Revenue Note for Guidance

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Revenue Note for Guidance

730J Payment in respect of foreign life policy

Summary

This section sets out the income tax regime which applies to a foreign life policy when the policyholder receives a payment without there being a whole or part disposal of the policy.

Details

This section applies from 26 September 2001 for payments in respect of a foreign life policy that is a personal portfolio life policy. In any other case it applies from 1 January 2001.

Individual

(a) Where a policyholder (who is an individual) of a foreign life policy receives a payment in respect of the policy and the amount of the payment is correctly included in a return, it will be liable to income tax as outlined in Table 1 below —

Chargeable event arising —

Regular payment
(i.e. made annually or at shorter intervals)

Non-regular payment (excluding PPLPs)

PPLPs – see section 730BA – applicable from 26 September 2001

Before 1 January 2009

Standard rate of income tax (20%)

Standard rate of income tax (20%) plus 3%

Standard rate of income tax (20%) plus 23%

Between 1 January 2009 and 7 April 2009

Standard rate of income tax (20%) plus 3%

Standard rate of income tax (20%) plus 6%

Standard rate of income tax (20%) plus 26%

Between 8 April 2009 and 31 December 2010

25%

28%

Standard rate of income tax (20%) plus 28%

Between 1 January 2011 and 31 December 2011

27%

30%

Standard rate of income tax (20%) plus 30%

Between 1 January 2012 and 31 December 2012

30%

33%

Standard rate of income tax (20%) plus 33%

Between 1 January 2013 and 31 December 2013

33%

36%

Standard rate of income tax (20%) plus 36%

Between 1 January 2014 and 31 December 2014

41%

41%

60%

On or after 1 January 2015*

41%

41%

60%

*See additional Note following Table 2 below

However, if the payment is not correctly included in such a return, it will be liable to income tax at the rates outlined in Table 2 below:-

Table 2:

Chargeable event arising –

Not a PPLP

PPLPs – see section 730BA – applicable from 26 September 2001

Before 1 January 2009

Marginal rate (i.e. 20% or 41% as appropriate)

Marginal rate (i.e. 20% or 41% as appropriate) plus 20%

Between 1 January 2009 and 7 April 2009

Marginal rate (i.e. 20% or 41% as appropriate)

Marginal rate (i.e. 20% or 41% as appropriate) plus 23%

Between 8 April 2009 and 31 December 2010

Marginal rate (i.e. 20% or 41% as appropriate)

Marginal rate (i.e. 20% or 41% as appropriate) plus 25%

Between 1 January 2011 and 31 December 2011

Marginal rate (i.e. 20% or 41% as appropriate)

Marginal rate (i.e. 20% or 41% as appropriate) plus 27%

Between 1 January 2012 and 31 December 2012

Marginal rate (i.e. 20% or 41% as appropriate)

Marginal rate (i.e. 20% or 41% as appropriate) plus 30%

Between 1 January 2013 and 31 December 2013

Marginal rate (i.e. 20% or 41% as appropriate)

Marginal rate (i.e. 20% or 41% as appropriate) plus 33%

Between 1 January 2014 and 31 December 2014

Marginal rate (i.e. 20% or 41% as appropriate)

80%

On or after 1 January 2015

41%

80%

Note: With effect from 1 January 2015, the distinction between ‘correctly included’ and ‘not correctly included’ is removed for other than a PPLP, and, any payment, whether regular or non-regular, (excluding from a PPLP), will be liable to income tax at the rate of 41% (i.e. one percentage point higher than the higher rate of income tax (40%) that comes into effect from that same date).

Company

(b) A company in receipt of a payment in respect of a foreign life policy is liable to tax on the amount thereof under Case III of Schedule D.

Relevant Date: Finance Act 2019