Finance Act 2005

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Amendment of Chapter 3A (Implementation of Council Directive 2003/48/EC of 3 June 2003 on Taxation of Savings Income in the Form of Interest Payments and Related Matters) of Part 38 of Taxes Consolidation Act 1997.

144.—(1) Chapter 3A (Implementation of Council Directive 2003/48/EC of 3 June 2003 on Taxation of Savings Income in the Form of Interest Payments and Related Matters) of Part 38 of the Taxes Consolidation Act 1997 is amended—

(a) in section 898B(1) by substituting the following definition for the definition of “the Directive”:

“ ‘the Directive’ means Council Directive 2003/48/EC of 3 June 2003¹ as amended;”,

(b) in sections 898F(5)(c) and 898G(6)(c) by substituting “1 July 2005” for “1 January 2005”,

(d) in section 898H—

(i) by substituting the following for the matter immediately preceding paragraph (a) in subsection (1):

“Every paying agent shall, as respects an interest payment made for the immediate benefit of a beneficial owner on or after 1 July 2005 who is resident in a relevant territory, make and deliver to the Revenue Commissioners within 3 months of the end of a tax year (being the tax year 2005 and subsequent years) a return of all interest payments, as respects the tax year 2005, so made during the period 1 July 2005 to 31 December 2005 by that paying agent and, as respects any other tax year, so made by that paying agent during that year consisting of—”,

and

(ii) by substituting the following for paragraph (b) of subsection (4):

“(b) (i) (I) the total amount of interest payments which are within the meaning of paragraphs (a), (b), (c), (d), (e) and (g) of subsection (1) of section 898E, and

(II) the total amount of interest payments which are within the meaning of paragraphs (f) and (h) of that subsection,

(ii) in a case where the paying agent is a residual entity—

(I) the total amount of deemed interest payments which are within the meaning of paragraphs (a), (b), (c), (d), (e) and (g) of subsection (1) of section 898E, and

(II) the total amount of deemed interest payments which are within the meaning of paragraphs (f) and (h) of that subsection.”,

(e) in section 898I by substituting the following for paragraph (c):

“(c) the total amount of the interest payments so made or so secured by it in the tax year (and for this purpose the tax year 2005 shall be deemed to begin on 1 July 2005 and end on 31 December 2005).”,

(f) by substituting the following for subsections (1) to (3) of section 898M—

“(1) Subject to subsections (3) and (4), where tax has been deducted from an interest payment in a relevant territory under provisions applicable in such territory in accordance with the Directive or the arrangements and—

(a) the interest payment is, or but for an exemption or relief from tax would be, taken into account in computing the total income of an individual for the tax year in which the tax was deducted for the purposes of income tax, and

(b) the individual is resident in the State for that tax year,

then—

(i) the individual may claim a credit for the tax deducted from the payment against any income tax chargeable on that individual for that year and, in determining the amount of tax payable on the individual's total income for that year, credit shall be given for the tax deducted from the interest payment and the amount of the credit shall be the amount of tax deducted from the interest payment, and

(ii) where—

(I) the tax deducted from the interest payment exceeds any such income tax chargeable, the excess shall be repaid, or

(II) no such income tax is chargeable, an amount equal to the tax deducted from the interest payment shall be repaid to the individual.

(2) Subject to subsections (3) and (4), where tax has been deducted from an interest payment in a relevant territory under provisions applicable in such territory in accordance with the Directive or the arrangements and—

(a) the interest payment is, or but for an exemption or relief from tax would be, taken into account in computing the chargeable gains of an individual for the tax year in which the tax was deducted for the purposes of the Capital Gains Tax Acts, and

(b) the individual is resident in the State for that tax year,

then—

(i) the individual may claim a credit for the tax deducted from the payment against the capital gains tax chargeable on that individual for that year and, in determining the amount of tax payable on the chargeable gains of that individual for that year, credit shall be given for the tax deducted from the interest payment and the amount of the credit shall be the amount of tax deducted from the interest payment, and

(ii) where—

(I) the tax deducted exceeds any such capital gains tax, the excess shall be repaid to the individual, or

(II) no such capital gains tax is chargeable, an amount equal to the tax deducted shall be repaid to the individual.

(3) (a) The credit referred to in subsection (1) or (2), as the case may be, shall apply only after the application of any other credit to which the individual may be entitled under any arrangement made under section 826 in respect of any tax deducted from the payment under provisions other than those referred to in subsection (1) or (2).

(b) Subsection (1) or (2) shall not apply where—

(i) the individual referred to in the subsection concerned has obtained relief under the law of a territory outside the State in respect of tax that has been deducted from an interest payment in a relevant territory under provisions applicable in such territory in accordance with the Directive or the arrangements, and

(ii) the individual was resident in that territory or was treated as being resident in that territory under arrangements made under section 826 for the year of assessment in which the tax was deducted.”,

(g) in section 898O by substituting the following for subsection (1):

“(1) Where any person required to make a return under this Chapter—

(a) fails, without reasonable excuse, to comply with any of the requirements of section 898F or 898G,

(b) makes an incorrect or incomplete return under this Chapter, or

that person shall be liable to a penalty of €19,045 and, in the case of paragraphs (a) and (c), if the failure continues that person shall be liable to a further penalty of €2,535 for each day on which the failure continues.”,

(h) by substituting the following for section 898P:

“Arrangements with third countries and dependent and associated territories of Member States.

