817X Making of distribution

Summary

The purpose of this section is to apply the defensive measures to relevant distributions which are within the scope of the defensive measures. It provides for the conditions which must be met for a relevant distribution to be within the scope of the measures. Where the section applies existing exemptions from income tax and existing exclusions from the obligation to deduct withholding tax are disapplied.

Details

(1) Subsection (1) provides the conditions which must exist for a relevant distribution to be within the scope of the measures. These are:

• a company resident in the State makes a relevant distribution to:
  • (1)(a)(i) an associated entity that is resident in a specified territory and is not resident in another territory that is not a specified territory. Circumstances may arise where an entity is dual tax resident in a specified territory and in another jurisdiction. Where an associated entity is resident for tax purposes in a non-specified territory it is not within the scope of the defensive measures, or
  • (1)(a)(ii) a permanent establishment of an associated entity which is situated in a specified territory.
• (1)(b) to the extent that the relevant distribution it is not an excluded payment, as defined in section 817U(1), and
• (1)(c) to the extent that the relevant distribution is made out of income, profits or gains which have not been chargeable, directly or indirectly, to tax. Tax, for the purposes of this paragraph, is domestic tax, foreign tax at a nominal rate greater than zero per cent, a controlled foreign company charge, a supplemental tax, or any other tax which is similar to any of those taxes.

(2) Existing exemptions from tax on relevant distributions made, contained in sections 140(3)(a), 142(2), 153(4), are disapplied where the relevant distribution is within the scope of the measures. In addition, existing exclusions from the obligation to deduct dividend withholding tax by Irish companies, contained in sections 172B(7) and 172D(2), and qualifying intermediaries contained in section 172E(1), are also disapplied where the relevant distribution is within the scope of section 817X.

(3) The section contains a targeted anti-avoidance measure to prevent arrangements to circumvent the section. It provides that where it is reasonable to consider that arrangements are entered into by any person and the main purpose or one of the main purposes of the arrangements, or any part of the arrangements, is the avoidance of any of the provisions of this section to a relevant distribution made, directly or indirectly, to an associated entity in a specified territory, then the section shall apply as if those arrangements, or that part of the arrangement, had not been entered into.

Relevant Date: Finance Act 2024