Taxes Consolidation Act 1997 section 739W

Application of Chapter 1A to IREFs

Section 739W provides for the tax-deferred transfer of an Irish real estate fund (IREF) property rental business to a qualifying real estate investment trust (REIT), subject to conditions including a deadline of 31 December 2017 and a maximum deferral period of 10 years.

• Where an IREF transfers its entire property rental business to a newly formed REIT and ordinary shares are issued to unit holders in proportion to their holdings (with the IREF receiving no other consideration except the assumption of liabilities), the tax normally arising on the IREF taxable event may be deferred.
• For capital gains tax purposes, unit holders are treated as having acquired their REIT shares at the same time and for the same cost as their original IREF units, so there is no disposal or acquisition event at the point of transfer.
• The IREF is treated as disposing of, and the REIT as acquiring, the transferred assets and liabilities at their value in the accounts of the investment undertaking, and the parties may jointly elect to defer the resulting IREF withholding tax until a trigger event occurs.
• The deferral ends on the earliest of: a date within 60 days of the investor disposing of the REIT shares, the tenth anniversary of the transfer, the appointment of a liquidator to the REIT, or the company ceasing to be a REIT; and instruments giving effect to the transfer are exempt from stamp duty.