Dáil Éireann Debate, Thursday - 18 December 2025
227. Deputy Pearse Doherty asked the Tánaiste and Minister for Finance if he will implement the recommendation of the funds review to develop an entity level tax on Irish real estate investment funds to address the situation where these funds pay no tax on rental income; and if he will make a statement on the matter. [73165/25]
View answerThe IREF regime is predominantly a withholding tax regime that applies to an Irish fund where 25 per cent or more of the value of the assets in a fund is derived from Irish property such as land and buildings. Where the profits of the IREF are transferred to a non-resident investor, the IREF is generally required to apply IREF withholding tax (IREF WHT) at a rate of 20 per cent.
There are certain exemptions from IREF WHT for certain non-resident investors, for example, for collective investments where an investor is a domestic or EU/EEA equivalent pension scheme, investment fund or a life assurance company. These exemptions are in line with international taxing norms for such investors and are necessary to prevent double taxation in the hands of the ultimate individual investor.
In order to prevent instances where entities are utilised for personal investment by a single investor, the IREF regime contains detailed anti-avoidance measures to ensure that the exemptions from IREF WHT are not available for investors who can select IREF assets or influence the business of an IREF.
Finance Act 2019 introduced an additional suite of anti-avoidance measures for IREFs, resulting in a charge to income tax at the level of the IREF in certain circumstances. These measures were introduced to prevent the use of excessive debt and other payments to reduce distributable profits that would be subject to IREF WHT.
Based on the latest data available from Revenue, the cumulative net tax collected under the IREF regime since its introduction in Finance Act 2016 is €262 million. The 2019 anti-avoidance measures have added to the overall tax yield for the IREF regime.
Breakdown of total tax collected under IREF regime from 2017 to 2025
|
For Accounting Periods Ending 1st January to 31st December |
Year IREF Tax Paid |
Gross IREF WHT (€m) |
Income Tax Charge (€m)* |
Total IREF WHT Tax & Income Tax Paid (€m) |
IREF WHT Refunds (€m)** |
Net IREF Tax Receipts (€m) |
|
2017 |
2018 |
8.5 |
N/A |
8.5 |
0 |
8.5 |
|
2018 |
2019 |
28.5 |
N/A |
28.5 |
0.2 |
28.3 |
|
2019 |
2020 |
65.7 |
6.4 |
72.1 |
3.2 |
68.9 |
|
2020 |
2021 |
36.8 |
17 |
53.8 |
18.9 |
34.9 |
|
2021 |
2022 |
30.9 |
12.2 |
43.1 |
6.6 |
36.5 |
|
2022 |
2023 |
27.6 |
10 |
37.6 |
0.8 |
36.8 |
|
2023 |
2024 |
20.7 |
11.2 |
31.9 |
2.2 |
29.7 |
|
2024 |
2025 |
26.9 |
N/A*** |
26.9 |
8.2**** |
18.7 |
|
Total |
|
245.6 |
56.8 |
302.4 |
40.1 |
262.3 |
*Specific anti-avoidance measures introduced in Finance Act 2019 may give rise to an income tax charge at the level of the IREF.
**Please note the majority of the repayment claims relate to more than one period.
*** Data on the Form 1 IREF returns for 2024 Income Tax is not yet available.
****The IREF WHT refunds figure is for repayments processed in the year to date.
Please note data for previous years has been revised as required to reflect amended IREF returns received on foot of Revenue compliance reviews and updates arising from verification of the data.
Since the publication of the Funds Review report in October 2024, there has been increased recognition of the need for urgent action to be taken to address Ireland’s housing supply shortage, the role that institutional investment plays, and the risk presented by any instability or uncertainty in the institutional investment landscape.
During Budget 2026, the former Minister for Finance announced that the Funds Review recommendation for consideration to be given to an entity-level tax for Irish Real Estate Funds (IREFs) will not be progressed. As complexity in the IREF regime continues to present a barrier to investment, the former Minister for Finance announced that a public consultation on proposals to simplify the IREF regime, without limiting its effectiveness, will be held in 2026.
