SICAV Fund. Tax Treatment ?

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phanteon

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I invested in the Sarasin Global real estate Fund over eight years ago.
The name of the fund is "JSS global real estate Euro P acc"

Does anyone know how this fund is treated for tax ?

If I ring Revenue will they insist on me giving them my name.
I have tried a few accountants, two didn't know how to work out the tax on this investment. One accountant seemed to know a lot but I would love to know for certain how to make a tax return for this fund.

I have been told that it is taxed at 41% and that there is an eight year deemed disposal rule to be applied as well.
 
Thanks.

I'm guessing from the fund name that it's not a UCITS fund (correct me if that's wrong) so that brings you into something of a grey area. If Revenue takes the view that the fund is subject to "comparable" legal structures and "comparable" regulatory oversight as a UCITS then you're into 41% exit tax territory, with a deemed disposal after 8 years (rather than the investment being subject to incone tax/CGT).

However, Revenue have stated that in these circumstances that they are prepared to review the underlying fund documentation and will express a view as to the appropriate tax treatment.

At this stage, the safest course is probably to return the latent gain (assuming there is a gain!) as a deemed disposal on the 8 year anniversary of the investment and to include an expression of doubt on the form.

Hope that helps.
 
I Think it might be a UCITS Fund.
I sold half of my original investment ( September 2006) at various stages ie. 2010, 2011 2012 all at a loss. Then in November 2014 I sold almost all the remaining units for a higher price than what I originally paid for them. However I am still making an overall loss on my original investment. Total money received for units sold is less than the purchase cost of these units.
But an accountant told me that I have to pay 41% tax on the units that I sold in November 2014 as previous losses cannot be offset against gains.
 
Well if it is a UCITS then your accountant is correct I'm afraid - the exit tax regime applies and you can't set off previous losses.
 
Ah no, so that means if you sell units at a loss at 11.00am, 1.00pm, 2.00pm, and 3.00pm and then you sell some units for a gain at 4.00pm on the same day that you suck up the losses and pay 41% tax on the gain you made on the 4.00pm sale.
 
Well there would only be one valuation point on each dealing day when you can actually redeem the units but, yes, you have the concept right. There is no exit tax on the units redeemed at a loss in any given tax year but this is disregarded in calculating any exit tax payable on any future redemptions in any subsequent tax year.

The fact that previous losses cannot be set off against subsequent gains is one of the real disadvantages of the exit tax regime for Irish investors.
 
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Yes this does seem to be quiet penal. I would say a lot of people (accountants included) do no realize this. I always knew that you couldn't offset losses from another fund but I presumed you could within the same fund as this would seem the logical thing to do. I ran a few calculations and if one bought units at a few different dates and sold at different times, that the tax to be paid can vary from treating the purchase of the units as separate transactions compared to cost averaging the purchases.
I would like to ring the revenue and get a definitive answer. Do i have to give revenue my name?
I have tried to contact revenue this morning but am getting an answering machine.
Would revenue reply to me by email without me giving them my correct name?

Thanks for your help Sarenco and forgive me for not been overjoyed with your answer. I suppose I wanted to hear a different answer.
Oh one more thing. If i sold units in November 2014, when have I to pay the tax on the gain?
 
I doubt you will get much joy from the frontline Revenue staff. A Luxembourg UCITS is considered a "good" offshore fund and is taxed in the same way as an Irish fund.

Exit tax on a gain arising on redemption in 2014 should be paid by 31 October (or 12 November if filing online) 2015.
 
You are getting a certain amount of loss reliefs within ucit funds themselves as the stocks within the fund are offset against each other , I also thought that the same fund would be OK to offset against each other and my original plan was to buy loads of MSCI world on this assumption .
I don't think UCITS are good for buying regularly at different intervals so I invested a lump sum and will only top up if I'm within 10% of the price I'm already bought at , if it's outside this range ill buy trusts or individual shares it's messy but I really don't want to end up with loads of UCIT funds bought at differnt prices .that could be very costly depending on stock market movements .
 
