Quick update following preliminary assessment by our tax consultant on tax treatment of U.K. investment trusts held by Irish residents.
In a sample of 18 trusts 3 were determined to be funds taxable under gross roll up (41%) rather than general tax principles.
We have requested additional information from the managers but at first sight it could be the case that around 20% of U.K. trusts would fall into gross roll up.
As I have repeatedly pointed out it is mistake to assume that all trusts have the same tax treatment. The legislation states that in order for these investments to be considered funds for tax purposes, they must be "similar in all material respects to an Irish authorised investment company (within the meaning of Part 24 of the Companies Act 2014)
Section 1386 of the Companies Act 2014 contains the definition of “authorised investment company”.
This is not an absolute condition because subsection (2) provides that the Central Bank can approve investment companies that do not provide the facility to redeem their shares subject to such conditions as may be applied by the Central Bank. Section 1386(3) further provides that "action taken by an investment company to ensure that the stock exchange value of its shares does not deviate from its net asset value by more than a percentage specified in its articles (which deviation shall not be so specified as greater than 5%) shall be regarded as the equivalent of purchase of its shares by the investment company".
Another gem I picked up from a tax conference yesterday : if you hold a gross roll up fund purchased when non-resident your deemed 8 year tax applies from the date of purchase (even though you were non resident) not from date of residency.
Marc Westlake
Chartered Certified and European Financial Planner
www.globalwealth.ie
In a sample of 18 trusts 3 were determined to be funds taxable under gross roll up (41%) rather than general tax principles.
We have requested additional information from the managers but at first sight it could be the case that around 20% of U.K. trusts would fall into gross roll up.
As I have repeatedly pointed out it is mistake to assume that all trusts have the same tax treatment. The legislation states that in order for these investments to be considered funds for tax purposes, they must be "similar in all material respects to an Irish authorised investment company (within the meaning of Part 24 of the Companies Act 2014)
Section 1386 of the Companies Act 2014 contains the definition of “authorised investment company”.
This is not an absolute condition because subsection (2) provides that the Central Bank can approve investment companies that do not provide the facility to redeem their shares subject to such conditions as may be applied by the Central Bank. Section 1386(3) further provides that "action taken by an investment company to ensure that the stock exchange value of its shares does not deviate from its net asset value by more than a percentage specified in its articles (which deviation shall not be so specified as greater than 5%) shall be regarded as the equivalent of purchase of its shares by the investment company".
Another gem I picked up from a tax conference yesterday : if you hold a gross roll up fund purchased when non-resident your deemed 8 year tax applies from the date of purchase (even though you were non resident) not from date of residency.
Marc Westlake
Chartered Certified and European Financial Planner
www.globalwealth.ie
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