739K Interpretation

Summary

This section is an interpretation section for terms used in this Chapter.

Details

(1)Main definitions

“accrued IREF profits” means the accrued income NAV in respect of a unit. It includes all profits earned since the acquisition of the unit by the unit holder;

“balance sheet” means the balance sheet, statement of financial position or equivalent prepared in accordance with international accounting standards or GAAP;

“income statement” means the profit and loss account, income statement or equivalent prepared in accordance with international accounting standards or GAAP;

“IREF” is defined as

1. an investment undertaking or a sub-fund of an umbrella investment undertaking, in which 25% or more of the value of the assets are derived directly or indirectly from IREF assets, or
2. an investment undertaking or a sub-fund of an investment undertaking, the main purpose or one of the main purposes of which was to acquire IREF assets or carry on IREF business,

but a UCITS will not be an IREF;

“IREF assets” are one or more of

1. land or mineral rights in the State,
2. shares in a REIT (within the meaning of Part 25A),
3. shares deriving their value or the greater part of their value from assets in (a) or (b) but not shares quoted which are actively and substantially traded on a stock exchange other than REITs shares,
4. specified mortgages, as defined by section 110(5A), other than
• those issued by a qualifying company as part of a business which is not a specified property business or
• those which form part of a loan origination business of the IREF,
5. units in an IREF;

“IREF business” means activities involving IREF assets, including dealing in or developing land or a property rental business, whose profits or gains would be chargeable to income tax, corporation tax or capital gains tax, apart from section 739C;

“IREF excluded profits” is defined as

2. dividends on shares which derive their value from Irish property are IREF excluded profits; and
3. dividends, other than property income dividends paid by a REIT, or distributions in respect of gains accruing on the disposal of assets of the property rental business of a REIT.

“IREF profits” is defined as the profits and gains of the IREF as shown in the income statement, other than excluded profits.

“IREF taxable event” is defined as any way in which the value of the profits of the IREF are passed onto the unitholder; namely:

1. a relevant payment
2. the cancellation, redemption or repurchase of units, including on liquidation;
3. any exchange of units in one sub-fund for units in another sub-fund,
4. the issuing of bonus units
5. an IREF ceasing to be an IREF
6. the disposal of a unit, e.g. on sale
7. the disposal of a right to receive any of the accrued IREF profits without a transfer of the underlying unit;

“IREF withholding tax” is an income tax at 20% on the IREF taxable amount;

“market value” is to be interpreted in accordance with section 548;

“PRSA” means a Personal Retirement Savings Account within the meaning of section 787A;

“purchased IREF profits” is the purchased income NAV of a unit;

“qualifying intermediary” means an intermediary (within the meaning of section 739B(1)) who is authorised by the Central Bank of Ireland under:

1. before 3 January 2018, the European Communities (Markets in Financial Instruments) Regulations 2007 (S.I. No. 60 of 2007), and
2. on and after 3 January 2018, the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No. 375 of 2017);

“specified person” is defined as a unit holder in respect of whom exit tax does not arise under Chapter 1A, except for:

1. The NTMA;
2. Exempt unit trusts;
3. Investment Limited Partnerships;
4. Irish pension funds, including PRSAs, AMRFs and ARFs, which provide the appropriate declaration to the;
5. Irish investment undertakings, or, where appropriate, a sub-fund that is a unit holder in another sub-fund of the same umbrella scheme, which provide the appropriate declaration to the IREF;
6. Irish life assurance companies, which provide the appropriate declaration to the;
7. Credit units, which provide the appropriate declaration to the IREF;
8. Charites, which provide the appropriate declaration to the IREF;
9. Qualifying companies, which provide the appropriate declaration to the IREF;
10. EEA equivalents of pension funds, investment undertakings or life assurance companies, which provide the appropriate declaration to the IREF;

“value of an IREF taxable event” in relation to an IREF taxable amount means:

• the value of the payment for the purposes of paragraph (a) of the definition of “IREF taxable event”,
• the market value of the unit less any amount subscribed for that unit for the purposes of paragraph (b), (c), (d), (e) and (f) of the definition of “IREF taxable event”, and
• the amount of accrued IREF profits sold or transferred for the purposes of paragraph (g) of the definition of “IREF taxable event”.

(1A) A qualifying intermediary who carries on a trade which holds units in a nominee capacity in an IREF (that is not a personal portfolio IREF) on behalf of unit holders who come with paragraph (a), (d), (e) or (f) (with its reference to paragraph (a)) of the definition of a specified person under subsection (1) may make a declaration in accordance with Schedule 2C on behalf of the unit holders in respect of that IREF.

(2) When calculating the portion of an asset which derives its value from Irish land:

• (a) any artificial transactions put in place to manipulate the value, e.g. flooding with cash, will be ignored and
• (b) it is the gross value of the assets which should be considered

Relevant Date: Finance Act 2021