PAYE taxpayers who hold shares in foreign companies face a last minute rush to regularise their affairs with Revenue ahead of a clampdown on offshore assets, reports Irish Times.
Revenue has extended a deadline for voluntary or “qualifying” disclosure of offshore source sof income by Irish taxpayers to Thursday next, May 4th after the original deadline yesterday fell on this bank holiday.
But many PAYE workers who do not generally file tax returns were unaware the new hardline approach from Revenue would affect them.
The tax authorities sent letters out in February to around 500,000 taxpayers who did file annual return. The letters warned that Revenue would no longer give errant taxpayers credit for approaching it with details of offshore assets and earnings after the May dealdine. Instead, it would treat the holding of hidden offshore income as deliberate tax evasion and impose penalties of up to 100 per cent of any tax due.
It also said reminded self-assessed taxpayers that new automatic exchange of information arrangements meant Ireland’s Revenue would get details of any income and / or assets of Irish taxpayers in more than 100 countries by 2018.
But no letters were sent to the majority of taxpayers who pay tax at source through the PAYE system.
However, Revenue warned this weekend that many of those people could have issues to address before the Thursday deadline.
The biggest source of offshore income for many PAYE taxpayers is dividends they may have received on foreign shares. Hundreds of thousands of Irish taxpayers hold shares in foreign companies – not least Vodafone and US company Verizon as a result of their ill-fated investment in the original flotation of Telecom Éireann, now Eir, in 1999.
Many others, through their employment or otherwise, will hold shares in companies listed in the UK, the United States or in Europe. This is especially the case with employees of technology companies.
“A preliminary look at the Foreign Account Tax Compliance Act (Fatca) data supplied by the US Internal Revenue Service [to Irish Revenue] indicates that there are dividends paid each year by US companies to PAYE taxpayers who, ordinarily, would not be obliged to complete a tax return,” a Revenue spokeswoman said.
“Revenue strongly encourages anyone in receipt of dividends from a US company, or indeed in receipt of any foreign dividends, to ensure that they have declared this income to Revenue and, if they have not done so, to make a disclosure of the foreign income to Revenue before 5.30pm on Thursday.”
No detail is yet available on the scale of Irish PAYE taxpayers’ liabilities from US share dividends.
PAYE earners may get some relief as taxpayers whose total undeclared tax liability is less than €6,000 will still be able to approach Revenue after the May 4th deadline and pay any tax due without penalty. However, they need to approach Revenue before Revenue contacts them about any such offshore assets.