Assuming you are subject to Irish Tax on your worldwide gains, i.e. assuming you are Irish resident and domiciled, you probably already know you will be subject to Irish Capital Gains Tax on gains made on assets sold worldwide.
Double Taxation relief is governed by a large by the Double Taxation Treaty network that Ireland has with 44 countries and the provisions of the Taxes Consolidation Act 1997.
The treaty in force between Ireland and Germany was signed in 1962 and does not expressly deal with "Capital Gains Tax" (CGT) as we know it given that CGT was first introduced in Ireland in 1976. However it does deal with taxes on Capital, of which CGT in one.
Relevant extracts from the treaty are reproduced below:
Article 1 - the taxes covered
Article I
1. The taxes which are the subject of this Convention are:
- In the Federal Republic of Germany: The Einkommensteuer (income tax), The Körperschaftsteuer (corporation tax), The Vermögensteuer (capital tax) and The Gewerbesteuer (trade tax) (hereinafter referred to as "Federal Republic tax").
- In Ireland: The income tax (including sur-tax) and the corporation profits tax (hereinafter referred to as "Irish tax").
2.
This Convention shall also apply to any identical or substantially similar taxes which are subsequently imposed in addition to, or in place of the existing taxes.
Article 20 Taxes imposed by 1 or both countries on capital
Article 20
Where taxes on capital are imposed by one or other or both of the Contracting States the following provisions shall apply:
- Capital represented by immovable property as defined in paragraph (2) of Article 9 may be taxed in the Contracting State in which such property is situated.
- Subject to the provisions of paragraph (a) above, capital represented by assets forming part of the business property employed in a permanent establishment of an enterprise, or by assets pertaining to a fixed base used for the performance of professional services, may be taxed in the Contracting State in which the permanent establishment or fixed base is situated.
- Ships and aircraft operated in international traffic and assets, other than immovable property, pertaining to the operation of such ships and aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
- All other elements of capital of a resident of a Contracting State (a tax resident of Ireland or Germany) [sic] shall be taxable only in that State (the country the person is a tax resident of) [sic].
This latter provision of the treaty (highlighted) may provide scope for an Irish tax resident with German shares to recover any German CGT imposed at source as it would seem to me that this "new" tax is simply a new means of collection rather than a new tax itself? I don't know the provisions of German tax but that's how it would seem to me.
If I can be of any further assistance just let me know.
Dear All,
does anybody know more specific details about the new CGT at source (Abgeltungststeuer) which will be introduced in Germany from 2009? How will this impact on taxation of income in Ireland? (based on selling shares in Germany and making gains, then a tax is deducted at source; tax rate will be 25 %). Are there any double taxation rules that will apply?
Sallyhunter