Given the revelations in relation to the “Panama Papers” and increased focus on offshore assets held by Irish entities, it was announced in Budget 2017, and enacted in Finance Act 2016, that from 1 May 2017 the ability to avail of a qualifying voluntary disclosure in respect of offshore assets, income and gains will no longer exist.
These new rules are being introduced in conjunction with the introduction of mandatory exchanges of financial information between countries who have signed up to what is known as the “Common Reporting Standard”. In excess of 100 countries have signed up to these regulations which are due to commence in September 2017.
A qualifying disclosure is a type of voluntary disclosure made to Revenue before the commencement of a Revenue audit. The benefits of making a qualifying disclosure are:
- mitigation of penalties;
- non-publication as a tax defaulter; and
- protection from criminal prosecution in relation to the tax default.
The new provisions will affect disclosures related directly or indirectly to:
- an account held or situated in a country or territory outside Ireland;
- income or gains arising from a source, or accruing, in a country or territory outside Ireland;
- property situated in a country or territory outside Ireland.
What is very important to understand is that the term “offshore” does not just relate to “tax havens” such as the Cayman Islands or the Isle of Man. It relates to any jurisdiction outside of Ireland where income or gains may be arising to a person or company liable to tax in Ireland on that income.
Any person who holds assets in an offshore location or earns income from a state outside of Ireland should review their situation to ensure that any income/gains have been reported correctly for tax purposes.
By Alison McGinley