Finance Act, 2000

Chapter 4

Income Tax, Corporation Tax and Capital Gains Tax

Amendment of section 198 (certain interest not to be chargeable) of Principal Act.

34.—(1) Section 198 of the Principal Act is amended by the substitution for subsection (1) of the following:

“(1) (a) In this subsection—

‘arrangements’ means arrangements having the force of law by virtue of section 826;

‘relevant territory’ means—

(i) a Member State of the European Communities other than the State, or

(ii) not being such a Member State, a territory with the government of which arrangements have been made;

‘tax’, in relation to a relevant territory, means any tax imposed in that territory which corresponds to corporation tax in the State.

(b) For the purposes of this subsection, a company shall be regarded as being a resident of a relevant territory if—

(i) in a case where the relevant territory is a territory with the government of which arrangements have been made, the company is regarded as being a resident of that territory under those arrangements, and

(ii) in any other case, the company is by virtue of the law of the relevant territory resident for the purposes of tax in that territory.

(c) Notwithstanding any other provision of the Income Tax Acts but without prejudice to any charge under the Corporation Tax Acts on the profits of such a person—

(i) a company not resident in the State or a person not ordinarily resident in the State shall not be chargeable to income tax in respect of interest paid by—

(I) a company in the course of carrying on relevant trading operations (within the meaning of section 445 or 446), or

(II) a specified collective investment undertaking (within the meaning of section 734),

and

(ii) a company shall not be chargeable to income tax in respect of interest paid by a relevant person (within the meaning of section 246) in the ordinary course of a trade or business carried on by that person if the company—

(I) is not resident in the State, and

(II) is regarded for the purposes of this subsection as being a resident of a relevant territory.”.

(2) Subsection (1) shall apply as respects interest paid in the year of assessment 2000-2001 and subsequent years of assessment.