(1) Where on or after 1 January 2001 a person disposes, in whole or in part, of a foreign life policy, and the disposal gives rise to a gain computed in accordance with subsection (2), and details of the disposal have been correctly included in a return made by the person, then notwithstanding section 594, the amount of the gain shall be treated as an amount of income chargeable to tax under Case IV of Schedule D, and where the person is not a company, the rate of income tax to be charged on that income shall be ...¹―

[(a) in the case of a foreign life policy which is a personal portfolio life policy, at the rate determined by the formula―

[(S + 28) per cent]²

where S is the standard rate per cent for the year of assessment in which the payment is made, and

[(b) in any other case, at the rate of 28 per cent]³]⁴

(2) The amount of the gain accruing on a disposal referred to in subsection (1) is the amount of the relevant gain (within the meaning of section 594(2)) which would be computed if the gain accruing on the disposal were computed for the purposes of that section.

(3)[(a)]¹ Notwithstanding sections 538 and 546, where apart from this subsection the effect of any computation under subsection (2) would be to produce a loss, the gain on the disposal referred to in subsection (1) shall be treated as nil and accordingly for the purposes of this Chapter no loss shall be treated as accruing on such disposal.

[(b) Where in respect of a foreign life policy―

(i) a gain on a disposal is treated as nil in accordance with paragraph (a),

(ii) that disposal is not a deemed disposal, and

(iii) a person was chargeable to tax in respect of an earlier deemed disposal of the policy,

then the provisions of section 865 (apart from subsection (4)) shall apply and the inspector may make such repayment or set-off as is necessary for securing that the aggregate of tax payable in respect of the policy under this section does not exceed the tax that would have been so payable in respect of the policy if subsection (6) had not been enacted.]²

(4) Where, as a result of a disposal by a person, an amount of income is chargeable to tax under Case IV of Schedule D in accordance with subsection (1), that amount shall not be reduced by a claim made by the person―

(a) where the person is not a company, under section 381 or 383, or

(b) where the person is a company, under section 396 or 399.

(5) Where an individual is chargeable to tax in accordance with subsection (1) in respect of an amount of income―

(a) the tax thereby payable, in so far as it is paid, shall be treated as an amount of capital gains tax paid for the purposes of [section 104 of the Capital Acquisitions Tax Consolidation Act 2003]¹, and

(b) that amount of income shall not be included in reckonable income (within the meaning of the Health Contributions Regulations, 1979 (S.I. No. 107 of 1979)) for the purposes of those Regulations.

(6) Where a person has a foreign life policy and a relevant event occurs in respect of that policy, then the person shall be deemed for the purposes of this section to have disposed of the whole of the policy immediately before the time of that relevant event and immediately to have reacquired it at its market value at that time.