Revenue Note for Guidance

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Revenue Note for Guidance

172G Authorised withholding agent

Summary

This section provides that a company which makes a relevant distribution to an authorised withholding agent, who is to receive the distribution on behalf of another person, must make the distribution without operating DWT. The authorised withholding agent then, effectively, steps into the shoes of the company and must operate the DWT scheme when it pays on the distributions, or amounts representing such distributions, to its clients.

To be an authorised withholding agent, a person must be an intermediary and must —

  • be resident in the State for tax purposes,
  • enter into an authorised withholding agent agreement with Revenue, and
  • be authorised by Revenue as an authorised withholding agent.

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
  • otherwise be suitable to be an authorised withholding agent.

An authorisation of a person as an authorised withholding agent expires after 7 years subject to renewal of the, or the entering into of a new, authorised withholding agent agreement.

Under an authorised withholding agent 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 the Collector-General, correctly and efficiently, to pay to the Collector-General any DWT required to be included in such returns, 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.

Provision is also made for the maintenance by Revenue of a list of authorised withholding agents which can be made available to any person, and for the revocation of an authorisation of a person as an authorised withholding agent.

Details

Exemption from DWT for relevant distributions made to authorised withholding agent where that agent then operates DWT scheme

(1) DWT does not apply where an Irish resident company makes a relevant distribution, either directly or through one or more than one recognised qualifying intermediary, to an authorised withholding agent for the benefit of a person who is beneficially entitled to the distribution, not being the authorised withholding agent itself. This rule, however, is subject to section 172H which provides that the authorised withholding agent must effectively step into the shoes of the company and operate the DWT scheme when it is paying on the distribution.

Authorised withholding agent – conditions

(2) There are a number of conditions which must be satisfied if a person is to be an authorised withholding agent. 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 amounts or other assets representing such distributions from qualifying intermediaries. In addition, the person must be resident in the State or, if not resident in the State, must be resident for tax purposes in another EU country or in a tax treaty country and must carry on through a branch or agency in the State a trade which consists of or includes the receipt, on behalf of other persons, of relevant distributions from a company or companies resident in the State. Moreover, the person must enter into an authorised withholding agent agreement with Revenue, and must be authorised by Revenue as an authorised withholding agent.

Authorised withholding agent agreement

(3) An authorised withholding agent 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,
  • when requested to do so by notice in writing from Revenue, an 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 172H (which sets out the obligations of an authorised withholding agent in relation to the DWT scheme) in a correct and efficient manner,
  • to make to the Collector-General the return required under section 172K(1), and to pay to the Collector-General any DWT required to be included in that return, within the prescribed time,
  • as part of the qualifying intermediary agreement, the intermediary must undertake 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, 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, take extracts from, or copies of, documentation made available to Revenue under subsection (3)(b).

Authorisation as an authorised withholding agent

(4) Revenue are restricted as to whom they may authorise as an authorised withholding agent. Revenue may only authorise as an authorised withholding agent —

  • 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 Revenue consider suitable to be an authorised withholding agent.

Maintenance of list of authorised withholding agents

(5) Revenue are required to maintain a list of authorised withholding agents whose authorisations have not been revoked. Notwithstanding their confidentiality and secrecy obligations, Revenue may make available to any person the name and address of any authorised withholding agent.

Revocation of authorisation as authorised withholding agent

(6) Revenue are empowered to revoke a person’s authorisation as an authorised withholding agent where Revenue is satisfied that the person has failed to comply with the authorised withholding agent agreement or the DWT scheme in general or that the person is otherwise unsuitable to be an authorised withholding agent. 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 an authorised withholding agent must be published in Iris Oifigiúil.

Duration of authorisation as authorised withholding agent

(8) Without prejudice to subsection (6) which allows Revenue to revoke an intermediary’s authorisation as an authorised withholding agent 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 authorised withholding agent agreement or to enter into a further such agreement. Nor does it to prevent a further authorisation by Revenue of the intermediary as an authorised withholding agent for the purposes of the DWT scheme

Relevant Date: Finance Act 2021