Yes, its a UCITs so that means it is absolutely 100% going to be subject to exit tax at 41%.

However, there is more it than that,as its a Lux domiciled fund it has no double tax treaty with the USA yet the fund is 48% invested in US Equities.

That means that you suffer 30% Dividend Withholding tax on all dividends for which you get no credit against your personal tax liability. The yield on the fund is currently 3.16% so you are being hit with an unrecoverable tax cost of 0.455%pa.

Equally, the fund charges are a huge 1.84%pa Total Expense Ratio (source Morningstar)

You could achieve a better result with an Irish Domiciled fund which would be able to access the Irish USA double tax treaty and which would cut your dividend witholding tax in half.

For example, the fund we use has a TER to 0.23%pa so that would represent a total annual saving to you 1.8375%pa



Practical information
2 Depositary: RBC Investor Services Bank S.A.
2 Further information about the Fund, the prospectus, the articles of association and the latest annual and any subsequent half-yearly report
may be obtained in German and English free of charge from the management company J. Safra Sarasin Fund Management (Luxembourg)
S.A., 11-13 Bvd de la Foire, L-1528 Luxembourg, tel.: +352 262 1251, and from the Company, JSS Investmentfonds, 11-13, Bvd de la Foire,
L-1528 Luxembourg.
2 Further practical information about the Fund and current share prices is available at www.jsafrasarasin.ch/funds.
 
Thanks Marc for the above information.
The fund I have is the Global real Estate Euro P Acc so it is an accumulation fund and i don't get dividends separately.
I fully agree with you that the fund charges are very high. This fund has done very well over the last six or seven years.
Unfortunately I bought into it when the price was high.
I bought a sizable amount in September 2006 at 146 and it was doing so well that in February 2007 I bought three times as much again in February 2007 at 179.
Soon after the crash came and this fund went all the way down to 50.
I don't know how I stuck with it at this low point but I did.
I sold some in 2010 at 106
2011 at 118
2012 at 123
2012 at 127
The above disposal added up to 50 % of the first lot of units I bought at a price of 146.

Then in November 2014 I sold almost all of the remaining units from this first batch ( cost 146) for a price of 174

Total sales of all units comes to about 98% of the cost of the units.
My stupidity or patience for hanging in when the value of my investment had proven to be a wise move.

But now I think I have to pay tax on the November 2014 disposal as i made a gain on this sale of 28 euro/share. (174-146)
I am annoyed that I have to pay tax on a loss but if that's the rule, well so be it.
I know the units i sold have gone past the eight anniversary by two months but i don't think its worth it to pay a deemed disposal on these when i sold them so soon after anyway.
 
Just to clarify one point on this.

The dividend withholding tax is taken before the dividend is paid to the fund.

It makes no difference if you receive the payment or reinvest
 
UCIT Funds in Luxembourg are now subject to the EUSD some Banks/Financial Institutions may apply reporting to the Lux tax authorities.
They will then report to the Irish revenue.
There is still an element of difference as some say they will only report when asked.
The EUSD has some limitations as certain equity funds fall 'out of scope' . This is to be repealed and replaced by the Common Reporting Standard which will include all funds for 2016.
You can invest in offshore funds with Irish banks and only pay the tax after 8 years . This would seem a better option that choosing Irish domiciled funds. These are taxed at source yearly and can be unfair if losses are made in any year.There are no credits for the loss. I also assume that the 41% rate could go down if it goes up any more feck the mattress may be an option.
There is always gold no tax no reporting .
I assume that buy and exit of funds are reported by the Irish Bank/Financial Institution to revenue so its not really a self assessment .I remember a broker saying its up to you, like you have a choice ?
 
phanteon said:
Ah no, so that means if you sell units at a loss at 11.00am, 1.00pm, 2.00pm, and 3.00pm and then you sell some units for a gain at 4.00pm on the same day that you suck up the losses and pay 41% tax on the gain you made on the 4.00pm sale.
Click to expand...
I see it as any gain above the original purchase price ,argue that set up costs be a credit for tax which is penal, only 20% in the UK.
 
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