Thousands of PAYE workers may be caught unawares in a Revenue clampdown on offshore assets.
Revenue posted letters earlier this year to more than 500,000 taxpayers who file annual returns warning them of an impending crackdown on offshore tax liabilities. No letters were sent to PAYE workers. As a result, most will likely have assumed the issue does not affect them.
However, a Revenue official says that initial information sent to the Irish tax authorities from the United States under new arrangements for the automatic exchange of tax information shows a number of PAYE taxpayers have outstanding tax issues.
The problem relates to share dividends. Many listed companies pay a dividend to shareholders twice a year and this is considered as income for tax purposes – liable to income tax at the marginal, or higher, rate as well as universal social charge and, depending on age, PRSI.
Vodafone shares
As recently as 2016, more than 300,000 Irish people held shares in British telecoms group Vodafone, for instance, as a result of the ill-fated investment in Telecom Éireann. Most of those will also have had shares in US telecoms group Verizon. Many others have shares as a result of their employment by US companies while direct investment in the UK market by Irish investors has long been a feature of the Irish investment market.
“A preliminary look at the Foreign Account Tax Compliance Act (Fatca) data supplied by the US Internal Revenue Service [to Irish Revenue] indicates that there are dividends paid each year by US companies to PAYE taxpayers who, ordinarily, would not be obliged to complete a tax return,” a Revenue spokeswoman said.
Similar information is being made available to Irish tax officials for other countries in the EU and further afield this year and next, under new automatic exchange of information arrangements put in place through the OECD in an effort to clamp down on tax evasion.
Revenue last week extended a deadline for taxpayers to notify it of any outstanding liability for offshore income or assets to Thursday, May 4th.
Editorial Comment, page 13; Business, page 15
