807A Liability of non-transferors

Summary

This section applies to impose a tax charge on an individual who does not come within the charge imposed by section 806, because that individual was not the transferor of the assets concerned.

Details

(1) & (8) This section applies where, as a result of a transfer of assets, either alone or in conjunction with associated operations, income becomes payable to a non-resident person or to a person not domiciled in the State, and an individual who is resident or ordinarily resident in the State, who is not liable to tax under section 806 as the transferor, receives a benefit out of those assets. The section applies irrespective of when the transfer or associated operations took place.

(2) & (4) The value of the benefit, up to the amount of “relevant income” of years of assessment up to an including the year the benefit is received, is treated as income of the resident, or as the case may be, ordinarily resident, individual for all tax purposes for that year and charged to income tax under Case IV of Schedule D.

Relevant income

(3) & (8) Relevant income of a year of assessment is any income arising in that year to a non-resident or non-domiciled person and which, by virtue of the transfer or associated operations, can directly or indirectly be used to provide a benefit for the resident, or as the case may be, ordinarily resident individual or to enable a benefit to be provided to that individual. The section applies, however, only to relevant income arising on or after 11 February 1999.

Non-domiciled persons

(5) If, by virtue of domicile, the individual concerned would not have been liable to income tax if he or she had received the income of the non-resident, or as the case may be, non-domiciled, person directly, then no charge to income tax arises under this section. In relation to income arising on or after 1 January 2016 this subsection was repealed by FA 2015.

Interaction with CGT and avoidance of double taxation

(5) Where the benefit received by the individual is in the form of a capital payment from an offshore settlement which cannot be matched with relevant income of the year of receipt or an earlier year, and in consequence of the capital payment the individual is assessable to capital gains tax under section 579A or 579F, then, to avoid double taxation, the individual is treated in a subsequent year as having been assessed on an amount of income benefit equal to the amount of gain on which he or she was assessed to capital gains tax.

Exemption and Appeals

(6) The section does not apply if the Revenue Commissioners are satisfied the transfer of assets and associated operations (if any) were not effected for tax avoidance purposes or that they were bona fide commercial transactions [under the old or the new rules, as appropriate – see notes on sections 806(8) and 806(10)]. A person aggrieved by a decision of the Revenue Commissioners in this regard has a right of appeal to the Appeal Commissioners. The section does not apply if the Revenue Commissioners are satisfied that the non-resident person to whom the income accrues is resident in the EEA and the income is arising due to real economic activity in that EEA state.

Relevant Date: Finance Act 2019