Revenue Note for Guidance

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Revenue Note for Guidance

155 Restriction of certain reliefs in respect of distributions out of certain exempt or relieved profits


This is an anti-avoidance provision designed to restrict certain reliefs in respect of distributions out of exempt or relieved profits. Generally, the provision applies where there is a reasonable basis for asserting that risk has been eliminated in respect of either the receipt of distributions or the repayment of capital in respect of subscriptions for shares. Where the section applies, the dividends in respect of those shares lose their tax exempt or tax relieved status. Exceptions ensure that flows of foreign funds to Irish companies are unaffected by the section.



(1)distribution” has the same meaning as in the Corporation Tax Acts (see Chapter 2 of this Part).


(2)(a) The section applies to shares in a company in respect of which the shareholder is either —

  • assured of recovering part or all of the capital subscribed, or
  • assured of receiving an agreed distribution.

The use of the words “agreement, arrangement or understanding” aims at covering a spectrum of methods which may be used to eliminate risk ranging from formal agreements to informal understandings. For this section to apply it is necessary to show not that risk has been reduced but that the risk has been eliminated. While this is a stringent test, it is balanced by the fact that it is to be applied on a reasonable basis (that is, is it reasonable to say that the shareholder’s risk has been eliminated).

(2)(b) The beneficial owner of the shares is deemed to include the person owning the shares and any person connected with that person.

(2)(c) The guaranteed amount includes an amount specified or implied in a foreign currency. It is not possible, therefore, to argue that a guaranteed amount in a foreign currency is in reality a fluctuating amount in terms of Irish pounds due to possibilities of exchange rate movements.

Withdrawal of tax exempt or tax relieved status

(3) This subsection withdraws, subject to subsection (4), the tax exempt or tax relieved status from certain distributions made in respect of shares to which this section applies. These dividends are those made out of —

The distributions are treated as income chargeable to income tax or corporation tax, as appropriate, and are chargeable under Case IV of Schedule D.


(4) The withdrawal of tax exempt or tax relieved status for such distributions does not apply to —

  • a company none of whose shares are beneficially owned by resident persons, and whose only income chargeable to corporation tax consists of distributions which (but for this provision) would be chargeable by virtue of this section, or
  • non-residents.

These exceptions are designed to ensure that the section does not affect the foreign funding arrangements which Irish companies have with foreign banks and which involve no cost to the Irish Exchequer.

(5) In determining how a dividend received by an Irish resident (other than a company to which subsection (4)(a) applies) is to be charged, subsection (4) is to be ignored. This ensures that the exclusion in subsection (4) will not be used by Irish residents for tax planning purposes.

Relevant Date: Finance Act 2021