1003 Payment of tax by means of donation of heritage items

Summary

Certain tax liabilities may be discharged by way of a donation of an important heritage item to a specified national collection provided certain conditions are met.

The scheme takes the form of a non-refundable payment on account of tax of an amount equal to 80 per cent of the market value of the heritage item donated. The heritage item must be valued at a minimum of €150,000 and, in the case of a collection, at least one item in the collection must have a minimum value of €50,000. There is a ceiling on the aggregate of items approved for donation in any one year of €6 million.

Details

Definitions

(1) “the Acts” are the Tax Acts (that is, the Income Tax Acts and the Corporation Tax Acts, other than those provisions which provide for tax collected under the PAYE tax deduction system and relevant contracts tax), the Capital Gains Tax Acts, and the Capital Acquisitions Tax Consolidation Act 2003 (including enactments amending or extending that Act). In addition any instrument (for example, a regulation or order) made under any of these Acts is included in the definition.

“approved body” is one of the institutions eligible to receive a donation. These institutions are —

• the National Archives,
• the National Gallery of Ireland,
• the National Library of Ireland,
• the National Museum of Ireland,
• the Crawford Art Gallery Cork Limited,
• the Irish Museum of Modern Art, and
• any other State owned or funded body approved by the Minister for Arts, Heritage, Gaeltacht and the Islands (now Minister for Arts, Sport and Tourism), with the consent of the Minister for Finance.

“arrears of tax” is tax (including interest and penalties) which at the time the gift is made is unpaid —

• in the case of income tax, corporation tax and capital gains tax, for the relevant period, and
• in the case of gift tax and inheritance tax, before the calendar year in which the relevant gift is made.

“current liability” for income tax and capital gains tax refers to tax due in the year of assessment in which the gift is made. For corporation tax it refers to tax liability arising in the accounting period in which the gift is made. In the case of gift or inheritance tax it means tax owed for the calendar year in which the gift was made.

“designated officer” is either the member of the selection committee representing the body to which the gift is made or, if that body is not so represented, a person nominated by the Minister for Arts, Heritage, Gaeltacht and the Islands (now Minister for Arts, Sport and Tourism).

“heritage item” is defined in subsection (2)(a).

“market value” is defined in subsection (3).

“relevant gift” is the gift of a heritage item to an approved body provided no consideration (other than the tax credit given by the section) is received.

“relevant period” for income tax and capital gains tax is any year of assessment before the year in which the relevant gift is made. In the case of corporation tax it is any accounting period before the accounting period in which the relevant gift is made.

“selection committee”: this committee comprises —

• an officer of the Minister for Arts, Sport and Tourism, who is to act as Chairperson of the committee,
• the Chief Executive of the Heritage Council,
• the Director of the Arts Council,
• the Director of the National Archives,
• the Director of the National Gallery of Ireland,
• the Director of the National Library of Ireland,
• the Director of the Crawford Art Gallery Cork Limited,
• the Director of the National Museum of Ireland,
• the Director and Chief Executive of the Irish Museum of Modern Art.

In addition, it includes a person acting in the capacity of any of the above persons where that person cannot attend due to illness, absence or other cause.

“tax” is income tax, corporation tax, capital gains tax, gift tax or inheritance tax.

“valuation date” is the date on which an application is made to the selection committee for a determination that an item is a heritage item.

The selection committee may act even if there are one or more vacancies and may regulate its own procedures. The member of the selection committee representing an approved body which is intended to receive the donated item cannot be involved in deciding on its selection (but may, however, partake in a discussion of the application before the decision is made).

Heritage items

(2)(a) A heritage item is any kind of cultural item (including any archaeological item, archive, book, estate record, manuscript and painting), any collection of cultural items and any collection of cultural items in their setting. Before any such item can be a heritage item, the selection committee, following an application to them by the person who owns the item, must make a determination that the item is an outstanding example of its type (pre-eminent in its class) whose export from the State would constitute a diminution of the accumulated cultural heritage of Ireland or whose import into the State would significantly enhance that heritage and also that the item is suitable for acquisition by one of the bodies approved for accepting such items.

(2)(aa) The selection committee, in considering an application that an item is a heritage item, is required to —

1. consider the supporting evidence submitted by the applicant, and
2. request and consider a written opinion relating to the application from—
   
   1. the approved body which is the intended recipient of the donation, and
   2. the Heritage Council, the Arts Council or such other person or body which is considered appropriate by the selection committee.

(2)(ab) Where an application is in respect of a collection of items, the selection committee is precluded from making a determination in relation to the collection unless, in addition to making a determination relating to the collection as a whole, the committee is satisfied that – based on its consideration of the application under paragraph (aa) – it could also make a determination in relation to at least one item in the collection, if that was to be required.

