Provisions in relation to Convention for reciprocal avoidance of double taxation in the State and the United Kingdom of income and capital gains

Summary

This section elaborates on the application in certain circumstances of the 1976 double taxation agreement with the United Kingdom.

Details

(1) “the Convention” is the 1976 double taxation agreement between Ireland and the United Kingdom.

(3) The application of the 1976 agreement is subject to the rules, set out in section 73, for the computation of income arising in the United Kingdom for the purposes of assessment under Case III of Schedule D.

These provide that the remittance basis of assessment in respect of income from securities and possessions abroad which may be claimed by individuals who are not domiciled or not ordinarily resident in the State is not to apply to income arising in the United Kingdom. It also provides that the tax in respect of income (other than income from stocks, shares or rents) arising in the United Kingdom is to be computed on the same basis as if it had arisen in the State.

(4)(a) In the case of United Kingdom friendly societies carrying on a life assurance business in the State, the expenses of management to be taken into consideration for the purposes of relief for such management expenses under section 707 are to be the expenses attributable to contracts made on or after 6 April 1976.

(4)(b) In computing the income of such United Kingdom friendly societies to be charged to corporation tax, income attributable to contracts of assurance effected before 6 April 1976 is not to be taken into account. Section 726 lays down the method of computing the chargeable income of an overseas life assurance company by way of a formula which determines the taxable portion of the income from the investments of the life assurance fund. The taxable portion is the amount which bears the same proportion to the total income from the investments as the average of the liabilities to policy holders whose proposals were made through a branch in the State bears to the average of the liabilities to all the policy holders. Liabilities on foot of Irish contracts of assurance made before 6 April 1976 are to be excluded in arriving at the average of the liabilities to policy holders whose proposals were made through the Irish branch.

The provisions regarding such United Kingdom friendly societies are to be construed as one with Part 26 which deals with the taxation of life assurance companies.

Relevant Date: Finance Act 2021