Revenue "clampdown" - Are US Shares an 'offshore asset'?

Discussion in 'Investments' started by sadie, Feb 22, 2017.

  1. sadie

    sadie Frequent Poster

    Posts:
    590
    I see an article today about the Revenue clamping down on those with offshore assets.

    http://www.irishtimes.com/business/...xpayers-of-offshore-asset-clampdown-1.2984087

    I have shares from a previous job in a US Share account, as I am sure do many Irish employees of US technology firms. I fill in the US Tax Holding form every year. I haven't sold any shares for at least 10 yrs since I left the job, so haven't 'gained' anything nor brought any money into Ireland.
    So I'm not withholding any information from Revenue, am I?
     
  2. dereko1969

    dereko1969 Frequent Poster

    Posts:
    2,457
    Sorry don't know the answer but I hate when the term "Clampdown" is used when it's simply implementing the law as intended.
     
    Jim2007 likes this.
  3. Kerrygrrrl

    Kerrygrrrl Registered User

    Posts:
    17
    Yes. This revenue initiative is only a problem for you if you had dividend income or gains which you did not declare on your tax return. Further, you may have been liable to tax depending on when you received the shares so it would be important that this was in order too.
     
  4. joe sod

    joe sod Frequent Poster

    Posts:
    351
    I have had a US trading account for years and have been declaring dividends and capital gains for years. However there is no place on form 11 to actually declare that you have a US trading account. There is the "foreign income" section which has a specific entry for US dividends and the "capital gains" section where you declare all capital gains whether it is property , irish shares or any other asset. Also you have to fill out W8ben form on US account where you enter all your details incuding PPS number so surely by doing this you cannot be accused of having hidden offshore account.
     
  5. SBarrett

    SBarrett Frequent Poster

    Posts:
    1,997
    That's so the Revenue can match back the info that the get from the US trading company. The days of people having "Swiss bank accounts" are over, there is an incredible amount of information shared between financial institutions and Revenue's from all over the world.

    I had a meeting with a client and her accountant this morning and we were talking about this. The Institute of Tax and Revenue held a joint conference about this last weekend and she said the Revenue had no real answers on what was being looked at and what was not. They kept on saying there would be an eBrief issued on all the questions that were asked.

    It is always prudent to err on the side of caution. If they Revenue don't need the info, they will disregard it. If they do want it and you don't report it, you will be hit with penalties and interest.


    Steven
    www.bluewaterfp.ie
     
  6. Gordon Gekko

    Gordon Gekko Frequent Poster

    Posts:
    1,677
    How can you be hit with interest and penalties if the relevant income/gains has been returned?

    This is turning into a PR nightmare for Revenue.
     
  7. SBarrett

    SBarrett Frequent Poster

    Posts:
    1,997
    You would if it has been returned and paid. Whether you need to put the information on your return is the issue.

    It would help if the Revenue went to the tax advisor conference with some actual answers to their questions!!


    Steven
    www.bluewaterfp.ie
     
  8. Gordon Gekko

    Gordon Gekko Frequent Poster

    Posts:
    1,677
    You mean you wouldn't...

    This is built to prevent people with suitcases full of cash from availing of disclosure regimes.

    Yet all I'm hearing is Mom and Pop types with holiday homes, current accounts, and disclosed investment income.

    A PR disaster as usual.
     
  9. dub_nerd

    dub_nerd Frequent Poster

    Posts:
    1,292
    Last edited: Feb 22, 2017
    Apologies, I am confused here. (TL;DR: Skip to the last sentence of the post for my actual question). I got a ROS notification today about "Reviewing and Correcting Your Tax Returns". I presume this is the vanilla letter sent to all self-assessed individuals, and not particularly singling me out. I followed the link to Revenue's web page on 'Making a Disclosure'. There I see the the items of interest are:
    • an account held or situated in a country or territory other than the State
    • income or gains arising from a source, or accruing, in a country or territory other than the State
    • property situated in a country or territory other than the State.
    I also note from a document linked from the Revenue page ('Frequently Asked Questions about Qualifying Disclosures relating to Offshore Matters'):

    2.1 Is it illegal to have offshore accounts, assets or investments?
    No, it is not illegal to have an offshore account or to have assets or investments offshore, but you
    must pay tax on any interest, income or gains earned. Also, any money placed in an offshore account
    or used to acquire assets or investments offshore must be declared for tax purposes, unless exempt
    from tax or Irish tax has already been paid on it.

    2.2 I have money offshore does that mean I have a tax problem?
    If all the money you put offshore has already been declared for Irish tax purposes and you have
    declared all income or gains arising from that money on your tax returns, you have no further
    liability and you do not need to make a disclosure.
    If you have opened an offshore account or acquired a financial product with monies that are exempt
    from tax or on which the correct Irish tax has already been paid and have not earned any income on
    the account or financial product itself, you have no tax liability
    ________________________________________________________


    So here's my thing: I have a euro trading account with SaxoBank UK. In theory I can see how this could qualify as an 'offshore account', as there are actually cash sums in there, albeit not earning any interest. All original income taxes were paid on the amounts transferred to the Saxo account. All of my gains from trades are 100% reported and up to date -- I pay all CGT by the payment deadlines and file a tax return as soon as possible, usually on January 1st, ten months ahead of the filing deadline. Items are declared as capital gains, UK dividends etc. as appropriate per Form 11. I have maintained exquisitely detailed spreadsheet records of all trades, calculated gains and tax returns, separate from the account statements themselves. As far as I'm concerned my tax affairs go beyond 'ultra-squeaky clean'.

