Taxpayers with offshore assets have been warned not to try to avoid disclosure to the Revenue ahead of a deadline next Monday, reports The Irish Times.
The tax authorities have said they will accept voluntary disclosure of money or assets abroad on which tax should have been paid until May 1st, under a measure first announced in the budget last year by Minister for Finance Michael Noonan.
Anybody coming forward by that date will be able to avail of reduced penalties on any money owed. After that, Revenue has said that failure to disclose and pay tax due on foreign income and assets will be seen as an act of deliberate tax evasion. That could see penalties jumping from the “discounted” 10 per cent rate for qualifying disclosures to as much as 100 per cent.
The issue is relevant for thousands of Irish taxpayers who have returned to the State after periods living and working abroad. Many will have foreign bank accounts, property or even pensions.
New international co-operation on tax evasion means Revenue is more likely than before to discover foreign assets owned by Irish taxpayers.
Revenue no longer needs to request information from foreign jurisdictions. Automatic exchange of information provisions agreed in recent years alongside major technological improvements in areas such as data mining means Revenue will get details of financial assets belonging to Irish taxpayers in most countries worldwide.
Already, last year, details of more than 340,000 Irish tax residents were given to Revenue by tax authorities in other countries.
That will have come from the United States under the Fatca (Foreign Account Tax Compliance Act ) regulations and from 26 of the EU’s 27 other members. The information from within the EU under the directive on administrative co-operation includes details of any pension or property owned, as well as details of insurance policies and employment income, including directors’ fees.
The EU cited the “political priority of fighting against tax avoidance and aggressive tax planning” as it introduced the rules back in 2014.
Next September, Revenue will receive extensive data on foreign bank accounts from 54 states under recently agreed OECD common reporting standards rules. These include many Caribbean states, the Isle of Man and the Channel Islands.
A further 47 will report similar information to Irish tax authorities next year, including Australia, Canada, Middle Eastern countries and New Zealand.
That means that even taxpayers who have no current income to declare on foreign bank accounts or property by the current Revenue deadline will need to supply details of any foreign income, capital gain or even inheritance in future years.