Dáil Éireann Debate, Tuesday - 26 May 2026
168. Deputy Pearse Doherty asked the Tánaiste and Minister for Finance to outline his rationale for ruling out introducing an entity level tax on vulture funds using IREF structures to own residential property, despite his own Department recognising there is a 'strong case' for such a tax in order to ensure rental income does not flow out of the State untaxed. [39784/26]
View answerAs the Deputy is aware, the 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 at a rate of 20 per cent.
There are exemptions from IREF withholding tax for certain investors, for example, where an investor is a domestic or EU/EEA equivalent pension scheme, investment fund or a life assurance company. These categories of investors are generally associated with collective, widely held investment. Exemptions are in line with international taxing norms. They are necessary to prevent double taxation in the hands of the ultimate individual investor, and it is a wider policy objective to support financial security through long-term investments such as pensions and life assurance policies.
The Funds Review report noted that while there appears to be a case for amending the IREF regime to incorporate an entity-level tax, this must be balanced against the need for private capital, domestic and international, to support the development and ownership of housing and other commercial real estate and with the need to have a stable regime, which allows for long-term investment decisions.
Following publication of the Funds Review report, further analysis of the recommendation and the IREF regime was carried out by officials in the Department of Finance, on foot of which it was announced in Budget 2026 that the recommendation to introduce an entity level tax will not be progressed, and that instead, a public consultation on proposals to simplify the IREF regime, without limiting its effectiveness, would be held.
