574 Trustees of settlement

Summary

Under the ordinary meaning of disposal the creation of a trust (other than a case within section 567(2)) constitutes a disposal and the settlor should be charged to tax by reference to the market value of the assets as at the date of settlement. Section 574 treats the trustees of a settlement as a single and continuing body of persons distinct from the persons who may from time to time be trustees. As a result they are chargeable to capital gains tax on any chargeable gains made by them on the disposal of trust assets. The trustees as a body are to be regarded as resident and ordinarily resident in the State unless the administration of the trust is carried on outside the State and all the trustees or a majority of them are not resident or not ordinarily resident in the State.

Details

Trustees – general

(1)(a) In relation to settled property, the trustees are to be treated as a single and continuing body of persons distinct from the persons acting as trustees and are to be treated as resident and ordinarily resident in the State unless the trust is administered outside the State and the trustees or a majority of them are not resident or not ordinarily resident in the State.

(1)(b) A person carrying on a business of trust management is treated on a different basis from the general rule. Such a person is not to be treated as resident in the State in relation to a trust if the whole of the settled property of the trust was provided by a person not domiciled, resident or ordinarily resident in the State. Thus, an overseas trust does not become chargeable to capital gains tax merely because the management of the affairs of the trust are entrusted to an Irish bank or an Irish professional trustee.

Recovery from beneficiaries of tax due by trustees

(2) If capital gains tax assessed on trustees is not paid within 6 months of the due date and the asset, or part of the proceeds from the sale of the asset, in respect of which the chargeable gain accrued is transferred by the trustees to a person absolutely entitled to it as against the trustees, then, that person may be assessed and charged on the amount of the capital gains tax proportionate to the asset or proceeds so transferred. The assessment may be made within 2 years from the time the tax charged on the trustees became payable.

Settled property vested partially in one trust and partially in another

(3) Where part of the settled property is vested in a trustee or set of trustees and part in another trustee or set of trustees, the trustees are to be treated as a single body even where they act separately.

Relevant Date: Finance Act 2021