This Christmas, ex-pats home for the holiday can expect to be blitzed by companies which have acquired their names from the registers of the professional bodies they may be affiliated to like their banks, credit card companies and mobile phone providers.

But one offer probably shouldn't be ignored - the chance to set up a highly tax efficient savings or retirement benefit plan overseas which can be brought home later - with considerable tax benefits still accruing.

The companies involved are Eagle Star European and Irish Life International, both based at the IFSC. They both have investment and retirement benefits policies available to any Irish non-resident working abroad for at least six months. (The usual residency tax restrictions do not apply.) The policies are aimed at younger, well-paid, ex-pats who either know they are about to start working abroad or who are already outside the country but intend to return to work in Ireland in the future.

Written under Section 67 of the Finance Act 1997, the investment fund is entirely free of Irish taxes while the policyholder is working abroad. If encashed abroad, the fund is paid over tax-free. If the policyholder returns to Ireland, the policy becomes subject to a special tax regime which includes:

the right to encash the fund immediately with no tax liability; [SBX]

no tax payable on any growth achieved before the policyholder returned to Ireland;

tax becomes liable on investment income and capital gains from the date the policyholder returns, but this tax is deferred until encashment and is subject only to the income tax rate, currently 26 per cent;

no tax is payable if the policyholder dies or is permanently disabled.

If the ex-pat chooses the retirement benefit option, the same tax free fund status applies. There is no tax deduction on premium contributions (currently worth 48 per cent to most tax-payers) but when it comes to retirement a new set of features apply:

the entire retirement fund is paid out as a lump sum between age 60 and 70 - unlike conventional, Irish-based pension plans, there is no requirement to buy an annuity with the proceeds of the fund; [SBX] the standard rate of tax - currently 26 per cent - is deducted from just 75 per cent of the investment income and capital gains achieved, but only from the date the policyholder returns to Ireland - this has the effect of reducing the tax rate to 19.5 per cent;

the proceeds of the policy do not count as benefits for Revenue purposes when calculating the maximum benefits payable under an occupational pension plan - in other words, having this policy will not affect the value of any pension the policyholder may receive from his employer.

The fact that there is no tax liability for as long as you stay out of the country, and that a tax-exempt, roll-over status applies until encashment from when the policyholder returns home, represents an enormous advantage over the conditions which apply to ordinary resident investors. The difference in maturity values is about 13 per cent in favour of the ex-pat.

The tax differential between the IFSC retirement benefits plan and a resident pension are not as dramatic, because domestic pensions are not taxed internally and premiums are tax deductible. But the lump-sum proceeds, no compulsory annuity purchase, standard rate tax applying to only 75 per cent of the fund and no effect on an existing occupational pension benefit makes this the retirement top-up of a lifetime.

Investment advisers who know about these new products - the IFSC companies have kept a low profile since launching them this summer - say they are extremely attractive investment opportunities, especially since you only need to be out of the country for six months before you can bring these extraordinary policies - and all their tax advantages home again to enjoy for as many years as you wish.

Some have expressed reservations about the fairness of giving such lucrative and sustainable tax breaks to an already privileged few (especially when they return to this jurisdiction) when the rest of the working population is subject to a much more onerous taxation and pension funding regime. Family Money will return to this question next week.