Finance Act 2008

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Amendment of Schedule 24 (relief from income tax and corporation tax by means of credit in respect of foreign tax) to Principal Act.

49.— (1) Schedule 24 to the Principal Act is amended—

(a) in paragraph 4(2A) (inserted by the Finance Act 2006 ) by substituting “foreign tax in respect of any income of a company (in this subparagraph referred to as ‘that income’), being income (other than income from a trade carried on by the company through a branch or agency in a territory other than the State) which is taken into account” for “foreign tax in respect of any income of a company (in this subparagraph referred to as ‘that income’), being income which is taken into account”, and

(b) by inserting the following after paragraph 9G (inserted by the Finance Act 2006 ):

“Dividends paid out of transferred profits

9H(1) This paragraph applies in any case where—

(a) under the law of a territory outside the State, tax is paid by a company (in this paragraph referred to as the ‘first company’) resident outside the State in respect of any of its profits,

(b) some or all of those profits become profits of another company (in this paragraph referred to as the ‘second company’) resident outside the State otherwise than by virtue of the payment of a dividend to the second company, and

(c) the second company pays a dividend out of those profits to another company, wherever resident.

(2) Where this paragraph applies, then for the purposes of allowing credit under this Schedule for foreign tax in respect of profits of the first company attributable to any dividends paid—

(a) by any company (whether or not the second company) resident outside the State,

(b) to a company resident in the State,

this Schedule shall apply with any necessary modifications as if the second company had paid the tax paid by the first company in respect of those profits of the first company which have become profits of the second company in accordance with subparagraph (1)(b).

(3) Subparagraphs (1) and (2) are subject to the following limitations—

(a) the credit against corporation tax allowable to a company resident in the State shall not exceed the amount which would have been allowable to that company had those profits become profits of the second company by virtue of the payment of a dividend by the first company to the second company, and

(b) no tax shall be taken into account in respect of profits referred to in subparagraph (1) where such profits become the profits of the second company by virtue of a scheme or arrangement the purpose or one of the main purposes of which is the avoidance of tax.”.

(2) (a) (i) Subject to subparagraph (ii)(1)(a) applies as on and from 31 January 2008.

(ii) Subsection (1)(a) shall be deemed to have applied as respects any company as on and from 1 January 2006, if an election in writing is made by the company to the Revenue Commissioners to that effect.

(b) Subsection (1)(b) applies to dividends paid on or after 31 January 2008.