Revenue Note for Guidance

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Revenue Note for Guidance

420C Group relief: Relief for certain losses of non-resident companies


This section sets out the conditions under which a parent company resident in Ireland may get group relief for losses of a subsidiary company resident in another EU/EEA Member State. Where the provision is applicable, it allows an Irish-resident company to offset against its taxable income the losses of an EU/EEA resident subsidiary. The losses are available for relief “vertically upwards” from the non-resident subsidiary to the Irish-resident company, but are only available when certain conditions are met. Losses that are available for offset against profits in another territory, or that can be used at any time by setting them against any company’s profits in the country where the loss is incurred, are not covered by the provision. The section includes an anti-avoidance provision to disallow losses where arrangements are entered into primarily to secure an amount that would qualify for the group relief.


(1) The following definitions are used in the section:

foreign loss” is the amount of the non-resident company’s loss that falls within the “vertically upwards” criterion in section 411(2A).

relevant foreign loss” is the part of a foreign loss that is allowed under the provision. This must meet the following conditions:

  • It must be of a type that would be allowed under “Irish rules” – i.e. what an Irish surrendering company would be able to give up to a claimant under section 420 or section 420A of the TCA.
  • It must be computed under the EEA country’s tax law.
  • It must not be attributable to a branch or agency in the State (i.e. section 25).
  • It must not be available for use otherwise in the State.
  • It must be a trapped loss – i.e. a loss where the possibilities for relief in the surrendering Member State have been exhausted. Trapped losses are defined in section 420C(2).
  • It must not be available for surrender, relief or offset in a territory outside the State or the surrendering state (for example, horizontally under a different rule in an other Member State).

surrendering state” is the EEA State where the company surrendering the losses is resident.

(2) A trapped loss is defined as a loss that, under the laws of the surrendering state, cannot be used in any accounting period in that country. In other words, it cannot be used in the current accounting period, it cannot be carried back, it cannot be used in the future or it cannot be surrendered to another company.

(3) Losses that are incurred by non-resident companies and that meet all the conditions for foreign loss relief can be treated (with any necessary modifications) as if they were relevant trading losses under section 420A/420B of the Taxes Consolidation Act. Relief for foreign losses is given after other loss relief.

(4) The section does not apply where the losses arose as a result of arrangements the purpose of which was to obtain the relief.

(5) The claimant company must claim the relief within 2 years of the loss being incurred – this is subject to later claims being allowed under subsection (6).

(6) If circumstances change in the surrendering state so that a loss that could be carried forward subsequently becomes unavailable for carryforward, then Revenue will allow a claim to be made at that later stage (within 2 years of the condition being met).

(7) An accounting period in respect of a foreign subsidiary for the purposes of applying this provision is defined. (This is necessary because the foreign subsidiary doesn’t fall within section 27 of the Taxes Consolidation Act, and so does not have an accounting period for the purposes of the Tax Acts.)

(8) Revenue has power to obtain information for the purposes of giving effect to the section.

Relevant Date: Finance Act 2021