Through a trust in Ireland, a person can transfer the ownership of various types of assets to another person. The trust can also be used as a vehicle through which other types of entities can benefit from the property of a person and this can be the case when the trustee provides the right to use his or her assets for charitable purposes.
The Irish trust can be set up for family purposes, through which the members of a family can benefit from the right to use a person’s assets. By opening a trust in Ireland, the trustee can also manage his or her current property. It is worth knowing that the trust must also be registered for tax purposes and our team of consultants in company formation in Ireland can assist persons interested in this structure to register it for local taxes, a procedure that has to be completed through the Irish Revenue.
What is the law regulating the Irish trusts?
There are several rules of law which regulate the manner in which an Irish trust can be incorporated and managed in this country. The rules of law can vary based on the type of trust that was selected for incorporation in Ireland; our team of specialists in Irish company formation can provide advice on all the types of trusts available for registration in Ireland.
One of the main rules of law applicable in this sense is the Irish Trusts Law, but the regulations of the Conveyancing Law Reform 2009 also apply. One of the types of trusts that can be registered in Ireland is the asset protection trust, which provides a set of benefits. Some of the most important aspects are the following:
- • the Irish asset protection trusts can be set up by foreigners, as there aren’t any restrictions in this sense;
- • more importantly, Irish asset protection trusts can be owned 100% by foreigners;
- • it can also be used as a means for planning and managing a person’s real estate property;
- • once the trust is incorporated, it can benefit from a perpetual life (there are no requirements concerning the trust’s duration);
- • foreigners can benefit from tax exemptions, as long as certain conditions are met (for example, the assets are located outside Ireland).
Another regulation that is applicable to Irish trusts is the European Union Regulations 2019 (SI16/2019) (Anti-Money Laundering: Beneficial Ownership of Trusts); the rule of law was included in the Irish legislation referring to trusts and it is applicable to the manner in which the registration of a trust must be done here, but it also refers to the beneficial owners of the trust.
Under this regulation, the owners of a trust are legally obligated to obtain all the necessary information concerning the beneficial owners and they must also update this data, once modified. Thus, any trustee must have the current personal data of any beneficial owner (his or her name, address, nationality, the person’s residency); our team of specialists in company formation in Ireland can offer more details on this new regulation.
What are the taxes for a discretionary trust in Ireland?
One of the types of trusts that can be registered in Ireland is the discretionary trust. In a discretionary trust, the trustee is considered the legal owner of the property and it can be used for a variety of reasons, such as: protecting specific assets, holding assets for a person’s children, preserve a person’s assets for future generations (this can take into consideration more generations of persons), but it can also be used as means to provide for a child with various disabilities. This type of trust is taxed with the following taxes:
- • a tax that is charged only once, which is imposed at a rate of 6% from the value of the trust;
- • this tax can be reduced to 3% in specific conditions (the assets are distributed in a period of 5 years);
- • a yearly tax (payable by 31st of December of each year) imposed at a rate of 1%;
- • provided that the trust has an Irish tax residency, it is also imposed with the income tax, applicable at a rate of 20%;
- • the trust can also be liable to an income tax surcharge of 20% if the income is not distributed to the trustees.
Since a trust in Ireland is liable for taxation, it is necessary to register with the Irish Revenue Commissioners; this type of structure also has the obligation to submit an application with the institution through the Revenue Online Service (ROS), by completing the Form TR1.
In the case in which the trust in Ireland is registered by a foreign person, the same obligations will arise, but the form will differ. Foreigners have to complete the Form TR1 (FT). The ROS platform will also be used for making various payments and file the necessary tax returns. Persons who want to register an Irish trust can contact our team of specialists in Irish company formation for consultancy services on this subject.