Under section 980 of the Taxes Consolidation Act 1997, where a vendor is selling certain assets (listed below) and fails to provide a purchaser on closing with a capital gains tax clearance certificate (known as a form CG50A), the purchaser must withhold 15% of the consideration and pay this over to Revenue. This anti-avoidance section applies to the disposal of the following assets:
- Irish land and/or buildings
- Irish minerals
- Irish exploration/exploration rights
- unquoted shares deriving their value or the greater part of their value directly or indirectly from any of the items above
- goodwill of a trade carried on in Ireland
The withholding obligation does not apply if the vendor supplies a CG50A to the purchaser on closing. The 15% withholding applies to relevant assets worth more than €500,000 or assets that are houses or apartments worth more than €1m.
Applying for a CG50A historically required a paper based application which could have been signed by the vendor or its agent. Revenue is now moving the application process online. Revenue has issued a new tax and duty manual, link here, with detailed instructions on the application process from both an input and documentation requirements perspective.
Historically, Revenue required 3 to 5 working days to process a paper CG50A application so it is hoped that the new online application process will lead to quicker turnaround times for the processing and issuing of CG50As.
If you have any questions on this please contact Brian Duffy or your usual William Fry contact who would be happy to discuss the changes in further detail.
Contributed by Laura Ellen Ford