Investments FAQ

How much exit tax is deducted?

Exit tax at the rate of 41% is deducted from gains that arise when you sell units. Exit tax is also deducted on gains arising on a deemed sale every 8 years if you continue to hold your units. KBC deduct the exit tax and pay it to Revenue. The exit tax rate is set by Revenue and is subject to change.

How is exit tax calculated on the sale of units?

The amount of exit tax to be deducted is calculated by applying a rate of tax (presently 41%) to the gain that arises when you sell units. When you place an order to sell units, they are sold based on the order you bought them in, meaning you sell your oldest units first and so on. A gain will arise if the investment return from selling the units exceeds the amount you purchased them for. Where a loss is incurred, no exit tax is deducted and this loss cannot be used to offset a gain made on any other sale. 

What happens every 8 years – how is exit tax calculated?

The tax law states that you have to pay exit tax on your units every 8 years i.e. you are deemed to sell your units on the 8th anniversary of the date you purchased them. A deemed sale will apply again in the future if you continue to hold your units for another 8 years i.e. on the 16th anniversary of your initial purchase and so on every 8 years. KBC will deduct the exit tax due and pay it over to Revenue. In order to release cash to pay the exit tax due, KBC will sell an amount of units required to meet the exit tax liability.

Exit tax already paid in connection with the ending of an 8-year period may be offset against exit tax due on a subsequent sale or deemed disposal. Where an overpayment of exit tax arises after such offset, the excess is repaid to you.

I have bought units in a KBC Investment Fund - what are my personal tax obligations?

A KBC Investment Fund is an Irish investment fund. Therefore customers are not required to complete an Income Tax Return in respect of this investment. As gains are subject to exit tax, you do not have to include the income arising from these investments in your personal tax return.

WARNING: IF you hold units in an Offshore Investment Fund and sell them, you must file a Form 11 Income Tax return and pay any tax due directly to Revenue. More information on this is available in the Offshore Investment Funds section of the website.

I am not resident in the Republic of Ireland – can I claim an exemption from exit tax?

KBC do not accept declarations from non-resident unit holders and exit tax will be deducted as appropriate and paid to Revenue.

What happens with exit tax on the death of a unit holder?

Where the units are held jointly, the surviving unit holder becomes beneficially entitled to all the units and no exit tax is triggered.

Where a sole unit holder dies, a transfer of their units to their estate is deemed to have occurred on the date of death. The transfer of units to the deceased’s estate is treated for tax purposes in the same way as a sale of units and exit tax is required to be deducted.  KBC will deduct the exit tax due and pay it over to Revenue. In order to release cash to pay the exit tax due, KBC will sell an amount of units required to meet the exit tax liability. The remaining units will transfer to the estate and the purchase price of the units will be reset to the date of death and it will be this cost that will be taken into future calculations on the sale or deemed sale of the units.

Tax Advice

To help you to fully understand your tax obligations in buying units in a KBC Offshore Investment Fund, we recommend you contact a professional independent tax advisor to discuss your personal tax situation, and to ensure you are tax compliant. We do not offer tax advice and are unable to help you to determine what (if any) tax is due, nor can we assist you with filling-in tax forms. We can however provide you with some general explanatory information which we have included below.
 

An explanation of the terms used to describe your transactions

• The transaction type ‘subscription’ means a buy transaction leading to you acquiring a number of units of a specific KBC Offshore Investment Fund.
• The transaction Type ‘redemption’ means a sell transaction leading to a reduction (full or partial) of your holdings in a specific KBC Offshore Investment Fund.
• ‘Gross Amount’ in the case of a subscription means the gross subscription amount, before entrances fees are deducted.
• ‘Units’ – means shares in an Investment Fund.

I have bought units of a KBC Offshore Investment Fund – what type of fund is it for tax purposes?

You have acquired a material interest in a regulated offshore fund in the EU/EEA/OECD (often referred to as an “equivalent fund”). KBC Offshore Investment Funds are located in Belgium and Luxembourg. 
 

I have bought units in a KBC Offshore Investment Fund by investing a lump sum and/or starting a monthly investment plan– what are my tax obligations?

Buying units in a KBC Offshore Investment Fund with a lump sum and/or starting a monthly investment plan means you automatically fall into the ‘self-assessment’ tax category. This means you have to file a Form 11 income tax return and are subject to the tax payment rules including preliminary tax. All customers, even those who have previously only been subject to the PAYE system, must file a Form 11 income tax return
 
A Form 11 income tax return for a year must be filed by 31 October in the following year (e.g. tax return for year 20X1 must be filed by 31 October 20X2). You are required to disclose the following details in your Form 11 income tax return in respect of all units that you have bought in the year:  
 

• Name and address of the offshore fund e.g. Sivek Global Low Fund, Belgium;
• Date interest in the offshore fund was acquired (i.e. date you bought units) ;
• Amount of capital invested in acquiring the offshore fund; and
• Name and address of intermediary through whom the material interest was acquired being KBC Bank Ireland plc, Sandwith Street, Dublin 2.

