Revenue Note for Guidance

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Revenue Note for Guidance

739W Transfer of IREF business to a REIT

Summary

Where an IREF transfers some or all of its IREF business to a REIT, then the tax arising on the IREF taxable event can be deferred, subject to certain conditions, for a period of up to 10 years.

Details

(1) ‘Property rental business’ is assigned the same meaning as in Part 25A, which deals with the taxation of REITs.

‘qualifying REIT’ means a new REIT, formed to take over the business of an IREF.

‘transferred business’ means the IREF business and associated assets transferred from the IREF to the REIT.

(2) This section applies:

  1. (a) where on or before 31 December 2017 a company notifies Revenue of its intention to become a REIT in respect of a property rental business which was previously carried on by an IREF
  2. (b) where the IREF transfers the whole of its property rental business to the REIT
  3. (c)
    1. where ordinary shares in the REIT are issued to the unit holders in the IREF in proportion to their unit holdings
    2. where the IREF receives no other consideration for the transfer other than the taking over of the liabilities of its property rental business.
  4. (d) Where the shares are issued on or before 31 December 2017, and
  5. (e) Where the IREF does not carry on any business similar to the transferred business after the date of the transfer.

(3) For the purposes of the CGT Acts, the unit holder’s acquisition of the units will be treated as the acquisition of the shares, for the purposes of determining base cost and acquisition date.

(4) For the purposes of the IREF, Investment Undertaking and REIT legislation, the IREF and the REIT shall be treated as having disposed of and acquired, as the case may be, the assets and liabilities of the property rental business for the value shown in the accounts of the IREF.

(5) The transfer of the assets from the IREF into the REIT will constitute an IREF taxable event but the resultant IREF withholding tax will be deferred until the earlier of:

  1. a date within 60 days of the disposal of the shares by the investor;
  2. the 10th anniversary of the transfer;
  3. the appointment of a liquidator to the REIT or
  4. the company ceasing to be a REIT.

Within 21 days of each anniversary of the transfer, the company must provide an annual statement to Revenue providing details relevant to the deferral of the IREF withholding tax.

(6) Instruments giving effect to a transfer under this section are not stampable.

Relevant Date: Finance Act 2021