Revenue eyeing up foreign holiday homes in crackdown on tax dodgers
Ireland has joined a host of other countries in a crackdown on tax dodgers who receive income from renting out properties abroad.
A new agreement with 24 OECD countries will see Ireland share and exchange information on property ownership as part of a worldwide effort against tax evasion.
Hundreds of thousands of foreign properties and holiday homes are believed to be owned by Irish residents, who must pay tax here on any rental income from those properties.
Revenue said it will share information with other countries to ensure better cross-border access to information on who owns property abroad and any rental income from it. Pic: File
While similar agreements have existed with individual countries, the new deal will cast a wider net on foreign holiday homeowners who seek to avoid the taxman. The accord will also ensure that people with large international property portfolios will pay tax on their earnings.
Revenue said it will share information with other countries to ensure better cross-border access to information on who owns property abroad and any rental income from it.
Tánaiste and Minister for Finance Simon Harris said: ‘Through the commitment made in this statement, Ireland will become an early adopter of an important tax transparency initiative which may be a foundation on which further action can be built.’
Tánaiste and Minister for Finance Simon Harris said: ‘Through the commitment made in this statement, Ireland will become an early adopter of an important tax transparency initiative which may be a foundation on which further action can be built.’ Pic: Sam Boal/Collins Photos
The initiative was jointly set up to enforce tax laws more efficiently and bring greater transparency to tax issues. Security sources told the Mail that the plan will target criminals, adding: ‘Gardaí know that many criminals like to invest their money in property, especially in tourist locations like Spain and Portugal.
‘These are their holiday homes, and they think they’re sound investments. They might even have several holiday homes. For example, if they need to leave Spain, they can end up renting them and still get money to maintain their lifestyles. But unlike their money, they can’t up and leave with a property if things get hairy. So, they’ll rent it out, or they’ll do something to try to make it make money for them.
‘What this will do is to see if someone is compliant and then be able to cut off an avenue of funding that was only achieved due to criminality.’
Ireland has joined a host of other countries in a crackdown on tax dodgers who receive income from renting out properties abroad. Pic: Getty
But the crackdown will also target ordinary members of the public who have avoided declaring rental income from holiday homes until now.
The Department of Finance said: ‘In recent years, tax policy developments have greatly enhanced cross-border exchanges of tax information and international cooperation between tax administrations, combating offshore tax non-compliance and tax secrecy on financial accounts.
‘This includes delivering transparency through automatic exchange of financial assets, through the common reporting standard (CRS) and crypto-assets (through the crypto-asset reporting framework). Despite these significant advances in automatic exchange of information, there is not yet a mechanism for jurisdictions to exchange information on non-financial assets, especially immovable property.’
Revenue said it will share information with other countries to ensure better cross-border access to information on who owns property abroad and any rental income from it. Pic: File
Despite the planned crackdown, savvy tourists and property owners are already finding ways around the potential tax burden. For example, home swapping is taking off in Spain as a no-cost alternative to holiday rentals, but the trend is expanding in a legal vacuum.
No money changes hands, no tourism rules apply, and the Tax Agency has yet to set clear obligations for participants, according to tax lawyer José María Salcedo, who spoke with Spanish news organisation ID.
He said each summer, more owners trade homes for a week in a different corner of the country, often through specialised platforms.
‘The appeal is obvious: free accommodation without entering the formal rental market. But the rapid rise of these arrangements is exposing gaps in fiscal oversight,’ he said.
Mr Salcedo explained that authorities still have no official criteria for dealing with these exchanges, adding that the practice has so far been largely ignored by auditors. Despite the absence of payment, Mr Salcedo stressed that the swap is not a free transfer.
‘There is a quid pro quo. You stay in someone’s home because they stay in yours,’ he said.
Regarding the new rules being implemented in the OECD nations, the move was about ‘recognising that ownership and transactions involving immovable property often have cross-border elements’, the Tánaiste said.
‘We acknowledge the need for improved mechanisms to ensure that tax authorities have access to relevant information on immovable property assets held and income derived therefrom abroad to enforce tax laws effectively.
‘We therefore welcome the new Multilateral Competent Authority Agreement on Automatic Exchange of Readily Available Information on Immovable Property (IPI MCAA) between tax authorities developed by the OECD,’ a statement said.
The ‘broad adoption’ of the initiative was described as ‘an important step’ towards delivering tax transparency on non-financial assets.
‘It will strengthen our ability to monitor and enforce tax compliance, and to combat tax evasion, which undermines public revenues and unfairly shifts the tax burden onto compliant taxpayers.
‘We aim to join the IPI MCAA by 2029 or 2030, subject to domestic procedures as applicable. We also encourage other jurisdictions to join this initiative in the collective effort to promote transparency, fairness and efficiency in global taxation,’ the statement added.
The OECD report says: ‘Historically, bank secrecy rules and limited exchange of information networks resulted in tax administrations having limited visibility over foreign assets and income of their taxpayers.
‘However, important tax policy developments in the past 15 years have significantly reduced barriers to cross-border exchanges of tax information.’
The multinational cross-border crackdown is being carried out worldwide by Belgium, Brazil, Britain, Chile, Costa Rica, Finland, France, Germany, Greece, Iceland, Italy, Korea, Lithuania, Malta, New Zealand, Norway, Peru, Portugal, Romania, Slovenia, South Africa, Spain, Sweden and Gibraltar, along with Ireland.
Additional reporting by Garreth MacNamee
