Revenue Note for Guidance

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Revenue Note for Guidance


Implementation of Council Directive 2003/48/EC of 3 June 2003 on the Taxation of Savings Income in the Form of Interest Payments and Related Matters


This Chapter transposed the EU Directive on the taxation of savings income in the form of interest payments into Irish law (Council Directive 2003/48/EC of 3 June 2003 refers). The Directive has been applied in Member States since 1 July 2005 with the aim of ensuring that interest payments made in one EU Member State to an individual resident for tax purposes in another Member State are taxed in accordance with the laws of the latter member State. Essentially, Chapter 3A obliged paying agent to establish the identity and residence of all individuals to whom they made interest payments and report certain information to the Revenue Commissioners in respect of such payments. It also made provision for the related matters concerning the extension of the savings tax scheme to certain dependent and associated territories of the UK and the Netherlands., In addition it made provision for the implementation in Ireland of the measures necessary to implement the associated agreements between the EU and each of Andorra, Liechtenstein, Monaco, San Marino and Switzerland.

On 10 November 2015 the Directive was repealed by the Economic and Financial Affairs Council with effect from 1 January 2016. The repeal was deemed necessary in order to avoid dual reporting following the adoption of Directive 2014/107/EU which provides for the mandatory automatic exchange of information between Member States and which takes effect from 1 January 2016. Section 73 of Finance Act 2015 inserted section 898S to provide for the repeal of the Directive with effect from 1 January 2016 Notwithstanding the repeal of the Directive, the obligations of paying agents in relation to information collected prior to the date of the repeal should continue be met. In relation to withholding tax levied under the transitional period referred to in the Directive, the provisions of section 898L and section 898M shall also continue to apply. In relation to the dependent and associated territories and the five third countries, each have committed to applying the OECD’s Common Reporting Standard from 2016 or 2017. As regards the third countries, protocols amending the existing Savings Agreements will be signed to convert these agreements into reciprocal agreements imposing OECD Standard based reporting. Similarly, the bi-lateral agreements with the dependent and associated territories are also being replaced with OECD Standard based agreements. The provisions of this Chapter will continue to apply to interest payments in respect of the dependent and associated territories and the third countries until these territories have adopted the OECD Standard.

898B Interpretation (Chapter 3A)

(1) This section contains the interpretation of terms used throughout the Chapter. It either provides stand-alone definitions or cross-references terms to the point in the Chapter where the term is defined.

The definitions of “building society” and “credit union” are needed for the purposes of the definition of “interest payment” in section 898E.

The definition of “certificate of residence for tax purposes” is modelled on the provision in paragraph 8(f) of Schedule 2A requiring the production of a similar type certificate. This definition is needed for the purposes of the provisions as to residence in section 898G(5)(a).

The definition of “electronic means” is needed for the provision in section 898G(7) to allow for the non-face-to-face opening of accounts or purchase of interest bearing financial products. It is modelled on a similar definition in the Electronic Commerce Act 2000.

The definition of “money debt” is used for the definition of “security”. The definition of “securities” is intended to be as wide as possible (but excludes shares in a company). Specifically included is accrued or capitalised interest due in respect of loans which are not evidenced by the issue of a formal security and which might not otherwise be considered as securities.

(2) An individual’s permanent residence is defined as situated in the country where he/she has his/her permanent address. As this concept of “residence” is different to the usual concept of residence for the purposes of taxation a distinction is maintained in the Chapter between the use of the term where “permanent address” is intended and where actual “tax residence” is intended.

(3) The term “resident for tax purposes in a territory” is defined by reference to the law of the territory concerned and not by reference to the law of any other territory.

(4) A standard interpretative measure is included to align the interpretation of terms used in the Chapter with those used in the directive.

Relevant Date: Finance Act 2021