New Process for dealing with non-resident vendors: requests for clearance to distribution of sales proceeds. | Fieldfisher
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New Process for dealing with non-resident vendors: requests for clearance to distribution of sales proceeds.

Conor Dunne



According to Sections 1034, 1035, 1043 of the Taxes Consolidation Act 1997, a non-resident vendor may be assessed and charged with income and capital gains tax ("CGT") in the name of a representative in respect of the disposal of a specified asset. These representatives can take the form of any kind including Solicitors in the State.

The proceeds of such a sale should be withheld by the representative until notice of intention to distribute sales proceeds to the non-resident vendor has been given by the representative to the Revenue and also until clearance has been furnished by the Revenue Commissioners that all tax affairs are in order. Following issues and delays in obtaining these confirmations being experienced by Solicitors, a new clearance process has been introduced.

This new process is set out in the Tax and Duty Manual 45-01-05 (the 'TDM'). This TDM outlines how the clearance request application should be submitted and the necessary documentation that must accompany a valid clearance request. The representative must be registered with a Transaction Advisory Identification Number and ROS to make a clearance application.

The documents required to be submitted are as follows:-
  1. Form in Appendix 1 to the TDM declaring non-residence status and confirmation of how the property was used during the period of ownership
  2. Transaction Advisory Notification signed by client to confirm representative is acting on their behalf
  3. Form CG1 for the tax year in which the disposal takes place
  4. CGT computation
  5. Full payment of CGT liability (if any)
  6. Contract for Sale
If Revenue do not respond within 35 working days, sales proceeds can then be distributed to the non-resident vendor. No further specific letter of clearance is required before distribution can take place. 

It is important to note that a similar system has already been in place in relation to Capital Acquisitions Tax ("CAT") arising on asset distribution under the probate process. Solicitors acting in the probate of an estate whereby a non-resident beneficiary is inheriting assets must either write to the CAT Section of the Revenue Commissioners notifying of their intention to distribute to non-resident beneficiaries or submit an enquiry via Revenue Online Service ("ROS") once they are satisfied that the non-resident beneficiaries pay and file obligations have been met. Similarly to the new CGT process, if Revenue do not respond within 30 calendar days, the assets can be distributed. 
This new clearance process came into effect on the 24 October 2022. It is a welcome development for both non-resident vendors and their representatives, with the likely effect of the TDM to speed up the clearance application process and consequently the distribution of sales proceeds to non-resident vendors.

Written by: Conor Dunne and Hannah Coman

Areas of Expertise

Real Estate