Non Resident Vendors – Caveat Vendor

This new clearance process came into effect in late 2022. It is a welcome development for both non-resident vendors and their representatives as it is viewed to speed up the process.. It is important to plan for this tax clearance application when sale closes or indeed before sale closes so that delays on receiving sales monies are not experience. Of particular relevance is for the non-resident’s Income tax returns to be up to date.

According to the Taxes Consolidation Act 1997, a non-resident vendor may be assessed and charged with income and capital gains tax (“CGT”) in the name of a representative in respect of the disposal of an Irish property. These representatives can take the form of the accountant representing the vendor.

The proceeds of such a sale should be withheld by the solicitor until notice of intention to distribute sales proceeds to the non-resident vendor has been given by the accountant to the Revenue and also until clearance has been furnished by the Revenue Commissioners that all tax affairs are in order.

The Process

This process is set out in the Tax and Duty Manual (TDM). This TDM outlines how the clearance request application should be submitted and the necessary documentation that must accompany a valid clearance request.

The documents required to be submitted to Revenue are as follows:-  

1. 1.  Form in Appendix 1 to the TDM declaring non-residence status and confirmation of how the    property was used during the period of ownership


2. 2.  Tax Advisory Notification signed by client to confirm representative is acting on their behalf


3. 3.  Form CG1 for the tax year in which the disposal takes place


4. 4.  GT computation


5. 5.  Full payment of CGT liability (if any)


6. 6.  Contract for Sale

If Revenue do not respond within 35 working days, sales proceeds can then be distributed to the non-resident vendor. No further specific letter of clearance is required before distribution can take place.
 

Contact us

At Malone & Co, our dedicated Tax Team has extensive experience in managing all areas of tax accounting and planning for clients. If you would like to discuss managing your return filing obligations or any planning matters, please contact a member of our Tax Team, or your usual Malone & Co. contact.