 2022 where a non-resident Vendor is selling property in Ireland
Gains arising on the disposal of specified assets in Ireland will always be subject to Irish Capital Gains Tax, regardless of the residence or domicile position of the individual disposing of them. This arises under Section 29 of the Taxes Consolidation Act (TCA) 1997.
This generally arises where a person resident in Northern Ireland is selling property purchased by them some years previously in Ireland and where they may or may not have made a profit. Such profit is liable to Capital Gains Tax in Ireland, but the important matter to bear in mind is that, even if they have not made a profit, they are still obliged to file a Capital Gains Tax Return and seek Clearance from the Revenue Commissioners in Ireland before their solicitor can release the proceeds of sale to them.
Return to the Revenue Commissioners
Under Sections 1034 and 1043 TCA 1997, a non-resident person is assessable and chargeable to Income Tax as well as Capital Gains Tax and this liability is assessable in the name of any representative of that non-resident person; for example, the vendor’s solicitors, located in the State. The extent of any liability for the non-resident vendor is the same as if he/she were actually resident in the State. The imposition of a charge on the representative in such cases leads to a liability for the representative where the vendor does not make good any Income Tax or Capital Gains Tax arising in respect of the asset sold.
Whereas in the normal course, a person resident in Ireland is only required to file a Capital Gains Tax Return when making their Income Tax Return later in the year of sale, where a non-resident sells property, the solicitor acting for the vendor is obliged to ensure that Tax Clearance is properly sought from the Revenue Commissioners before he can release the proceeds of sale to his non-resident client.
Previously, it was necessary for the vendor’s Accountant to file the required Returns with the Revenue Commissioners and, after this was done, seek a “Letter of No Audit”. The difficulty, however, with this process was that there was no time limit within which the Revenue Commissioners were required to respond and there were often delays by the Revenue Commissioners in issuing the “Letter of No Audit”.
A new online process has now been created by the Revenue Commissioners to manage applications for Capital Gains Tax Clearance. The new process involves practitioners (Accountant or Solicitor) being registered as a TAIN Advisor to make the application and, once a complete and accurate submission has been made by the TAIN Advisor to the Revenue Commissioners, they have received no notification of a compliance intervention from the Revenue Commissioners and no request from the Revenue Commissioners for further information within a defined period of 35 days, then the TAIN Advisor is deemed to have received automatic clearance.
While the process appears simple in theory, it is extremely important that the vendor gives full and accurate instructions to the TAIN Advisor, so that the Returns can be submitted by the TAIN Advisor without delay. Remember, the 35 days only commence to run from after the filing of the submission to the Revenue Commissioners and, most importantly, provided no notification has been received from the Revenue Commissioners during that 35-day period thereafter that they wish to investigate the matter further.
There will be many trips and falls for the unwary in this new process!
For further information on Property transactions, you should contact:
Morgan McManus Solicitors
Have you read our FREE Guide to Selling your House : Morgan-McManus-Guide-to-Selling-Your-House-November-2020.pdf (morganmcmanus.com)