898P.—(1) This Chapter shall apply for the purposes of implementing any arrangements made with a territory being a dependent or associated territory of a Member State (in this Chapter referred to as the ‘arrangements’) in relation to the automatic exchange of information and the application of a withholding tax referred to in paragraph 2(ii) of Article 17 of the Directive.

(2) (a) In this subsection—

‘Council Decision on signing of agreement with Andorra’ means Council Decision (2004/828/EC) of 2 November 2004 concerning the signature of the Agreement between the European Community and the Principality of Andorra providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments and the approval and signature of the accompanying Memorandum of Understanding¹ ;

‘Council Decision on signing of agreement with Liechtenstein’ means Council Decision (2004/897/EC) of 29 November 2004 on the signing of the Agreement between the European Community and the Principality of Liechtenstein providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments and the approval and signing of the accompanying Memorandum of Understanding² ;

‘Council Decision on signing of agreement with Monaco’ means Council Decision (2005/35/EC) of 7 December 2004 on the signing of the Agreement between the European Community and the Principality of Monaco providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments and the approval and signing of the accompanying Memorandum of Understanding³ ;

‘Council Decision on signing of agreement with San Marino’ means Council Decision (2004/903/EC) of 29 November 2004 on the signing of the Agreement between the European Community and Republic of San Marino providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments and the approval and signing of the accompanying Memorandum of Understanding⁴ ;

‘Council Decision on signing and conclusion of agreement with the Swiss Confederation’ means Council Decision (2004/911/EC) of 2 June 2004 on the signing and conclusion of the Agreement between the European Community and the Swiss Confederation providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments and the accompanying Memorandum of Understanding⁵ .

(b) (i) Article 12 (Exchange of information on request) of the agreement attached to the Council Decision on signing of agreement with Andorra,

(ii) Article 10 (Exchange of information) of the agreement attached to the Council Decision on signing of agreement with Liechtenstein,

(iii) Article 12 (Transmission of information on request) of the agreement attached to the Council Decision on signing of agreement with Monaco,

(iv) Article 13 (Exchange of information on request) of the agreement attached to the Council Decision on signing of agreement with San Marino, and

(v) Article 10 (Exchange of information) of the agreement attached to the Council Decision on signing and conclusion of agreement with the Swiss Confederation,

shall, notwithstanding any other enactment, have the force of law.

(i) Article 10 (Elimination of double taxation) of the agreement attached to the Council Decision on signing of agreement with Andorra,

(ii) Article 9 (Elimination of double taxation) of the agreement attached to the Council Decision on signing of agreement with Liechtenstein,

(iii) Article 10 (Elimination of double taxation and/or repayment of withholding tax) of the agreement attached to the Council Decision on signing of agreement with Monaco,

(iv) Article 10 (Elimination of double taxation) of the agreement attached to the Council Decision on signing of agreement with San Marino, and

(v) Article 9 (Elimination of double taxation) of the agreement attached to the Council Decision on signing and conclusion of agreement with the Swiss Confederation,

in the same way as it applies for the purposes of the Directive or the arrangements, and references in that section to tax deducted from an interest payment in a relevant territory under provisions applicable in such territory in accordance with the Directive or the arrangements shall be construed as references to—

(I) in the case of Liechtenstein or the Swiss Confederation, as the case may be, a retention from an interest payment under provisions applicable in that country in accordance with the agreement, and

(II) in the case of Andorra, Monaco or San Marino, as the case may be, tax withheld from an interest payment under provisions applicable in that country in accordance with the agreement,

and references to tax deducted and cognate expressions shall be construed accordingly.

(d) (i) The Revenue Commissioners may make regulations generally for the purposes of implementing the provisions of any arrangements the Government may make with the Government of any of the countries referred to in article 17(2)(i) of the Directive for the purposes of supplementing paragraph (b).

(ii) For the purposes of subparagraph (i), arrangements made with the head of a State shall be regarded as made with the Government of that State.

(e) Section 898L shall apply for the purposes of Article 9 (Voluntary disclosure) of the agreement attached to the Council Decision on signing of agreement with Andorra in the same way as it applies for the purposes of the Directive.”,

and

(i) in section 898R by substituting—

(i) “898O” for “898P” in subsection (1),

(ii) the following for subsection (2):

“(2) Section 898O shall apply as respects an act or omission which takes place or begins on or after the date of the passing of the Finance Act 2005.”,

and

(iii) “1 July 2005” for “1 January 2005” in subsection (3).

(2) Section 912A(1) of the Taxes Consolidation Act 1997 is amended by substituting the following for the definition of “foreign tax”:

“ ‘foreign tax’ means a tax chargeable under the laws of a territory in relation to which arrangements (in this section referred to as ‘the arrangements’) having the force of law by virtue of section 826, 898P(2) or section 106 of the Capital Acquisitions Tax Consolidation Act 2003 apply;”.

(3) This section applies as on and from the date of the passing of this Act.

¹OJ No. L157, 26.6.2003, p.38

¹OJ No. L359, 4.12.2004, p.32

²OJ No. L379, 24.12.2004, p. 83

³OJ No. L19, 21.1.2005, p.53

⁴OJ No. L381, 28.12.2004, p.32

⁵OJ No. L385, 29.12.2004, p.28

Finance Act 2005 Permanent Page URL

Finance Act 2005

Permanent Page URL