 
If you hold units in a KBC Offshore Investment Fund for 8 years, there is a deemed sale every 8 years and you will have tax obligations. Information on the 8 year deemed sale is included in a specific FAQ below.
 

I have sold all or part of my units in a KBC Offshore Investment Fund – what are my tax obligations?

Calculate if you have made a gain on the sale of all or part of your units. Information on how to do this calculation is included in a specific FAQ below.
 
If you have made a gain, you must declare this gain in your Form 11 income tax return and pay the tax on the value of the gain directly to Revenue.
 
 A Form 11 income tax return must be submitted to Revenue on or before the 31^st of October, in the year after the year in which you sold and made a gain ( e.g. gains made in 20X1 are returned in your Form 11 income tax return which must be filed by 31 October 20X2).
 
The tax due is subject to preliminary tax rules.
 

What part of the Form 11 income tax return do I complete? 

You should complete the section “Offshore Funds (Part 27 Ch 4)” in Panel E, under the heading “Foreign Life Policies / Offshore Funds / Other Offshore Products”.
 
This section should be completed for the following transactions that occurred in the year in relation to your units in a KBC Offshore Investment Fund;

• All units that you bought,
• All gains arising on the actual sale of all, or part of your units,
• All gains arising on the deemed sale of units held every 8 years.

How do I complete and file a Form 11 Income Tax Return?

The Revenue Online system “My Account” does not contain the full details of a Form 11 Income Tax Return and does not cater for returning income from offshore funds.   As a result, you will be required to download and complete the paper Form 11 Income Tax Return and send it to Revenue by post. 

Married couples and civil partners are obliged to submit only one Form 11 Income Tax Return to Revenue and it should show the income and capital gains, gifts and inheritances, etc. of both spouses or civil partners, unless you have made a formal election to have your tax affairs dealt with separately.

Revenue publish a Form 11 Income Tax Return helpsheet on their website that you may find useful to refer to when completing your Form 11 Income Tax Return.

If you are a PAYE worker you can get your PAYE income details (Part D) and your tax paid (Part O) and tax credit details (Part I) in your statements in your My Account on ROS.

Return of Gains Arising on Sale

If you have made a gain on the sale of units during the year, you must declare this gain in your Form 11 income tax return and pay the tax on the gain directly to Revenue.

Your total gains arising on the sale of units should be included in Part E Section 322 (c) of the Form 11.  (Note: include the gain, not the tax on the gain).

There is a requirement to complete the self-assessment section of the Form 11 (Section O).  Your gains arising on the sale of units for the year should be added to all your other income and included in Section 936(a), and, the income tax arising on your gains should be added to the tax due on all your other income and included in Section 936(b)(i). 

The gains arising on the sale of units is not subject to USC or PRSI. Therefore the amounts in Section 936(b)(ii) to 936(b)(v) should not include USC or PRSI on the gains you made on the sale of units.

Return of Details in respect of Purchases during the Year

Panel E Section 322 (e) – (h) Offshore Funds should be completed in respect of purchases of units in a KBC Offshore Investment Fund during the year.  You are required to disclose the following details in your Form 11 income tax return in respect of all units that you have bought in the year: 

• Name and address of the offshore fund e.g. Sivek Global Low Fund, Belgium;
• Date interest in the offshore fund was acquired (i.e. date you bought units) ;
• Amount of capital invested in acquiring the offshore fund; and
• Name and address of intermediary through whom the material interest was acquired being KBC Bank Ireland plc, Sandwith Street, Dublin 2.

What are the preliminary tax rules that I must meet? 

Preliminary tax is your estimate of the Income Tax, Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) that you expect to pay for a tax year. You must pay this by 31 October of the tax year in question. The amount of preliminary tax for a year must be equal to, or more than, the lowest amount of the following:
 

• 90% of the tax due on all income for that tax year, or
• 100% of the tax due on all income for the immediately previous tax year, or
• 105% of the tax due on all income for the tax year preceding the immediately previous tax year (often called the ‘pre-preceding year’).  This option only applies where you pay by direct debit. It does not apply if the tax due for the pre-preceding year was nil.

For late payments, you will be charged interest for each day (or part of a day) past the deadline as set by the Revenue.
You must make sure that you do not under pay your preliminary tax, or you may be charged interest by the Revenue. 

How do I pay preliminary tax?

Details of the options available to pay preliminary tax are available on www.revenue.ie.
 

Every 8 years I am deemed to sell units of a KBC Offshore Investment Fund– what are my tax obligations?
 

This section applies to you if you have bought units and held them for 8 years. It will apply again in the future if you continue to hold your units for another 8 years i.e. on the 16^th anniversary of your initial purchase and so on every 8 years.
 
