Revenue Note for Guidance

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Revenue Note for Guidance

129A Dividends paid out of foreign profits


This section is an anti-avoidance provision that removes from the scope of section 129 distributions between Irish-resident connected companies where the profits out of which the dividends are paid were earned by the paying company while it was resident outside the State. The section provides that distributions out of such profits be subject to tax much in the same way as foreign-sourced dividends.

To ensure that this section does not adversely affect normal business transactions not involving the avoidance of tax, e.g. companies moving to Ireland to take advantage of the holding company regime, it is provided that dividends paid by companies which were not controlled by Irish residents before becoming resident in the State will not fall within the scope of the section. Also, to ensure that companies who may already have re-domiciled or who are in the process of doing so are not affected, the provisions only apply where the paying company became tax resident here on or after 3 April 2010.



(1)(a) “Profits” are defined as the accounting profits.

(1)(b) Section 10 applies for the purposes of determining if companies are connected and also that companies involved in a scheme or arrangement to circumvent the section will be connected for the purposes of the section.

(1)(c) “Control” is defined by reference to section 432.

Dividends between connected companies

(2) Where a company receives a dividend from a connected company which became resident in the State in the period beginning on the date 10 years before the payment of the dividend or 3 April 2010, whichever is the later, the dividend or part of the dividend which is paid out of profits earned while a company was resident outside the State will not be exempt under section 129 but will be chargeable to corporation tax under Case IV of Schedule D.

(3)(a) The amount by which a dividend exceeds the distributable profits of the company for the period (“specified period”) since the company became resident in the State will be treated be as paid out of profits earned while the company was non-resident.

(3)(b) The distributable profits of the specified period are defined as the aggregate of the accounting profits for the period from the date the company became resident in the State to the last day of the accounting period immediately before the accounting period in which the distribution is made as reduced by any distributions for that period which were exempt under section 129.

Credit relief for foreign tax

(4) The credit relief for related foreign tax will be available for set off against the corporation tax payable on the dividends, which are subject to tax by virtue of this section.

(5) The section does not apply where the company paying the dividend was not controlled by persons resident in the State before it became so resident.

Relevant Date: Finance Act 2020