Revenue Note for Guidance

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Revenue Note for Guidance

PART 35

Double Taxation Relief

CHAPTER 1

Principal reliefs

Overview

This Chapter gives effect under Irish law to double taxation agreements, applies Schedule 24 as the mechanism for granting relief under such agreements, and elaborates the manner of giving relief in certain circumstances.

826 Agreements for relief from double taxation

Summary

This section provides that double taxation agreements, air transport agreements or tax information exchange agreements made by the Government shall take effect once an Order approved by Dáil Eireann has been made and the Oireachtas enacts legislation that makes the Order part of Irish law. This will be done by listing (in Schedule 24A) all existing international tax agreements entered into by the State. The mechanism to give relief from double taxation is set out in Schedule 24. The section also sets out the manner in which an order under the section is to be made. Tax information exchange agreements are agreements that can be entered into by the Government with the government of another jurisdiction for the exchange of information between the tax authorities of each jurisdiction. The agreements provide for information to be exchanged on request. Air transport agreements provide relief from double taxation to air transport undertakings and their employees on profits, income or capital gains.

The section also, for ratification purposes, includes references to certain other Conventions, including —

  • The Joint Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters also provides for mutual assistance between Parties to the Convention in relation to the exchange of information, recovery of taxes and service of documents, and
  • The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS), signed by Ireland on 7 June 2017, provides a mechanism for countries to transpose the BEPS recommendations into existing tax treaties without the need for separate bilateral negotiations. At the time that the Multilateral Convention was signed and prior to ratification, each government must inform the Depository of its intended approach to reserve or notify in relation to any articles or provisions. The extent to which any arrangements with treaty partners may be modified will depend on the compatibility between the reservations and notifications made by Ireland and those made by our treaty partners. The recommendations will help reduce opportunities for international tax avoidance.

Details

Double Taxation Treaties

(1) Where the Government makes an order declaring that —

  • arrangements for double taxation relief have been made with the government of another territory in relation to income tax, corporation tax on income or gains or similar taxes, or arrangements for exchange of information have been made with the government of another territory in the case of taxes of any kind or description imposed by the laws of the State or the laws of that other territory, and
  • those arrangements should have the force of law,

and the order is referred to in Part 1 of Schedule 24A, then the arrangements are to have the force of law. This is, however, subject to the certain qualifications under this section.

An order made by the Government will have the force of law from the date on which it is referred to in Part 1 of Schedule 24A.

Air Transport Agreements

(1A) Where the Government makes an order declaring that —

  • arrangements have been made with the government of another territory in relation to affording relief from double taxation to air transport undertakings and their employees on profits, income or capital gains, and
  • those arrangements should have the force of law,

and the order is referred to in Part 2 of Schedule 24A, then the arrangements are to have the force of law. This is, however, subject to the certain qualifications under this section.

An order made by the Government will have the force of law from the date on which it is referred to in Part 2 of Schedule 24A.

Tax Information Exchange Agreements

(1B) Where the Government makes an order declaring that —

  • arrangements have been made with the government of another territory in relation to exchanging information to prevent and detect tax evasion in the case of taxes of any kind in the State or in the other country concerned, and such other matters giving relief from double taxation as the Government considers appropriate, and
  • those arrangements should have the force of law,

and the order is specified in Part 3 of Schedule 24A, then the arrangements are to have the force of law. This is, however, subject to the certain qualifications under this section.

An order made by the Government will have the force of law from the date on which it is referred to in Part 3 of Schedule 24A.

Joint Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters

(1C) Where the Government makes an order declaring that —

  • it has become a signatory to the Joint Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters, or any Protocol thereto, and
  • that Convention, or any Protocol thereto, should have the force of law,

and the order is specified in Part 4 of Schedule 24A, then the Convention or any Protocol thereto are to have the force of law. This is, however, subject to the certain qualifications under this section.

An order made by the Government will have the force of law from the date on which it is referred to in Part 4 of Schedule 24A.

Agreements with non-governmental representative authorities

(1D) Where the Government makes an order declaring that —

  • arrangements for double taxation relief have been made with a non-governmental representative authority of another territory in relation to income tax, corporation tax on income or gains or similar taxes or arrangements for exchange of information have been made with a non-governmental representative authority of another territory in the case of taxes of any kind or description imposed by the laws of the State or the laws of that other territory, and
  • those arrangements should have the force of law,

and the order is specified in Part 1 of Schedule 24A, then the arrangements are to have the force of law. This is however, subject to the qualification as a set out under this section.

An order made by the Government will have the force of law from the date on which it is referred to in Part 1 of Schedule 24A.

Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS)

(1E) Where the Government makes an order declaring that —

  • it has become a signatory to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting and
  • that Multilateral Convention should have force of law,

and the order is specified in Part 5 of Schedule 24A, then the Convention should have the force of law.

An order made by the Government will have the force of law from the date on which it is referred to in Part 5 of Schedule 24A.

Schedule 24A

(1)(b), (1A)(b), (1B)(b), (1C)(b) (1E)(b) Part 1 of Schedule 24A lists all the existing double taxation agreements. Part 2 of the Schedule lists the only current air transport agreement, which is with the USSR. Part 3 lists all existing tax information exchange agreements. Part 4 is for the future listing of the Joint Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters, or any Protocol thereto. Part 5 is for the future listing of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.

(6) Where the Government is proposing to make an order under this section, a draft of the order must be laid before Dáil Éireann and the order is not to be made until Dáil Éireann has passed a resolution approving the draft order.

(5) An order made by the Government may be revoked and a revoking order may contain any transitional arrangements considered by the Government to be expedien.

(3) & (4) Arrangements made with the head of a foreign state are regarded as made with the government of that state. Arrangements which cover periods before the arrangements were made or which contain provisions in relation to income or capital gains which are not subect to double taxation are to be valid.

(8) Where arrangements apply from a certain date and the arrangements apply to corporation tax for the part of an accounting period which falls after that date, such apportionments as are necessary are to be made on a time basis.

(2) Schedule 24 contains the mechanisms for granting relief under double taxation agreements by providing for a credit for foreign tax against tax payable in the State.

(7) Where a double taxation agreement, air transport agreement, tax information exchange agreement or the Joint Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters, or any Protocol thereto, is given the force of law, Revenue is not prevented from disclosing information to an authorised officer of the government concerned, or of a party to the Convention, or any Protocol to the Convention, as the case may be, where such information is required to be disclosed under the agreement, or the Convention, or any Protocol to the Convention, as the case may be.

(9) The Revenue Commissioners are entitled to make regulations to ensure the application of agreements as they were intended to apply and in particular —

  • to ensure that relief does not accrue to persons not entitled to it, and
  • for authorising the recovery of tax where a payment was made without deduction of tax in compliance with the arrangements and it is discovered that the arrangements do not, in fact, apply to the payment.

The regulations can require recovery of the tax by an assessment on the recipient or by deduction from future payments. No such regulations have been made.

(10) An arrangement entered into with a non-governmental representative authority shall, for tax purposes, be treated like any other double taxation agreement made with a foreign Government. Accordingly, references to a “country” are deemed to include a reference to a “territory” and references to a “government” are deemed to refer to an “authority of a territory outside the State”.

Relevant Date: Finance Act 2020