Revenue Note for Guidance

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Revenue Note for Guidance

263 Declarations relating to deposits of non-residents

Summary

This section provides for a form of declaration in respect of deposits beneficially owned by persons who are not resident in the State so that a financial institution may pay interest on such deposits without deduction of DIRT. The section supplements paragraph (g)(ii) of the definition of “relevant deposit” in section 256(1).

Details

Declarations

Without the required declaration, a financial institution cannot treat a deposit beneficially owned by a non-resident as not being a “relevant deposit” and must deduct tax at source on interest paid or credited on the deposit.

(1) The required declaration must be in writing to the financial institution and must be —

  • signed by the person to whom interest on a deposit is payable (the person who makes the declaration (“the declarer”) may be the non-resident beneficial owner himself or a person, resident or otherwise, holding the deposit in trust for the non-resident), and
  • in a form prescribed or authorised by the Revenue Commissioners.

The declarer must declare that the person or persons beneficially entitled to the interest on the deposit (that is, the declarer or the person or persons for whom the declarer holds the deposit in trust) is or are not resident in the State. It is important to note that all of the persons beneficially entitled to the interest must be non-resident. If one of the joint owners of a deposit were an Irish resident, the deposit would be a “relevant deposit” and interest paid on the deposit would be subject to deduction of DIRT.

The names, addresses of principal places of residence and countries of residence of all the persons beneficially entitled to the interest must be stated in the declaration.

An undertaking must be given by the declarer to advise the financial institution if any of the persons so referred to (that is, any person beneficially entitled to the interest) becomes resident in the State. This is to alert the financial institution to the fact that the condition in paragraph (g)(i) of the definition of “relevant deposit” in section 258 that no Irish resident should be beneficially entitled to any interest on the deposit is no longer fulfilled in relation to the deposit. Accordingly, the bank, etc would then have to treat the deposit as a “relevant deposit” and deduct tax from all payments of interest made after the time when a person resident in the State became beneficially entitled to any interest on the deposit.

Such other information as the Revenue Commissioners may reasonably require must be supplied in the declaration. In addition to the preceding information the declaration also requires the reference number of the account in which the deposit is held and a statement of the capacity (that is, agent, trustee, etc) in which the declaration is signed.

Declarations made in accordance with paragraph (22) of Finance Resolution No. 12, passed by Dáil Éireann on 30 January, 1986, are treated as if they were declarations made in accordance with this section.

Retention of, and examination of, declarations

(2) Financial institutions must keep and retain declarations under this section for the longer of —

  • 6 years, and
  • until 3 years after the account is closed or becomes a relevant deposit (by, for example, a beneficiary changing his/her residence status to Irish resident).

An inspector is authorised to require a financial institution to make available within a specified time all declarations under this section on giving notice in writing to the financial institution.

An inspector is also authorised to examine all declarations so made available by a financial institution and to take extracts from them or copies of them.

Relevant Date: Finance Act 2020