DT9893 | Double Taxation Relief Manual: Ireland: approved retirement fund

UK residents may be in receipt of Approved Retirement Fund (ARF) income, which is an Irish sourced product reinvested from a pension scheme, upon retirement.

When funds have moved from the pension scheme into the ARF, this changes the income source from a pension into an Investment Account. Only growth generated in the ARF is taxable in the UK in the year it arises – interest, capital gains, income from property etc.

Pension Lump Sum

At the point of changing funds from the pension to the ARF, a pension lump sum has been withdrawn and is taxable in the UK in accordance with Article 17 or Article 20 of the UK / Ireland treaty. Ireland may tax this as Capital upon distribution from the ARF. The UK has primary taxing rights on this income for UK residents and no UK relief is due.

UK Treatment and SA Declaration

The Qualifying Fund Manager (QFM) responsible for the ARF is able to provide a breakdown of the taxable growth into the ARF in some cases. The Breakdown should be declared in accordance with the underlying sources of income into the fund (interest, dividends, CG etc)

However, some ARF products sold by life assurance companies are structured as unit linked funds, where the growth cannot be broken down to underlying sources of income. In these specific cases, the income would be taxed in accordance with the “Income not expressly mentioned” article of the UK / Ireland treaty, which allows only the country of residence to tax.

This “Income not expressly mentioned” should be declared on the foreign income supplementary page (SA106) as a foreign pension in the “Overseas pensions, social security benefits and royalties” boxes with a description of the income and structure entered in the “white space” box of the SA100.

Ireland Repayment

Ireland will continue to tax the ARF at source upon distribution. To reclaim the Irish tax as appropriate, eg if taxed as the underlying sources or as Income not expressly mentioned, a revised refund claim form “Refund of Taxes Paid on ARF Distributions” is available on Revenue Ireland’s website – currently available at Claim for repayment of tax paid by non-residents on ARF distributions