Section 246 Interest payments by companies and to non-residents
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(1) In this section-
["bank" includes building society within the meaning of section 256(1);]1
"company" means any body corporate;
["investment undertaking" means-
(a) a unit trust mentioned in section 731(5)(a),
(b) a special investment scheme within the meaning given to it in section 737, ...2
(c) an investment undertaking within the meaning given to it in [section 739B, or]3
[(d) a common contractual fund within the meaning given to it in section 739I (inserted by the Finance Act 2005);]4
"relevant person" means-
(a) a company, or
(b) an investment undertaking;]5
"relevant security" means a security issued by a company [in the course of carrying on relevant trading operations within the meaning of section 445 or 446]6, on terms which oblige the company to redeem the security within a period of 15 years after the date on which the security was [issued;]7
["relevant territory" means-
(a) a Member State of the European Communities other than the State, ...8
(b) not being such a Member State, a territory with the government of which arrangements having the force of law by virtue of [section 826(1)]9 [have been [made]10, or]11]12
[(c) not being a territory referred to in paragraph (a) or (b), a territory with the government of which arrangements have been made which on completion of the procedures set out in section 826(1) will have the force of law;]13
[''tax", in relation to a relevant territory, means any tax imposed in such territory which corresponds to income tax or corporation tax in the State.]14
Amendments
1 Definition of "bank" substituted (in place of definitions of "a collective investment undertaking" and "collective investor") by Finance Act 2001 section 37(1)(b)(i) as respects interest paid on or after 30 March 2001.
2 Deleted by Finance Act 2005 section 44(b)(i).
3 Substituted by Finance Act 2005 section 44(b)(ii).
4 Para (d) inserted by Finance Act 2005 section 44(b)(iii).
5 Definitions of "investment undertaking" and "relevant person" substituted (for definition of "relevant person") by Finance Act 2001 section 37(1)(b)(ii) as respects interest paid on or after 30 March 2001.
6 Substituted by Finance Act 1999 section 39(a)(iii)(I).
7 Substituted by Finance Act 1999 section 39(a)(iii)(II).
8 Deleted by Finance (No. 2) Act 2008 section 33(e)(i) from 1 January 2009.
9 Substituted by Finance Act 2007 section 35 and Schedule 2 para 1(i) as on and from 2 April 2007.
10 Substituted by Finance Act 2000 section 66(1)(a) as on and from 10 February 2000.
11 Substituted by Finance (No. 2) Act 2008 section 33(e)(i) from 1 January 2009.
12 Definition of "relevant territory" inserted by Finance Act 1999 section 39(a)(iv).
13 Para (c) inserted by Finance (No. 2) Act 2008 section 33(e)(ii) from 1 January 2009.
14 Definition of "tax" inserted by Finance Act 2000 section 66(1)(a) as on and from 10 February 2000.
(2) Where any yearly interest charged with tax under Schedule D is paid-
(a) by a company, otherwise than when paid in a fiduciary or representative capacity, to a person whose usual place of abode is in the State, or
(b) by any person to another person whose usual place of abode is outside the State,
the person by or through whom the payment is made shall on making the payment deduct out of the payment a sum representing the amount of the tax on the payment at the standard rate in force at the time of the payment, and subsections (1) and (3) to (5) of section 238 shall apply to such payments as they apply to payments specified in subsection (2) of that section.
