Revenue Note for Guidance
This section allows interest paid by banks to their foreign parents and other associated companies (which would under normal corporation tax rules be treated as a distribution by virtue of section 130(2)(d)(iv)) not to be so treated, provided certain conditions are met. The effect of not treating interest paid in these circumstances as a distribution is that the bank paying the interest is entitled to a tax deduction which it might not otherwise be entitled to.
(1) The definition of “bank” is more restrictive than in certain other provisions of the Taxes Consolidation Act, 1997 as this section is intended to have a limited scope.
The type of interest which qualifies for the tax treatment is identified as interest which —
(3) Where a bank proves that interest payable by it meets the above criteria and the bank elects not to have the interest treated as a distribution under the rule in section 130(2)(d)(iv) then the interest concerned is not to be so treated.
(4) The election must be included in the bank’s tax return for the period in which the interest is paid.
Relevant Date: Finance Act 2017