Real Estate Investment Trust companies (REIT’s)

Finance Bill 2013 provides for the introduction of a tax regime for REIT companies, which are property investment vehicles. Subject to meeting a number of criteria, including a requirement to distribute 85% of its property income by way of property income dividend, the regime provides a tax exemption in respect of the income and chargeable gains of a property rental business. The REIT must derive 75% of its aggregate income from the property rental business. It may carry on other ‘‘residual’’ business, but the tax exemption applies only to the income and chargeable gains of the property rental business. The section also provides that property income dividends paid by the REIT will be subject to Dividend Withholding Tax, and will be taxable in the hands of the shareholders.

Irish resident individual and corporate shareholders will be taxable on distributions received from the REIT and also on gains made on a disposal of the shares. Non resident investors will not be subject to Irish CGT, however they may be liable in their own jurisdiction. In relation to dividends paid to non resident shareholders, it is intended that tax will be withheld at 20% from income distributions.

Contact your OSK tax consultant today for more information.