898D Paying agent and residual entity

This section defines the terms “paying agents” and “residual entities”.

Paying agents are economic operators who make interest payments to, or secure interest payments for, the immediate benefit of beneficial owners. The definition encompasses more than what would be normally regarded as paying agents. It also includes collecting and receiving agents. Specifically included in the definition are residual entities as respects certain payments received rather than paid by such entities. Also specifically included are Government Ministers and any body established by statute which might make or secure interest payments.

A bank, etc is not a paying agent as respects amounts of interest it merely credits to its clients accounts (e.g. the issuer of a security paying interest to a designed account held at a bank, etc will not mean that the bank is a paying agent in relation to the account holder in respect of the payment by the issuer).

A “residual entity” is defined by elimination. The entities excluded from the definition are listed in subsection (2) provided the entity provides evidence to the paying agent that the exclusion applies to them. Residual entities are treated as paying agents on receipt (as opposed to on payment) of an interest payment and only have to comply with the reporting requirements as respects a deemed interest payment (i.e. as respects an interest payment received by them) rather than any actual payments that they may make.

A residual entity may elect to be treated as a UCITS for the purposes of the Chapter. Provision is made for the Revenue Commissioners to make regulations governing the election process and the issuing of certificates. Where such an entity makes such an election the effect will be that it will be treated as an actual “paying agent” where it makes or secures an interest payment for a beneficial owner and as such subject to the normal reporting arrangements.

A residual entity which does not opt for UCITS treatment does not have to report interest payments it makes to beneficial owners. Such payments are outside the scope of the directive (see definition of paying agent). However, a residual entity is considered to have made an interest payment (a “deemed interest payment”) when it receives an interest payment (see section 898E(7)(a)). The residual entity is then required to report the details of the portion of this deemed interest payment attributable to each beneficial owner (see section 898J) who is resident in a relevant territory. This, of course, applies even where the residual entity does not make an actual payment to the beneficial owner.

Relevant Date: Finance Act 2021