Revenue Note for Guidance

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Revenue Note for Guidance

172C Exemption from dividend withholding tax for certain persons

Summary

This section provides for an exemption from DWT for relevant distributions made by a company resident in the State to a person who is beneficially entitled to the distributions and is within one of the following categories —

  • an Irish resident company,
  • a pension scheme,
  • managers of approved retirement funds, approved minimum retirement funds and special savings incentive accounts,
  • a PRSA administrator,
  • a qualifying employee share ownership trust,
  • a collective investment undertaking,
  • an exempt unit trust,
  • a charity,
  • a sports body which is exempt from income tax by virtue of the income concerned being applied for the sole purpose of promoting athletic or amateur games or sports
  • a designated stockbroker who is receiving relevant distributions as part of the income of a special portfolio investment account,
  • a permanently incapacitated individual who is exempt from income tax in respect of income from the investment of compensation payments made by the courts or under an “out of court” settlement for personal injuries,
  • the trustees of a trust fund raised by public subscriptions for an individual who is permanently incapacitated from maintaining himself or herself where the trust is exempt from income tax in respect of income from the investment of trust funds,
  • a permanently incapacitated individual who is exempt from income tax in respect of payments from a trust referred to in the preceding indent and in respect of income arising to such an individual from the investment of such payments, or
  • a thalidomide victim who is exempt from income tax in respect of income arising from the investment of compensation payments made by the Minister for Health and Children or the “thalidomide victims foundation”

To qualify for exemption, the person must have made the appropriate declaration of entitlement to exemption as set out in Schedule 2A. The declaration must be made to the company making the distribution in the case where the person receives the distribution directly from the company. Where, however, the person receives the distribution through one or more than one qualifying intermediary, or through an authorised withholding agent, the declaration must be made to the qualifying intermediary or the authorised withholding agent from whom the person receives the distribution made by the company.

Details

Exemption from DWT for excluded persons

(1) The charge to DWT does not apply where an Irish resident company makes a relevant distribution to an excluded person.

Excluded persons

(2) An excluded person is a person beneficially entitled to the relevant distribution, being one of the persons listed in the summary, who or which has made to the relevant person (the company making the distribution or the qualifying intermediary or authorised withholding agent from whom that distribution is received) the appropriate declaration referred to in Schedule 2A.

Certain persons deemed to be beneficially entitled

(3) The exemptions provided by this section are predicated on the recipient of the relevant distribution being beneficially entitled to the distribution. The exemption provided to designated stockbrokers is intended to apply to stockbrokers operating special portfolio accounts. Such brokers are not themselves beneficially entitled to relevant distributions received in respect of such accounts; rather the beneficial owner of the distributions is the individual on whose behalf the broker is operating the account. Similar considerations apply in the case of a distributions received by a collective investment undertaking, a qualifying fund manager, a qualifying savings manager, a PRSA administrator, an exempt unit trust and the trustees of a qualifying trust. Accordingly, in order to allow such persons to make the appropriate declaration of exemption to the relevant person and thus receive relevant distributions without deduction of DWT, such persons are treated as being beneficially entitled to the relevant distributions.

Relevant Date: Finance Act 2020