Revenue publishes updated guidance on dividend withholding tax

Revenue has updated its guidance on the operation of dividend withholding tax (DWT) to provide confirmation regarding the treatment of distributions paid to partnerships.  The updated guidance outlines the circumstance in which distributions may be paid, directly or indirectly, to Irish or equivalent non‑resident partnerships without applying DWT.

The guidance outlines that on a strict interpretation of the legislation, DWT must be deducted on distributions received by the partnership. However, where a distribution is made to an Irish partnership, or to a non-resident partnership formed under the laws of a relevant territory, Revenue is prepared to ‘look through’ the partnership to the partners. In these circumstances and subject to certain conditions, Revenue will operate an administrative practice for distributions to be paid gross to the individual partners.

The relevant conditions to be satisfied include:

• All the partners in the relevant partnership must themselves qualify for exemption if the dividend had been paid directly to those partners,
• The partnership is considered to be tax transparent in its jurisdiction of residence (or, where the partnership is not considered to be resident in any jurisdiction, its place of creation) and by all the jurisdictions where the partners within the partnership are resident,
• The business is conducted through the partnership for commercial reasons and not for tax avoidance purposes, and
• The appropriate declarations of exemption with supporting certification, under TCA Schedule 2A paragraphs 8 and 9 as appropriate, for each partner have been put in place with the paying company, AWA, RQI or QI from whom the relevant distribution will be received.

Where a member of the partnership is itself a partnership, Revenue is prepared to ‘look through’ the second mentioned partnership where the above conditions are met in respect of the second mentioned partnership (and so on where, for bona fide commercial purposes, there are multiple partnerships in an investment chain).

Any changes to the partnership must be regularly reviewed and monitored to ensure that the requisite documentation is in place.