Revenue Note for Guidance

739E Deduction of tax on the occurrence of a chargeable gain

Summary

This section provides for the rate of tax to be applied to a “gain”. Provisions to allow for the refunding of tax, where the final amount due is less than what was paid to Revenue, are also included.

Details

(1), (1B) & (2) Where a gain arises on the happening of a chargeable event, investment undertakings are required to account for tax on that gain, referred to as appropriate tax – subject to the exception as outlined in subsection (2A) below. The rate applicable (see Tables 1(a) and 1(b) below) will depend, on whether or not the unit holder is a company, and if so, on whether or not the investment undertaking is in possession of a declaration from the company. The distinction between a company unit holder and other unit holders is of relevance only in respect of chargeable events arising on or after 1 January 2012.

**Table 1(a)**
Chargeable event arising on or after 1 January 2012	Unitholder is a company and has made a declaration	No declaration and chargeable event between 1 January 2013 and 31 December 2013	No declaration and chargeable event on or after 1 January 2014
Regular payment (i.e. made annually or at shorter intervals)	25%	33%	41%
Non-regular payment	25%	36%	41%
Disposal	25%	36%	41%
PPIU section 739BA	N/A	N/A	N/A

**Table 1(b)**
Chargeable event arising –	Regular payment (i.e. made annually or at shorter intervals)	Non-regular payment	Disposal	PPIU – see section 739BA – applicable from 20 February 2007
Before 1 January 2009	Standard rate of income tax (20%)	Standard rate of income tax (20%) plus 3%	Standard rate of income tax (20%) plus 3%	Standard rate of income tax (20%) plus 23%
Between 1 January 2009 and 7 April 2009	Standard rate of income tax (20%) plus 3%	Standard rate of income tax (20%) plus 6%	Standard rate of income tax (20%) plus 6%	Standard rate of income tax (20%) plus 26%
Between 8 April 2009 and 31 December 2010	25%	28%	28%	Standard rate of income tax (20%) plus 28%
Between 1 January 2011 and 31 December 2011	27%	30%	30%	Standard rate of income tax plus 30%
Between 1 January 2012 and 31 December 2012	30%	33%	33%	Standard rate of income tax (20%) plus 33%
Between 1 January 2013 and 31 December 2013	33%	36%	36%	Standard rate of income tax (20%) plus 36%
On or after 1 January 2014	41%	41%	41%	60%

Where a chargeable event occurred on or before 31 December 2000 (not being a regular payment to a unit holder), the rate of tax is 40 per cent.

The rates in Table 1 also apply where the investment undertaking has made an election not to account for the appropriate tax (see subsection (2A) below), and the details of the payment are correctly included in a timely tax return by the unit holder to Revenue.

However, where the election is made and the details are not correctly included in the tax return by the unit holder, the relevant rate specified in Table 2 below will apply:

**Table 2**
Chargeable event arising –	Not a PPIU	PPIU – see section 739BA – applicable from 20 February 2007
Before 1 January 2009	Marginal rate (i.e. 20% or 41% as appropriate)	Marginal rate (i.e. 20% or 41% as appropriate) plus 20%
Between 1 January 2009 and 7 April 2009	Marginal rate (i.e. 20% or 41% as appropriate)	Marginal rate (i.e. 20% or 41% as appropriate) plus 23%
Between 8 April 2009 and 31 December 2010	Marginal rate (i.e. 20% or 41% as appropriate)	Marginal rate (i.e. 20% or 41% as appropriate) plus 25%
Between 1 January 2011 and 31 December 2011	Marginal rate (i.e. 20% or 41% as appropriate)	Marginal rate (i.e. 20% or 41% as appropriate) plus 27%
Between 1 January 2012 and 31 December 2012	Marginal rate (i.e. 20% or 41% as appropriate)	Marginal rate (i.e. 20% or 41% as appropriate) plus 30%
Between 1 January 2013 and 31 December 2013	Marginal rate (i.e. 20% or 41% as appropriate)	Marginal rate (i.e. 20% or 41% as appropriate) plus 33%
On or after 1 January 2014	Marginal rate (i.e. 20% or 41% as appropriate)	80%

(1A) Appropriate tax already paid in connection with the ending of an 8-year period may be set off against appropriate tax calculated using the provisions of section 739D(2A) (which provide that the 8-year event is disregarded when the gain from a subsequent event is being calculated). Where tax is overpaid, the investment undertaking repays the excess to the unit holder and includes the amount in the return. However, an investment undertaking can elect for the Revenue Commissioners to instead make the repayment to the unit holder where the value of the chargeable units does not exceed 15% of the value of the total units at that time. The investment undertaking must advise the unit holder, in writing, of this and supply that person with the necessary information to enable the claim to be made to the Revenue Commissioners.

(2A) The investment undertaking does not have to account for the appropriate tax on the gain where it has made an election in certain circumstances, (and in such circumstances, the unit holder must then account for the tax directly to the Revenue Commissioners) as follows:

The investment undertaking can make an election where the value of the chargeable units is less than 10% of the value of the total units in the investment undertaking, or sub-fund as the case may be, at the calculation date.
The investment undertaking is deemed to have made the election once it has advised the unit holder, in writing, that it (the investment undertaking) will report certain details to the Revenue Commissioners. The unit holder is then deemed to be a chargeable person for that chargeable period for the purposes of Chapter 3 of Part 41A (obligation to make a return) and 1084 (surcharge for late returns) and is obliged to include in the return the name and address of the investment undertaking and the gains arising.
The investment undertaking will make an annual statement, in the required electronic format (including, where applicable, a nil return) to the Revenue Commissioners on or before 31 March in the following year outlining the name and address of each unit holder, the value of the unit holding to which the person is entitled at that time and such other information as the Revenue Commissioners may require.

(3) The investment undertaking is entitled to deduct appropriate tax from payments to a unit holder or, where necessary, to cancel sufficient units to cover such liability.

Relevant Date: Finance Act 2021