898P Arrangements with dependant and associated territories of Member States

Arrangements with dependent and associated territories

(1) The Savings Directive will not apply unless Member States are satisfied that the necessary agreements or arrangements are in place to allow the same measures to be applied in the dependant and associated territories of the UK and the Netherlands.

These territories are the UK Crown Dependencies of the Isle of Man, Jersey and Guernsey; the UK Caribbean territories of Anguilla, British Virgin Islands, Cayman Islands, Monserrat and the Turks and Caicos islands; and the Netherlands Caribbean territories of Aruba and the Netherlands Antilles.

The section provides for the application of the legislation to individuals resident in these territories as and when arrangements are put in place in the territories concerned to either send information to the Revenue Commissioners on interest payments to Irish residents or to apply a withholding tax to interest payments to residents of Ireland.

Arrangements with third countries

(2) The section also provides for the implementation by Ireland of the appropriate provisions of agreements entered into between the EU and each of Andorra, Liechtenstein, Monaco, San Marino and Switzerland. These agreements provide for the implementation by these countries of measures equivalent to those implemented by Member States under the Savings Directive. Basically, the equivalent measures these 5 countries are implementing consist of the deduction of a withholding tax from interest payments made to individuals who are resident in EU Member States. The third countries will share the amount deducted with the country in which the individual is resident on the basis of 75% to be remitted to the country of residence with 25% retained by the country applying the withholding tax. There is no reciprocal withholding by Ireland from interest payments to residents of those countries. Ireland is required to provide a credit for the amounts deducted from an interest payment made to an Irish resident individual against the individual’s Irish income tax liability. If the individual has no liability or a liability less than the amount deducted, he or she gets a refund. The other aspect of these agreements is the exchange of information on request in the case of “tax fraud and the like”. These are reciprocal arrangements.

(2)(a) The various Council Decisions concerning these agreements and to which the actual texts of the agreements are attached are set out in order to ensure that the text referenced is the authentic text of the agreement.

(2)(b) Effect in Irish law is given to the provisions providing for exchange of information on request in the case of tax fraud and the like as set out in the agreements by declaring them to have the force of law in the State.

(2)(c) Section 898M (which provides a credit/refund for tax deducted from interest payments under the Directive and the bilateral agreements with the dependent/associated territories) applies to provide for a similar credit/refund for amounts deducted/retained from interest payments by the third countries.

(2)(d) The Revenue Commissioners are authorised to make regulations if arrangements are made by the Government with any of the third countries for supplementing the exchange of information on request provisions given the force of law by subsection (2)(b). By virtue of section 898Q(3) any regulations made in connection with the implementation of the EU Savings Directive (including any regulations made under this provision) will have to be laid before the Dáil.

(2)(e) For the purposes of the agreement with Andorra the provisions of section 898L that allow for the payment of interest without deduction of tax where an individual has disclosed details of the account or asset in the other country to the Revenue Commissioners are applied.

Relevant Date: Finance Act 2021