The tax law states that you are deemed to have sold your units on the 8^th anniversary of the date you bought the units. However you are NOT required to actually sell your units. Instead you are required to work out if a gain would arise if you were to hypothetically sell the units on the 8^th anniversary. If you have made a gain, you must declare this gain in your Form 11 income tax return and pay the tax on the value of the gain directly to Revenue.
 
The Form 11 income tax return must be submitted to Revenue on or before the 31^st of October, in the year after the year in which your 8^th anniversary occurred ( e.g. gains in 20X1 are returned in your Form 11 income tax return which must be filed by 31 October 20X2). The tax due is subject to preliminary tax rules.
 
The tax paid is effectively a payment on account with Revenue. It is available for credit against the tax due when the units are ultimately sold. It is important that you remember the tax already paid when calculating the tax liability owed to Revenue when the units are ultimately sold.
 
If no gain arises, no tax will be due and there will be no action required on your part.
 
If you continue to hold your units for another 8 years, you would be required to complete the same process on the 16^th anniversary of your initial purchase and so on every 8 years.
 

I have sold ALL of my units in a KBC Offshore Investment Fund – how do I calculate if I made a gain?

 
To calculate if you made a gain, compare the proceeds from the sale to the cost of buying your units which is the gross amount invested. If the proceeds exceed the cost, then you have made a gain and tax is due on the value of the gain which you must pay directly to Revenue . You must declare this gain in your Form 11 income tax return. If the proceeds are less than the cost then you have made a loss and no tax is due and no action is required on your part. This loss cannot be used to offset a gain made on any other sale. 
 

I have sold PART of my units in a KBC Offshore Investment Fund – how do I calculate if I made a gain?

When you sell part of your units, the tax law states that you are deemed to sell your units based on the order you bought them in, meaning you sell your oldest units first and so on. This is called the “First In, First out”(FIFO) method.
 
To calculate if you have made a gain, you should first determine how many units you have sold. You then determine the amount you bought the units for (i.e. gross amount invested before entrance fees) and compare this to the proceeds of their sale to determine if a gain/(loss) arises.
 
If the proceeds exceed the cost, then you have made a gain and tax is due on the value of the gain which you must pay directly to Revenue . You must declare this gain in your Form 11 income tax return. If the proceeds are less than the cost then you have made a loss and no tax is due and no action is required on your part. This loss cannot be used to offset a gain made on any other sale. 
 

What is the tax rate that should be applied to a gain? 

The tax rate is 41%. This rate is set by Revenue and is subject to change. 
 

I have made a loss on the sale of units in a KBC Offshore Investment Fund – how can I use this loss?

This loss cannot be offset against any other gains or any other tax.
 

I have existing losses – can I use these against the gain I made on the sale of units in a KBC Offshore Investment Fund.

No, existing losses cannot be used to reduce any gain made on the sale of units in a KBC Offshore Investment Fund.
 

Can KBC calculate and pay any tax due to Revenue on my behalf?

No, KBC are not allowed to deduct and pay tax liabilities to Revenue on behalf of our customers.
 

Are gains generated within the fund taxable? 

No, gains generated within the fund are not subject to Irish tax. The fund can grow tax free until the   units are sold by you, or deemed to be sold every  8 years, whichever happens first.
 

What will happen if I fail to disclose, or fail to correctly disclose, details of gains in the Form 11 income tax return to Revenue?

In the event that a taxpayer fails to disclose or fails to correctly disclose details of gains from offshore investments, Revenue could impose penalties as allowed for by law.
 

What will happen if I do not meet my preliminary tax obligations?

In the event that a taxpayer fails to meet their preliminary tax obligations, Revenue could impose interest and penalties as allowed for by law.
 

Why do KBC need my PPSN?

When a customer buys or sells units in a KBC Offshore Investment Fund, KBC is required by law (Section 896 Taxes Consolidation Act 1997) to report certain details to the Revenue, one of which is your PPSN. In order for KBC to be compliant with current legislation, you must provide your PPSN to us so that we can then provide it to the Revenue.
 

Do KBC report to Revenue details of my units in a KBC Offshore Investment Fund? 

When a customer buys or sells units in a KBC Offshore Investment Fund, KBC are required by law to report to the Revenue the following details (where relevant):

• Customer name
• Address
• PPSN
• The name of the KBC Offshore Investment Fund
• The date of purchase or date of sale of units
• The amount paid by or to the customer in respect of a purchase or sale of units.

Where can I get more information in respect of my tax obligations?

See Revenue’s Tax & Duty Manual Part 27-04-01 available on www.revenue.ie for further information in respect of the taxation of offshore funds.
 

Warning

Under Irish legislation it is the responsibility of each individual to ensure that they have filed a correct and complete Form 11 income tax return with the Revenue, and the obligation falls with the individual to calculate and pay on time the correct tax liability owed to the Revenue. KBC does not accept any responsibility for interest and penalties arising to the customer as a result of an incorrect or incomplete Form 11 income tax return being submitted to the Revenue, or, an incorrect or late payment of the tax due.