Revenue to get automatic reporting of Deposit Interest information from Financial Institutions

The Revenue Commissioners, with the consent of Mr. Brian Cowen, T. D., Tánaiste and Minister for Finance, yesterday, 6 May 2008, made regulations requiring certain financial institutions to make automatic returns of interest and other similar payments to them. The regulations apply to banks, buildings societies, credit unions and the Post Office Savings Bank where accounts or investments pay more than €635 in a year.

The reporting requirement is being phased in and in the first phase payments made by banks, buildings societies and the Post Office Savings Bank from which DIRT was deducted for the years 2005 and 2006 must be reported to Revenue by 15 September 2008.

The power to make these regulations was provided in Finance Act 2006 and was prompted by a recommendation of the Revenue Powers Group that there should be automatic reporting to Revenue of payments made by financial institutions, life assurance companies, collective investment funds and Government Departments and agencies.

This change also brings domestic interest reporting into line with foreign interest reporting under the EU Saving Directive.

The regulations are available on the Revenue website at: S.I. No. 136 of 2008.

Additional Information

Reporting Threshold: Accounts and investments that pay interest of more than €635 in a year will be reported. This is also subject to an anti-account splitting provision.

Details to be reported: These include gross payment, name, address and date of birth if the account holder is an individual, and the account was opened or the investment was made before 1 January 2009. For new accounts opened and investments made on or after 1 January 2009 the details to be reported include gross payment, name, address, and tax reference number or, in the absence of a tax reference number, a special marker indicating that the tax reference number was not provided.

Type of Payments: The income to be reported will be any return on an investment in the nature of interest or any amount paid in consideration of the making of an investment, including building society and credit union dividends.

Phasing-in of Reporting: The payments to be reported for the years 2005 and 2006 are payments made by banks, buildings societies and the Post Office Savings Bank from which DIRT was deducted. These must be reported by 15 September 2008.

The payment to be reported for 2007 are, subject to some exceptions, all interest and other similar payments made by made by banks, buildings societies and the Post Office Savings Bank. These must be reported by 31 October 2008.

The payments to be reported for the year 2008 and subsequent years are, subject to some exceptions, all interest and other similar payments made by banks, buildings societies, the Post Office Savings Bank and credit unions and these must be made by 31 March in the following year. In relation to credit union dividends, the reporting requirements will not operate for dividends paid in respect of periods ending before the end of 2008.

Revenue Powers Group (2003): Section 891B of the Taxes Consolidation Act 1997 (introduced in the Finance Act 2006) was prompted by a recommendation of the Revenue Powers Group, established by the Minister for Finance, that there should be automatic reporting to Revenue of payments made by financial institutions, life assurance companies, collective investment funds and Government departments and agencies. The Revenue Powers Group consisted of an independent group chaired by a former Supreme Court Judge and consisting of six experts from the taxation, accountancy and legal professions.

The Group recommended as follows in relation to financial institutions: For all new accounts/investments in Irish financial institutions, the institution should be required to obtain and record the account holder's/investor's PPSN, or foreign equivalent, and include such number in the automatic reports to Revenue. Deposit takers (i.e. Irish banks, building societies, credit unions and the Post Office Savings Bank) would be required to make an automated annual report to Revenue in respect of all resident individuals who earn deposit interest in a tax year. The report to include the name and address of the beneficial owner of the interest, the account number(s) — and for new accounts the PPSN — and the gross amount of such interest (no de minimis figure is proposed-principally to deter account splitting).

The Group, in reaching its recommendation, stated

“Experience of evasion of both DIRT and tax on the underlying deposits, strongly indicates that domestic financial institutions — not only deposit takers, but also life assurance companies and collective funds-are used to hide untaxed funds.”

The Group went on to state

“Requiring these institutions to report annually on their customers' deposits/investments would greatly assist tax compliance by deterring the use of ‘onshore’ — and very accessible — accounts and financial products to hide undetected income/gains."

Link to the Revenue Powers Group Report

Further proposals: The Revenue Commissioners are developing further proposals to extend automatic reporting to payments made by life assurance companies, collective funds, Government Departments and other Government agencies (including An Post).