Navigating property transactions can be complex, especially for non-resident vendors. The recent updates to the Tax and Duty Manual (TDM) Part 45-01-05 introduce new procedures and documentation requirements when requesting Revenue clearance for property disposals. These updates, effective from March 2025, have a significant impact on non-resident vendors and their representatives, ensuring strict compliance with Irish tax laws.
This guide will walk property investors and non-resident vendors through these updates, providing an overview of key changes and practical advice for managing clearance requests.
What Does the Updated Guidance Cover?
The revised TDM sets out the requirements for non-resident vendors selling Irish properties, with a focus on ensuring compliance with Capital Gains Tax (CGT). It introduces a streamlined clearance application process and additional provisions for properties with secured charges.
Key updates include:
- Online Clearance Requests: Representatives must submit clearance requests through the MyEnquiries section on Revenue Online Service (ROS).
- Secured Charge Guidance: New protocols for handling disposals involving secured charges, including provision for phased payment arrangements if proceeds cannot fully cover CGT.
- Automatic Clearance: Representatives can proceed with fund distribution after 35 working days if no queries or compliance interventions are raised by Revenue.
By meeting these updated requirements, non-resident vendors can fulfil their tax obligations while mitigating the risk of liability for representatives handling the sale.
Why is Clearance Required?
Under Sections 1034, 1035 and 1043 of the Taxes Consolidation Act 1997, non-resident vendors are subject to CGT on gains from the sale of Irish property. Revenue clearance is required to ensure that all CGT liabilities are addressed before sale proceeds are distributed.
Failure to obtain clearance could result in the representative (e.g., solicitor or accountant) being held secondarily liable for unpaid taxes. The new Revenue process seeks to provide clarity and protect representatives by ensuring transparent and timely submissions.
Who Needs Revenue Clearance?
Revenue clearance applies in the following scenarios:
- The sale of land, buildings, or interest in property situated in Ireland.
- Disposal of property used in trades conducted in Ireland through a branch or agency.
- Sales involving unquoted shares where more than 50% of their value is derived from Irish land or mineral rights.
It is critical for representatives to assess a vendor’s residency status before initiating clearance requests to determine whether the updated requirements apply.
How to Submit Clearance Requests
Here’s a step-by-step guide to submitting a clearance request via ROS:
1. Register as a Representative
Representatives must obtain a Transaction Advisory Identification Number (TAIN) and register for ROS. Clearance requests cannot be submitted under the representative’s own tax registration number but must use the TAIN.
2. Prepare Documentation
Submit the following with the clearance request:
- Non-Resident Vendor Declaration: Completed and signed by the vendor, confirming non-residency and providing property usage details.
- CG1 Form: The CGT return for the year of disposal, including claims for Principal Private Residence (PPR) relief where applicable.
- CGT Computation: Detailed calculations covering base costs, enhancement expenses, and any forward losses or reliefs claimed.
- Proof of CGT Payment: Confirmation of full liability payment or inclusion of a signed phased payment arrangement for insufficient funds.
- Contract of Sale: Evidence of the transaction proceeds.
- Income Tax Compliance: Confirmation of all filed income tax returns related to rental income, including agent details where applicable.
3. Submit Online
Use MyEnquiries under the “Capital Gains Tax (CGT) > Non-Residents” category on ROS to upload the required documentation. Each submission generates an automated response confirming receipt.
4. Await Revenue’s Response
Revenue undertakes to respond within 35 working days by either requesting additional information or initiating a compliance intervention. If no response is received, clearance is deemed granted, allowing representatives to distribute proceeds without further risk of liability.
Key Considerations for Properties with Secured Charges
The updated TDM introduces specific guidance for sales with secured charges, such as mortgages:
- Sufficient Proceeds Remaining: If the remaining funds after redeeming the secured charge can cover CGT liabilities, proceed as normal with the clearance process.
- Insufficient Proceeds: If proceeds fall short of the CGT liability, the vendor must sign up for a phased payment arrangement, confirmed during the clearance request.
Representatives should ensure these arrangements are in place before executing contracts to avoid delays.
Practical Tips for Non-Resident Vendors and Representatives
For Vendors:
- Organise a PPS Number: Non-residents must have a valid Personal Public Service (PPS) number for tax registration and CGT filing. Apply early to avoid delays.
- Provide Full Details: Work with your representative to ensure all requested documentation is accurate and complete.
For Representatives:
- Verify Residency Status: Confirm the vendor’s residency for tax purposes at the start of the transaction. A Declaration of Residency and, if necessary, a Certificate of Residency from Revenue can help corroborate claims.
- Obtain Retainers: Secure signed irrevocable retainers to protect your position as a representative, particularly in cases involving CGT liabilities or phased payment requirements.
- Keep Strong Records: Maintain copies of all correspondence with Revenue and evidence of compliance with TDM 45-01-05.
What Happens if a Disposal is Not Covered by TDM 45-01-05?
Certain cases, such as voluntary transfers or sales where the solicitor holds no funds, are handled on a case-by-case basis. Representatives should contact Revenue early in the transaction to confirm procedures and avoid complications.
Final Thoughts and Resources
Navigating the updated guidance under TDM 45-01-05 not only ensures compliance with Irish tax laws but also safeguards representatives from unnecessary liabilities. Whether you’re a vendor looking to dispose of Irish property or a representative needing assistance, understanding Revenue’s clearance process is essential for a seamless transaction.
For further guidance and professional support, consider speaking with a property law expert. HOMS Assist offers experienced legal advice for property transactions of all complexities. Contact us today for expert support and ensure your next property sale adheres to all requirements.
