jpd said:The revenue have told me that as the policy was taken out prior to 20 Sep 1993, any gains are taxable at 40% and neither indexation nor annual exemption apply. This seems unfair to say the least!
Two regimes for taxation of foreign life policies
Under the old regime, which applies from 20 May 1993, a gain is
chargeable to capital gains tax. However, capital losses and an
individual's capital gains tax annual exemption amount cannot be set
against such gains. [See Appendix B]
Under the new regime, which applies from 1 January 2001, income
from policies that issued from an "offshore state" is taxable as income.
Where there is a disposal of the policy the gain on the disposal is
taxable as income provided details of the disposal were correctly
included in a person's tax return. Otherwise a charge to capital gains
tax arises. [See Appendix B]
The old regime still applies to a policy issued from jurisdictions other than an
"offshore state". An "offshore state" is a country other than Ireland, which is a
member of the EU, the European Economic Area or a member of the OECD
with which Ireland has a double taxation agreement.
jpd said:It would certainly seem to be at variance with EU rules on freedom of capital and movement of labour.
jpd said:The gains involved with this particular policy are not huge but I think there is a question of principle at stake here.
Has anybody had similar experience and what was the outcome ?
4. Is the policy a foreign life policy?
4.1 A foreign life policy is in general terms one normally issued from outside
Ireland. However, a policy taken out with the Irish branch of an overseas
insurer is treated as an Irish policy provided certain conditions are met.
jpd said:Thanks CCOVICH, that's makes it a bit clearer - it's still unfair - I should have cashed the policy in before returning!
jpd said:Maybe I'll just cash it in and not tell them!
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