(2)(ac) The restriction imposed by subsection (2)(ab) – that in any collection of items there is at least one item of significant importance in its own right – does not apply in relation to collections consisting wholly of manuscripts or archival material. Such collections can be those created by one individual, family or organisation, or assembled by an individual, family or organisation. However, it is conditional on the collection being in existence for at least 30 years, with each item being part of the collection for that term, as well as there being merit in the items being maintained as a collection.

(2)(b) When it receives an application for a determination that an item is a heritage item, the selection committee must make a written request to the Revenue Commissioners for a valuation.

(2)(c) The selection committee is limited to selecting items valued at a minimum of €150,000. Where the determination is sought in respect of a collection of items, at least one item in the collection must have a minimum value of €50,000. There is a ceiling on the aggregate value of the items in respect of which determinations are made and not revoked in any one year of €6 million. Where a determination is made and subsequently revoked, the value of the item concerned is not to be aggregated with the value of the other heritage items in respect of which a determination has been made in that year for the purposes of calculating the €6 million cap.

(2)(d)(i) An item ceases to be a heritage item —

• where the item is sold or otherwise disposed of to a person other than an approved body,
• where the owner notifies the committee in writing that it is not intended to make the gift of the item to the approved body, or
• where the gift of the item is not made to an approved body within the calendar year following the year in which the determination is made to the effect that it is a heritage item.

(2)(d)(ii) Where the selection committee becomes aware within the calendar year in which the determination is made of the occurrence of either of the first two above events, it may revoke the determination.

(2A) The selection committee may make a determination in respect of an item of archival material or a manuscript, or a collection consisting wholly of archival material or manuscripts, without the item, or any individual item in the collection, having the minimum value of €50,000 as set out in subsection (2)(c). However, the general valuation of €150,000 on the overall collection is retained.

Valuation rules

(3)(a) The market value of any item is (subject to subsection (3)(d)) the lesser of —

1. the price which, in the opinion of the Revenue Commissioners, the item would realise if sold on the open market on the valuation date (that is, the date of application to the selection committee for a determination), and
2. 1. the price which, in the opinion of the prospective donor, the item would fetch if sold on that date, or
   2. at the election of that person, the amount paid for the item by that person.

(3)(b) The Revenue Commissioners may ascertain the value in such manner and by such means as they think fit and for this purpose they may engage a person to inspect and value the item for them.

(3)(c) Any cost incurred in the valuation process is to be defrayed by the Revenue Commissioners.

(3)(d) The value of heritage items that are acquired for donation at auction is deemed to include the auctioneers fees and also—

1. any VAT in connection with those fees, or
2. any tax corresponding to VAT in the case of auctions held abroad.

Certificate of receipt of gift

(4) Once a relevant gift is made to an approved body the designated officer of that body must issue a certificate to the person who made the gift certifying the receipt of the relevant gift and the transfer of ownership of the item to that body. A duplicate of the certificate must be transmitted by the designated officer to the Revenue Commissioners.

Tax credit

(5) Where a person makes a relevant gift, the person is, on submission to the Revenue Commissioners of the certificate given by the designated officer of the body to which the gift was made, treated as having made on the date of the submission a payment on account of tax of an amount equal to 80 per cent of the market value of the relevant gift on the valuation date. This restriction in the amount of tax credit available applies to determinations made on or after 1 January 2009.

(6) The payment on account of tax is to be set so far as it is possible —

• firstly, against arrears of tax (including interest and penalties) and for an earlier period in priority to a later period, and
• then, against any current liability to tax which the person nominates.

For the purpose of determining whether a period is an earlier or later period, the date on which an arrear of tax became due decides whether it is for an earlier or later period.

(7) Any remaining balance is set off against such future liabilities to tax of the person who is treated as having made the payment as that person nominates.

(8) A person who has the power to sell a heritage item in order to pay capital acquisitions tax may make a relevant gift of that item in or towards satisfaction of that tax.

Prohibition on refunds

(9) There is no entitlement to a refund of tax in respect of a payment on account of tax made under this section.

Prohibition on interest

(10) Interest is not payable should it be due, whether directly or indirectly, because of any set-off which arises in respect of a payment on account of tax.

Bar on double relief

(11) A person discharging tax by virtue of this section is not entitled to any other relief in respect of the gift.

Publication

(12) The Revenue Commissioners are to include the details of all gifts made in a calendar year under this section in the publication of their annual report to the Minister for Finance.

Relevant Date: Finance Act 2021