Revenue Note for Guidance

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Revenue Note for Guidance

172LA Deduction of dividend withholding tax on settlement of market claims

Summary

This section gives statutory backing, from 10 February 2000, to the administrative arrangements for dealing with DWT in the case of market claims, i.e. where dividends are incorrectly paid to a person due to delays in updating share registers. Thus, brokers and other intermediaries who are settling market claims are legally obliged to deduct DWT in all such cases where DWT was not deducted when the distribution was originally made, pay all amounts so deducted to Revenue, and make an annual return containing details of DWT so deducted during the previous tax year.

Details

Definition

“proper owner” is the person beneficially entitled to a relevant distribution as a result of the specified event.

“recorded owner” is the person beneficially entitled to a relevant distribution before the specified event.

(1) “stockbroker” is a member firm of the Irish Stock Exchange plc trading as Euronext Dublin or of a recognised stock exchange in another country.

When a market claim is treated as arising

(2) A market claim is deemed to arise where—

  • a resident company has made a relevant distribution, either directly or through an intermediary, to the recorded owner on the basis of the information on the share register of the company or on the basis of a securities account in the name of the recorded owner held by an intermediary at a particular date,
  • it later transpires, as a result of an event (the “specified event”), being a sale or purchase of the shares or other securities in respect of which the relevant distribution was made, or another event or the failure to happen of another event in relation to those shares or securities, that the proper owner was actually entitled to receive the relevant distribution, and
  • a person (an “accountable person”), being the relevant stockbroker or intermediary who has acted for the recorded owner is obliged to pay the relevant distribution to the proper owner or to an intermediary holding securities on behalf of the proper owner, which action is referred to as the “settlement of the market claim”.

Consequences of a market claim arising

(3) Where a market claim arises, then, if DWT has not already been deducted from the relevant distribution made by the resident company to the recorded owner —

  • the accountable person must, on the settlement of the market claim, deduct DWT out of the amount of the relevant distribution,
  • the proper owner or, as may be appropriate, the stockbroker or intermediary who has acted for the proper owner in the specified event must allow this deduction on receiving the residue of the relevant distribution, and
  • the accountable person is acquitted and discharged of so much money as is represented by the deduction as if that amount of money had actually been paid to the proper owner or, as may be appropriate, the stockbroker or intermediary who has acted for the proper owner in the specified event.

Settlement of market claims

(4) The accountable person must, on the settlement of the market claim, give the proper owner or, as may be appropriate, the stockbroker or intermediary who has acted for the proper owner in the specified event a statement in writing showing—

  • the name and address of the accountable person,
  • the name and address of the company which made the relevant distribution,
  • the amount of the relevant distribution, and
  • the amount of DWT deducted from the relevant distribution.

Payment to Collector-General

(5) DWT so deducted by an accountable person must be paid by the accountable person to the Collector-General within 14 days of the end of the month in which that tax was required to be so deducted. DWT so due is payable without the making of an assessment, but DWT which has become so due may be assessed on the accountable person if that tax or any part of it is not paid on or before the due date

Statement to accompany payment

(6) Any such DWT payment must be accompanied by a statement in writing from the accountable person showing the name and address of the accountable person, the name and address of the company or companies which made the relevant distribution or distributions to which the payment relates and the amount of the DWT payment.

Returns

(7) An accountable person must make a return to Revenue for each year of assessment (being 1999–2000 or any subsequent year of assessment) in which a market claim arises. The return, which must be made not later than 15 February following the year of assessment, must show the following details in relation to each market claim arising in that year:

  • the name and address of the resident company which made the relevant distribution to which market claim relates
  • the amount of that distribution, and
  • the amount of DWT deducted from that distribution by the accountable person.

(8) In general, the return must be made in an electronic format approved by Revenue. It must also be accompanied by a declaration made by the accountable person, on the prescribed or authorised form, to the effect that the return is correct and complete.

(9) If Revenue are satisfied that the accountable person has not got the facilities to make the return electronically, the return may be made in writing in a form prescribed or authorised for that purpose by Revenue. A written return must also be accompanied by a declaration made by the accountable person, on the prescribed or authorised form, to the effect that the return is correct and complete

Relevant Date: Finance Act 2021