    So my only concern is that I have not declared a Saxo UK trading account itself as an offshore account. Do I need to? I have been presuming not.
     
    Last edited: Feb 22, 2017
  10. T McGibney

    T McGibney Frequent Poster

    Posts:
    2,637
    The overall Revenue philosophy seems to be that there is something fishy about having a foreign bank account or property. They frankly seem stuck in the 1980s.
     
  11. odyssey06

    odyssey06 Frequent Poster

    Posts:
    721
    Last edited: Feb 22, 2017
    What's that phrase... "the punishment is the process" ... they don't need to penalise you, the onerous and obfuscated compliance obligations are punishment enough!
     
    Last edited: Feb 22, 2017
  12. joe sod

    joe sod Frequent Poster

    Posts:
    351
    2.1 Is it illegal to have offshore accounts, assets or investments?
    No, it is not illegal to have an offshore account or to have assets or investments offshore, but you
    must pay tax on any interest, income or gains earned. Also, any money placed in an offshore account
    or used to acquire assets or investments offshore must be declared for tax purposes, unless exempt
    from tax or Irish tax has already been paid on it.

    I dont understand this, for example if you earned 35000 euro in a year and paid all the PAYE and USC as per the PAYE system, then surely this is "declared" income. Then if you transfer 10000euro of this into an US trading account, what is the issue?. Anyway there is no entry on form 11 to "declare" income you are transferring offshore. Basically what does it mean to "declare" money you are transferring offshore and how do you do this?
     
  13. dub_nerd

    dub_nerd Frequent Poster

    Posts:
    1,292
    Last edited: Feb 22, 2017
    There is a place on Form 11 for a once-off declaration of new foreign bank accounts opened:

    Foreign Bank Accounts (S.895)
    Give the following details for each foreign bank account opened in 2016 of which you or your spouse/civil partner were the beneficial owner of the deposits held

    Name & address of deposit holder (bank etc.)
    Date account was opened (DD/MM/YYYY)
    Amount of money deposited on opening the account €
    Name & address of intermediary through whom account was opened


    I find it hard to imagine it applies to trading accounts, but who knows for certain?

    EDIT: The S.895 referred to is explained in this Revenue document:

    http://www.revenue.ie/en/practitioner/law/notes-for-guidance/tca/part38.pdf

    It refers to foreign bank accounts, whether or not any interest is paid. The penalty for not informing Revenue about opening such an account is €4,000 for each offence. You don't have to have made any money from it.

    So, still in a quandary as to whether a trading account with a broker in another country that happens to be a bank is "a foreign bank account".
     
    Last edited: Feb 22, 2017
  14. joe sod

    joe sod Frequent Poster

    Posts:
    351
    @dub_nerd, yes I understand that issue of opening a "foreign bank account" in the tax year in question. But it doesn't mention trading accounts or the transfer of money into a trading account or even a bank account which was already been opened previously. For example I transfer 5000 euro into a trading account or bank account opened in 1999 , there is no entry for that, and whats the issue if tax and usc already paid as per PAYE system
     
  15. torblednam

    torblednam Frequent Poster

    Posts:
    82
    I assume you're talking about "Revenue" in the broader sense of the Governments and Revenue authorities of dozens of countries who have decided to sign up to the new exchange of information...

    Do you believe there won't be any / many instances of substantial tax evasion uncovered as a result of new information and that Revenue are barking up the wrong tree?

    As an auditor yourself I'm sure you'll agree there is quite clearly a risk if Revenue receive information that an Irish resident and domiciled person has material interests abroad and their Irish tax returns don't indicate foreign sources of income?
     
  16. T McGibney

    T McGibney Frequent Poster

    Posts:
    2,637
    My comment is in relation to Irish Revenue, but may well be applicable to authorities overseas too.

    I stand over my point that Revenue are treating taxpayers with non-Irish assets as potential criminals.

    I frankly don't accept that it is either fair or reasonable of them to withdraw qualifying disclosure options from these taxpayers in respect of such assets while preserving them in respect of assets located within the Irish State. I believe that this discrimination, if challenged by someone with assets outside the State but within the EU, would be torn apart at EU level.
     
  17. fistophobia

    fistophobia Registered User

    Posts:
    23
    I read the letter on Revenue website. I agree it has a nasty, threatening tone.
    This really is a PR disaster for them.
    I will file it where it belongs - in the garbage.
     
    T McGibney likes this.
  18. joe sod

    joe sod Frequent Poster

    Posts:
    351
    Can anyone clarify this issue, are you supposed to "declare" US trading account and are you supposed to "declare" money moved to a US trading account (after all taxes paid in ireland). If so how do you do this there are no specific entries on form 11 for this
     
  19. Gordon Gekko

    Gordon Gekko Frequent Poster

    Posts:
    1,677
    My parents bought a place overseas a number of years ago with clean money. They also opened a foreign current account for utilities etc. No income has ever been generated and if a capital gain arises, the tax will be paid as appropriate.

    They have been advised to write to Revenue stating that they have these things, that they're compliant, and that there's nothing further to add.
     
  20. dub_nerd

    dub_nerd Frequent Poster

    Posts:
    1,292
    I'm going to raise a question with Revenue via ROS as to whether a foreign trading account is considered to be a "foreign account" that must be declared. Don't hold your breath ... it took them months to reply to my last query.