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Please see below a list of FAQs regarding our new range of KBC Investment Funds.
KBC Investment Funds will be launched as Irish Investment Funds meaning customers will not be required to complete an Income Tax Return in respect of this investment. If you hold units in an Offshore Investment Fund and sell them, you will continue to be responsible for your own tax obligations. To find out more about the Offshore Investment Fund tax requirements, please see our FAQs.
From the 15th March 2021, existing KBCI Customers will have the opportunity to invest in our new KBC Investment Funds. Funds will have the ability to react and adapt to changes in the economic environment by switching to less risky options during times of uncertainty or maximising returns by switching to equities and bonds when markets are performing well, all of which seeks to benefit our customers.
The new KBC Investment Funds will:
- If you make no changes to your existing Start2Invest plan then you will continue to invest in the existing Offshore Investment Funds. Alternatively you can start a new Start 2 Invest plan, but you will need to complete a new Risk Profile Questionnaire, which will select an appropriate fund that matches your Risk Profile. An Investment Advisor can discuss this with you in more detail.
- From 15th March 2021, you will not be able to make any changes to your existing Start 2 Invest plan. You can stop the plan and the funds will be held until you decide to sell them. Should you wish to reactivate a Start2Invest plan, the Fund options provided will be the new KBC Investment Funds.
You will not be able to buy additional units as the Fund you invested in will no longer be offered, however, you can still hold your existing funds and invest in the new KBC Investment Funds.
Our Investment Advisors will be contacting customers during the subscription period, which is between the 25th January until the 4th March 2021 to discuss our KBC Investment Funds.
During this time, Investors will have the opportunity to invest in the KBC Investment Funds without having to pay an entry fee. If you decide to invest outside of the subscription period, you will be required to pay the 1% entry fee.
If you would like to sell your Offshore Investment Funds and re-invest in our KBC Investment Funds, you will be required to undertake a number of steps such as:
- Meet with a KBCI Investment Advisor to discuss the new Funds and the options available to you.
- Complete a new Risk Profile Questionnaire, which will recommend a Fund based on your financial and emotional needs.
- Complete a Sell and Buy Order Form, which will enable your existing Offshore Investment Funds to be sold and then buy the new Funds.
- An Investment Advisor will be able to talk you through the process in more detail.
Please note that when you sell units in your Offshore Investment Funds, you continue to be responsible to discharge your tax obligations and not KBCI.
With the launch of the KBC Investment Funds, you do not need to change Funds and you can continue to remain invested in your existing Fund. The Risk Profile that you would have completed will continue to remain valid for 4 years from the date your existing trade went live. If you decide to invest in the KBC Investment Funds, you will be required to complete a new Risk Profile questionnaire.
From 15th March 2021, you will not be able to purchase additional units or amend existing Offshore Investment Funds. If you would like to invest in our KBC Investment Funds, you can contact an Investment Advisor by phone on 1800 51 52 53 or drop into your local Hub.
With the launch of the KBC Investment Funds, existing customers do not need to sell their Offshore Investment Funds, however if a customer does decide to sell, the benefits of the KBC Investment Funds are:
- No entry fees during the subscription period.
- The Fund will adapt to changes taking place in the markets by reducing exposure during challenging times or increasing opportunities when markets are positive.
- KBCI will withhold the exit tax on investment gains and pay it to Revenue on your behalf.
The KBC Investment Funds will try to minimise risk when the markets are volatile by converting shares and bonds into less risky options when markets fall. However, with any investment, there is always a degree of risk and you should note the following:
- The value of your investment may go up as well as down.
- If you invest in the product you may lose some or all of the money you invest.
- This Fund may be affected by changes in currency rates.
- Past performance is not a reliable guide to future performance.
We encourage all customers to seek independent financial and tax advice in respect to their investment holdings. KBCI provides you with non-independent advice in respect to your buy orders, however no advice is provided by KBCI regarding your decision to sell your Offshore Investment Funds.
If you decide that you would like to invest in the KBC Investment Fund during the subscription period, below are some points to note:
- Purchase Price: of the KBC Investment Funds will be based on the day of purchase of the Fund, which will be the 15th March, and not the date that you decide to invest in the Fund.
- Sell Price: of the Offshore Investment Fund will be as per the 8th March 2021 and not the date you decide to sell your existing Offshore Investment Funds.
- Market Factors: Please note that between the date that you subscribe to the KBC Investment Funds and the date that your existing Offshore Investment Fund is sold, the value of your Fund may increase/decrease in price as a result of market factors.
You will not be able to purchase Lump Sum investments but if you are a Start to Invest customer, you will be able to continue with your current monthly investments.
Should you wish to cancel your instruction to sell your Offshore Investment Funds and invest in our KBC Investment Funds, you can do so by completing a Cancellation Form, which is available upon request from our Investment Advisors in our Hubs or Contact Centre.
The completion of this form will be deemed a retraction of the combined Sell and Buy Orders in their entirety. Completed Cancellation Forms must be received by KBC on/before 9am on the 1st March 2021. Requests received after this date can not be accepted and Buy/Sell Orders previously signed will be actioned.
Completion of the Sell and Buy Order Form is not a certain guarantee that the trades will take place.
KBC may decline to accept, in whole or in part, any application for the issue of Participating Shares of KBC Investment Funds:
- In the event of the decision to withdraw in whole, we will contact to outline that we will not proceed with the signed Sell and Buy trade instruction and that your investment will remain unimpacted in the existing Offshore Investment Funds.
- In the event of an KBC Investment Funds being withdrawn, we will contact you on/before 15th March 2021 to outline that we will not procced with the signed Sell/Buy trade instruction. Your options at this point will be discussed with you. These options may include investing in an alternative KBC Investment Fund within your Risk Profile or to remain unimpacted in the existing Offshore Investment Funds. Further signed documentation will be required to confirm acceptance of the alternative option decided upon.
Information on the tax obligations
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
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:
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 31st 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;
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:
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:
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 16th 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 8th 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 8th 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 31st of October, in the year after the year in which your 8th 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 16th 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):
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.
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.