Revenue Note for Guidance

The content shown on this page is a Note for Guidance produced by the Irish Revenue Commissioners. To view the section of legislation to which the Note for Guidance applies, click the link below:

Revenue Note for Guidance

736 Option for non-application of section 735


As a result of section 735 the tax regime in respect of a life company’s unit linked business is that gains on the disposal of units are exempt from tax (section 731(6)), but the disposal of assets in the unit trust gives rise to a tax charge. However, since 1992 the annual increase in value of a life companies chargeable assets has generally been subjected to tax. Life companies can opt, using this section, to bring their unit linked business within this regime if certain conditions are met. This essentially means that the unit trust is, despite section 735, deemed to be a collective investment undertaking.


(1) There are 3 conditions for a unit trust to be allowed “collective investment undertaking” status —

  • it must be an authorised unit trust scheme within the meaning of the unit Trusts Act, 1990 and accordingly would be a “collective investment undertaking” but for section 735,
  • its trustees must pay by 1 November, 1992 capital gains tax on a notional disposal of all its assets at 31 March, 1992, and
  • its trustees must notify the Revenue Commissioners that the capital gains tax payment has been made.

When the 3 conditions are fulfilled the unit trust is deemed to have been a collective investment undertaking from 31 March, 1992 for the purposes of section 734 and Schedule 18.

(2) The life company is thereafter liable to tax on the annual increase in value of the units held by it.

(3) The notional disposal of assets on 31 March, 1992 is deemed to have been for a consideration equal to the market value of the assets on that day.

Relevant Date: Finance Act 2020