Revenue Note for Guidance

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Revenue Note for Guidance

629 Deferral of exit tax

Summary

This section provides that exit tax may be paid in instalments over 5 years on the migration of companies/assets to EU Member States or third countries that are party to the EEA Agreement and have concluded an agreement on the mutual assistance for the recovery of tax equivalent to the Mutual Assistance Directive of 16 March 2010. The section also sets out the circumstances where the deferral of exit tax is discontinued

Details

Definitions

(1) Definitions are provided for the purposes of the section.

Deferral of tax

(2) A taxpayer can defer the payment of exit tax by paying it in instalments over 5 years. The first instalment is due and payable on the specified date and the remaining instalments are due and payable on each of the next 5 anniversaries of that date.

Non-availability of deferral option

(3) The deferral option provided for in subsection (2) will not be available in respect of assets which have been transferred to a third country unless that country is a party to the EEA Agreement and has concluded an agreement with this country or the European Union equivalent to the mutual assistance provided for in Council Directive 2010/24/EU of 16 March 2010.

Tax payable in instalments

(4) Where an election is made to pay tax in accordance with subsection (2), that tax shall be payable each year in 6 equal yearly instalments, the first instalment of which is due and payable on the specified date and the remaining instalments are due on the next 5 anniversaries of the specified date. The specified date means –

  • as regards corporation tax, the last day of the period of 9 months starting on the day immediately following the date of the event that gave rise to the exit tax charge, but in any event not later than day 23 of the month in which that period of 9 months ends, or
  • as regards capital gains tax payable in respect of a year in which the exit charge arises, 31 October in the following year.

Election to pay tax by instalments to be made in tax return

An election to pay tax by instalments or on a disposal of assets must be made in the company’s tax return. The return must be made electronically and specify:

  • the date the company ceased to be resident in this country,
  • (5)(a) the EU/EEA territory where the migrated assets were transferred,
  • the amount of tax,
  • the deferral option the company is electing to make, and
  • any other information that Revenue may require for the purposes of the section.

Obligation to make annual statement

(5)(b) Irrespective of the type of election made by a company, the company is obliged to make, without being notified to do so, an annual statement to Revenue specifying whether the company is treated as tax resident in a relevant territory (i.e. an EU Member State other than the State or a third country which is party to the EEA Agreement that has concluded an agreement with the State or the European Union equivalent to the mutual assistance provided for in Council Directive 2010/24/EU of 16 March 2010) throughout the period covered by the return.

In the case of companies electing to pay tax by instalments, annual statements are due within 21 days of the end of each of the 5 calendar years following the event giving rise to the charge to tax under section 627(2).

Information to be supplied by companies

(5) & (6) Companies electing to pay tax on the disposal of assets are required to supply the following additional information in their annual statement:

  • whether any tax became due and payable during the relevant period,
  • the amount of tax, interest and whether the tax and interest has been paid, and
  • the computation of such tax liability.

Circumstances in which deferral will be discontinued

(6) & (7) The deferral of exit tax will be discontinued on the occurrence of any of the following events:

  • where assets referred to in section 627(2) are sold or otherwise disposed of;
  • where assets referred to in section 627(2) are transferred to a third country, but this is subject to subsection (8);
  • where the company ceases to be resident in a Member State and becomes resident in a third country or the business carried on by a permanent establishment of the company is transferred to a third country, but this is subject to subsection (8);
  • where the company becomes insolvent or a liquidator is appointed to the company; or
  • where the company fails to pay the instalments referred to in subsection (2) on the due date and this failure has not been rectified within 12 months of that date.

Any tax which has not been paid at the time of the relevant event referred to in subsection (7) and any interest charged on that tax will become due and payable on the occurrence of that event.

References to third country

(8) The reference in subsection (7)(b) or (c) to a third country does not include a reference to a third country that is a party to the EEA Agreement if it has concluded an agreement with Ireland or the European Union equivalent to the mutual assistance provided for in Council Directive 2010/24/EU of 16 March 2010.

Interest payable on outstanding tax

(9) Simple interest is payable on outstanding tax and is due and payable at the same time as that tax is due and payable.

Guarantees required in certain circumstances

(10) A guarantee may be required from a company where there is a risk of non-recovery of tax.

Non-application of requirement for guarantee

(11) The requirement for a company to provide a guarantee does not apply where the tax debt can be recovered from another taxpayer who is a member of the same group as provided for in section 629A.

Interest and tax to be paid to Collector-General

(12) All amounts of interest and tax are to be paid to the Collector-General.

Tax and interest to be payable without making of assessment

(13) Any amount of tax and interest payable in accordance with the section shall be payable without the making of an assessment.

Provision for collection from Irish-resident controlling director where company defaults

(14) Where a company defaults on its obligation to pay tax, provision is made for its collection from an Irish-resident member of the same group or an Irish-resident controlling director

Collection and recovery provisions of Corporation Tax Acts and Capital Gains Tax Acts to apply

(15) The collection and recovery provisions of the Corporation Tax Acts and the Capital Gains Tax Acts apply to the collection and recovery of tax and interest.

Relevant Date: Finance Act 2019