11 May 2008
Sunday Business Post
Thousands of Irish owners of overseas properties are to receive letters from the Revenue Commissioners over the coming months demanding to know if the money used to buy them was declared for tax.
The Irish tax authority is in the process of compiling a major database of foreign property transactions involving Irish residents, and it expects to issue letters seeking information over the coming months.
It will ask the individuals if the money involved in the purchase of property has been declared to the tax authority. It will also offer them the opportunity to make a voluntary disclosure and settlement , according to sources close to the process.
The move forms part of a significant clampdown into overseas property investment by Revenue.
Based on the information collated to date, the Revenue intends to send out an initial tranche of letters to between 2,000 and 4,000 Irish investors seeking information about their overseas property interests.
It is anticipated that tens of thousands of Irish investors could be contacted by the Revenue as the probe into overseas property widens.
The Revenue is investigating if any so-called ‘‘hot money’’ has been used to fund the purchase and to discover if the property is generating any taxable income. Hot money is funds that have not been declared to the Revenue for taxation purposes.
In recent weeks, the Revenue has written to a sample number of overseas investors requiring further information.
It is understood that the limited exercise has already uncovered a number of instances of tax evasion. Last month, the Revenue announced that it was seeking new powers to force estate agents to hand over information on Irish residents who buy foreign properties. It already has the power to compel Irish-based letting agents hand over details of clients with overseas properties.
The Revenue has already obtained the names of thousands of Irish citizens holding overseas bank accounts, under a recent European information-sharing protocol called the EU Savings Directive.
Revenue officials are also examining foreign tax returns filed by Irish residents, in an effort to determine whether any undeclared money has been used to buy overseas property.
A recent study by OPP Knowledge and Data monitor estimated that Irish investors owned about 60,000 foreign properties worth more than €5.5 billion. However, there is no accurate means of tracking Irish investment overseas.