895 Returns in relation to foreign accounts

Summary

This section places an obligation on financial institutions and other agents who act for or assist Irish residents in opening foreign bank accounts to make an appropriate return to the inspector. In line with the provision in section 894 in relation to other third party return requirements, the return by the financial institutions under this section is on an automatic basis rather than waiting for a request from the inspector.

In addition, Irish residents themselves are obliged to report the opening of such accounts on their annual returns of income. This obligation applies irrespective of whether the matter also falls to be reported by a financial institution or other agent.

As the provision is an anti-evasion one, substantial penalties are provided for non-compliance. In the case of financial institutions and other agents, the penalty is €4,000 for each occasion they fail to comply with the section. In the case of the taxpayer, noncompliance attracts the surcharge for late submission of returns under section 1084. The surcharge will apply for the year in which the undeclared account was opened.

Details

(1) “appropriate inspector” identifies the inspector to whom the details of foreign bank accounts are to be supplied by an intermediary.

“chargeable period” derives its meaning from section 321(2) and means an accounting period of a company for corporation tax purposes or a year of assessment for income tax purposes.

“deposit” is a sum of money paid to a person on terms under which it will be repaid with or without interest and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person to whom it is made. The reference to “with or without interest” is intended to deal with the situation where, for example, the deposit is a non-interest-bearing deposit. The definition is intended to embrace normal deposit accounts, current accounts, certificates of deposit and time deposits.

“foreign account” defines the type of account which must be reported to the inspector as an account in which deposits are held at a location outside the State.

“intermediary” is any person carrying on in the State a trade or business in the ordinary course of the operations of which is provided a relevant service. The term chiefly refers to financial institutions and includes Irish branches of foreign banks.

“relevant person” is a person who in the normal course of trade or business receives or holds deposits. The definition includes foreign branches of Irish financial institutions.

“relevant service” means the acting in the State as an intermediary in or in connection with the opening of foreign accounts with relevant persons by or on behalf of residents.

“resident” is a person resident in the State.

“specified return date for a chargeable period” is the date by which the intermediary must make the return, that is, the 31st of October in the following year where the chargeable period is a year of assessment and 9 months after the end of the chargeable period where it is an accounting period of a company.

“tax reference number” has the meaning set out in section 885.

(2) An obligation is imposed on intermediaries to make a return for a chargeable period to the appropriate inspector of all residents for whom they acted in that period in the opening of foreign bank accounts, specifying in respect of each resident —

• the resident’s name and address,
• the resident’s tax reference number,
• the name and address of the relevant person with whom the foreign account was opened,
• the date on which the foreign account was opened, and
• the amount of the deposit made in opening the account.

(3) The return must be made on or before the specified return date for the chargeable period.

A resident who uses the services of an intermediary in the opening of a foreign bank account must supply the intermediary with the details which the intermediary is required to include in a return under this section. An obligation is also placed on the intermediary to take all reasonable care (including the requesting of documentary evidence) to confirm that the details supplied are correct.

(4) A penalty of €4,000 is imposed on an intermediary for each and every failure to comply with the obligations of this section. A resident is liable to a similar penalty for failure to supply the required information to the intermediary or for supplying incorrect information.

(6) There is an obligation on residents to include in their annual returns of income details of any foreign accounts opened by them or, where they are the owners of the deposit held in the account, which they cause to be opened. Failure to comply with the obligation results in the application of the surcharge under section 1084 for late submission of returns (or submission of incorrect returns).

As PAYE taxpayers are not under an obligation to make mandatory returns of income and may not be requested by an inspector to make one for a particular year, it is provided that a resident is to be regarded as a chargeable person for the purposes of the surcharge under section 1084 and the obligation to make automatic Self Assessment returns under Chapter 3 of Part 41A for any chargeable period in which he/she opens or causes to be opened a foreign account. The phrase “notwithstanding anything to the contrary in section Part 41A or section 1084” is because in normal circumstances PAYE taxpayers are excluded from the scope of chargeable person in the definition of that term in those sections.

The return of income (within the meaning of section 1084) to be delivered by the resident for the chargeable period is to include the following details of the foreign accounts —

• the name and address of the relevant person with whom the account was opened,
• the date on which the account was opened,
• the amount of the deposit made in opening the account, and
• the name and address of the intermediary, if any, who provided a relevant service (that is, gave assistance) in relation to the opening of the account.

Relevant Date: Finance Act 2019