The Double Taxation Relief (Taxes on Estates of Deceased Persons and Inheritances and on Gifts) (Republic of Ireland) Order 1978

EXPLANATORY NOTE

The Double Taxation Convention with the Republic of Ireland which is scheduled to this Order applies to death duties and gift taxes. The taxes covered by the Convention are the United Kingdom's capital transfer tax and the Republic of Ireland's gift and inheritance taxes. The Convention would also apply to any tax of a substantially similar character which may be imposed by either country.

Under the Convention each country retains the right to tax which it has under its domestic law. Where as a result tax is payable in both countries relief is provided.

The main rule is that each country is required to give a credit against its own tax if the property is situated in the other country.

Where both countries tax property which is situated in a third country the country with “subsidiary taxing rights” is required to give credit. Under the Convention a country has only a subsidiary taxing right if the deceased person (or, in the case of a lifetime gift, the donor) was domiciled for the purposes of the Convention in the other country. Where property is comprised in a settlement the rules for determining which country has subsidiary taxing rights depend in part on the proper law of the settlement and in part on the settlor's domicile.

Rules are provided for determining a person's domicile for the purposes of the Convention.

There is a provision for determining the situs of property; in general each country will apply its domestic law.

There are also provisions for safeguarding nationals of one country against discriminatory taxation in the other country and for the exchange of information and consultation between the taxation authorities of the two countries.

The Convention applies to any person who or property which is within the scope of a tax which is covered by the Convention.

The Convention takes effect in the United Kingdom as regards capital transfer tax on a death from 13 March 1975 and on other occasions from 27 March 1974. The previous arrangements between the United Kingdom and the Republic of Ireland for the relief of double taxation on death came to an end on 12 March 1975.