Revenue Note for Guidance

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Revenue Note for Guidance

172E Qualifying intermediaries

Summary

This section provides special measures to deal with the common situation where distributions are made through intermediaries such as nominees and custodians. DWT does not apply to distributions made through one or more qualifying intermediaries for the benefit of persons beneficially entitled to the distributions who are non-liable persons.

To be a qualifying intermediary, an intermediary must —

  • be resident for tax purposes in the EU or in a tax treaty country,
  • enter into a qualifying intermediary agreement with Revenue, and
  • be authorised by Revenue as a qualifying intermediary.

In addition, the intermediary must —

  • hold (or be wholly owned by a person who holds) a banking licence in an EU Member State or a tax treaty country,
  • be a member of a recognised stock exchange in the EU or in a tax treaty country, or
  • be a person whom Revenue considers suitable to be a qualifying intermediary.

An authorisation of a person as a qualifying intermediary expires after 7 years subject to renewal of the, or the entering into of a new, qualifying intermediary agreement.

Under a qualifying intermediary agreement, an intermediary must undertake to accept, retain and make available for inspection, all declarations of exemption and notifications made to the intermediary in connection with the DWT scheme. The intermediary must also undertake to exercise a duty of care in relation to the veracity of such declarations and notifications, to operate the DWT scheme (including the making of returns to Revenue) correctly and efficiently, to provide to Revenue an auditor’s report on the intermediary’s compliance with the agreement for its first year of operation and further such reports on request by Revenue, and to allow for the verification of such compliance by Revenue in any manner considered necessary by Revenue. The agreement may also require the provision of a bond or guarantee by the intermediary to protect the Exchequer against fraud or negligence in the operation of the agreement and the DWT scheme.

Provision is also made for the maintenance by Revenue of a list of qualifying intermediaries which can be made available to any person, and for the revocation of an authorisation of a person as a qualifying intermediary.

Details

Exemption from DWT for relevant distributions made through qualifying intermediaries for the benefit of non-liable persons

(1) DWT does not apply where an Irish resident company makes a relevant distribution through one or more than one qualifying intermediary for the benefit of a person who is beneficially entitled to the distribution and is a non-liable person in relation to the distribution. This rule is, however, subject to section 172F(6) which provides that the company must apply DWT to a distribution made to a qualifying intermediary unless it has been notified by the qualifying intermediary that the distribution is to be received by the qualifying intermediary for the benefit of a person in its Exempt Fund.

Qualifying intermediary – conditions

(2) A number of conditions must be satisfied if a person is to be a qualifying intermediary. The person must first of all be an intermediary, that is, a person whose trade consists of or includes the receipt, on behalf of other persons, of relevant distributions from Irish resident companies or of amounts or other assets representing such distributions from other qualifying intermediaries. In addition, the person must be resident for tax purposes in the EU or in a tax treaty country, must enter into a qualifying intermediary agreement with Revenue, and must be authorised by Revenue as a qualifying intermediary.

Qualifying intermediary – agreement

(3) A qualifying intermediary agreement is an agreement entered into between Revenue and an intermediary under which the intermediary undertakes certain obligations, namely —

  • to keep and retain all declarations (and accompanying certificates) and notifications (other than notices from Revenue) made or given to the intermediary in accordance with the DWT scheme. Such documents must be kept and retained by the intermediary for the longer of 6 years or the period which, in relation to the relevant distributions in respect of which the declaration or notification is made or given, ends not earlier than 3 years after the date on which the intermediary has ceased to receive relevant distributions on behalf of the person who made the declaration or gave the notification to the intermediary,
  • must make available to Revenue, within the time specified in the notice, all such declarations, certificates or notifications or such class or classes of such declarations, certificates or notifications as may be specified in the notice,
  • to inform Revenue if the intermediary has reasonable grounds to believe that a declaration or notification made or given to the intermediary was not, or may not have been, a true and correct declaration or notification at the time it was made or given to the intermediary,
  • to inform Revenue if at any time the intermediary has reasonable grounds to believe that a declaration made to the intermediary would not, or might not, be a true and correct declaration if made to the intermediary at that time,
  • to operate the provisions of section 172F (which sets out the obligations of a qualifying intermediary in relation to the DWT scheme) in a correct and efficient manner and to make a timely return of the information required under subsection (7) of that section,
  • to produce an auditor’s report on its compliance with the DWT scheme after it has been operating the agreement for one year. The report must be furnished to Revenue within 3 months after the end of that year. Further such reports have to be provided by the intermediary only on written notice from Revenue and in relation to such other period of its operation of the agreement as is specified by Revenue in that notice,
  • if required, to give a bond or guarantee to Revenue which is sufficient to indemnify Revenue against any loss arising by virtue of the fraud or negligence of the intermediary in relation to the operation of the agreement and the DWT scheme,
  • where the intermediary is a depositary bank holding shares in trust for, or on behalf of, the holders of American depositary receipts (ADRs) and if authorised by Revenue to do so, to operate the special provisions of section 172F dealing with DWT and ADRs and to comply with any conditions relating to such operation as are specified in the agreement, and
  • to allow for the verification by Revenue of the intermediary’s compliance with the agreement and the DWT scheme in any manner considered necessary by Revenue.

Examination of documentation

(3A) Revenue may examine, or take extracts from or copies of, any declarations, certificates or notifications made available to it under subsection (3)(b).

Authorisation as a qualifying intermediary

Revenue are restricted as to whom they may authorise as a qualifying intermediary. Revenue may only authorise as a qualifying intermediary —

  • a holder (or a person who is wholly owned by a holder) of a banking licence or other similar authorisation under the law of any relevant territory or of an EEA state,
  • a member of a recognised stock exchange in the EU or in a tax treaty country, or
  • a person whom they consider suitable to be a qualifying intermediary.

Maintenance of list of qualifying intermediaries

(5) Revenue are required to maintain a list of qualifying intermediaries whose authorisation as a qualifying intermediary has not been revoked. Notwithstanding their confidentiality and secrecy obligations, Revenue may make available to any person the name and address of any qualifying intermediary.

Revocation of authorisation as qualifying intermediary

(6) Revenue are empowered to revoke a person’s authorisation as a qualifying intermediary where Revenue is satisfied that the person has failed to comply with the qualifying intermediary agreement or the DWT scheme in general or that the person is otherwise unsuitable to be a qualifying intermediary. Notice of a revocation must be served in writing by registered post, and the revocation takes effect from the date specified in the notice.

(7) Notice of a revocation of an authorisation as a qualifying intermediary must be published in Iris Oifigiúil.

Cessation of authorisation as qualifying intermediary

(8) Without prejudice to subsection (6) which allows Revenue to revoke an intermediary’s authorisation as a qualifying intermediary in certain circumstances, such an authorisation ceases to have effect after 7 years. This, however, does not prevent Revenue and the intermediary from agreeing to renew the qualifying intermediary agreement or to enter into a further such agreement. Nor does it to prevent a further authorisation by Revenue of the intermediary as a qualifying intermediary for the purposes of the DWT scheme

Relevant Date: Finance Act 2020