(3) Subsection (2) shall not apply to-
(a) interest paid in the State on an advance from a bank carrying on a bona fide banking business in the State,
(b) interest paid by such a bank in the ordinary course of such business,
[(bb) interest paid in the State by a company to another company, being a company to which paragraph (a) of subsection (5) applies, for so long as that other company is a company to which that paragraph applies,]1
[(bbb) interest paid in the State to an investment undertaking within the meaning of section 739B,]2
(c) interest paid to a person whose usual place of abode is outside the State by-
(i) a company in the course of carrying on relevant trading operations within the meaning of section 445 or 446, or
(ii) a specified collective investment undertaking within the meaning of section 734,
[(cc) interest paid in the State to a qualifying company (within the meaning of section 110),
(ccc) interest paid by a qualifying company (within the meaning of section 110) to a person who, by virtue of the law of a relevant territory, is resident for the purposes of tax in the relevant territory, except, in a case where the person is a company, where such interest is paid to the company in connection with a trade or business which is carried on in the State by the company through a branch or agency,]3
(d) interest paid by a company authorised by the Revenue Commissioners to pay interest without deduction of income tax,
(e) interest on any securities in respect of which the Minister for Finance has given a direction under section 36,
[(ea) interest paid to—
(i) the National Asset Management Agency or a company referred to in section 616(1)(g),
(ii) the State acting through the National Asset Management Agency or through a company referred to in section 616(1)(g), or
(iii) the National Treasury Management Agency by the National Asset Management Agency or by a company referred to in section 616(1)(g),
(eb) interest paid by—
(i) the National Asset Management Agency,
(ii) a company referred to in section 616(1)(g), or
(iii) the State acting through the National Asset Management Agency, or through a company referred to in section 616(1)(g),
to a person who, by virtue of the law of a relevant territory, is resident for the purposes of tax in the relevant territory, except, in a case where the person is a company, where such interest is paid to the company in connection with a trade or business which is carried on in the State by the company through a branch or agency,]4
(f) interest paid without deduction of tax by virtue of [section 700,]5
(g) interest which under section 437 is a [distribution, or]6
[(h) interest, other than interest referred to in paragraphs (a) to (g), paid by a relevant person in the ordinary course of a trade or business carried on by that person to a company—
(I) which, by virtue of the law of a relevant territory, is resident in the relevant territory for the purposes of tax and that relevant territory imposes a tax that generally applies to interest receivable in that territory by companies from sources outside that territory, or
(II) where the interest—
(A) is exempted from the charge to income tax under arrangements made with the government of a territory outside the State having the force of law under the procedures set out in section 826(1), or
(B) would be exempted from the charge to income tax if arrangements made, on or before the date of payment of the interest, with the government of a territory outside the State, that do not have the force of law under the procedures set out in section 826(1), had the force of law when the interest was paid, except where such interest is paid to that company in connection with a trade or business which is carried on in the State by that company through a branch or agency.]7
Amendments
1 Para (bb) inserted by Finance Act 2002 section 19(1)(a) as respects interest paid on or after 25 March 2002.
2 Para (bbb) inserted by Finance Act 2006 section 47.
3 Paras (cc) and (ccc) inserted by Finance Act 2003 section 48(2) as respects interest paid on or after 6 February 2003.
4 Paras (ea) and (eb) inserted by National Asset Management Agency Act 2009 section 240 and Schedule 3 Part 10 item 4.
5 Substituted by Finance Act 1999 section 39(b)(i).
6 Substituted by Finance Act 1999 section 39(b)(ii).
7 Para (h) substituted by Finance Act 2010 section 40(2) for interest paid on or after 3 April 2010 (other than interest paid under an agreement entered into before that date).
(4) In relation to interest paid in respect of a relevant security subsection (3)(c) shall apply-
[(a) as if in section 445 the following subsection were substituted for subsection (2) of that section:
"(2) Subject to subsections (7) and (8), the Minister may give a certificate certifying that such trading operations of a qualified company as are specified in the certificate are, with effect from a date specified in the certificate, relevant trading operations for the purposes of this section.",
and
(b) as if in section 446 the following subsection were substituted for subsection (2) of that section:
"(2) Subject to subsections (7) and (9), the Minister may give a certificate certifying that such trading operations of a company as are specified in the certificate are, with effect from a date specified in the certificate, relevant trading operations for the purposes of this section.".]1
Amendments
1 Subs (4)(a)-(b) substituted by Finance Act 1999 section 39(c).
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(4) Although the effective 10% rate for Shannon and IFSC based companies expired on 31 December 2005 (31 December 2002 for projects approved after the cut-off date), interest payable by such companies in respect of securities issued before that date ...
(5)(a) This paragraph shall apply to a company-
(i) which advances money in the ordinary course of a trade which includes the lending of money,
(ii) in whose hands any interest payable in respect of money so advanced is taken into account in computing the trading income of the company, and
(iii) which-
(I) has notified in writing the appropriate inspector to whom the company makes the return referred to in section 951 that it meets the requirements of subparagraphs (i) and (ii), and
(II)(A) has notified the first company referred to in subsection (3)(bb) in writing that it is a company which meets those requirements and that it has made the notification referred to in subparagraph (iii)(I), and
(B) has provided the first company referred to in subsection (3)(bb) with its tax reference number (within the meaning of section 885).
(b) A company which is no longer a company to which paragraph (a) applies shall, upon that paragraph ceasing to apply to it, immediately notify in writing the inspector referred to in subparagraph (iii)(I) of paragraph (a) and the company referred to in subparagraph (iii)(II) accordingly.
Amendments
Subs (5) inserted by Finance Act 2002 section 19(1)(b) as respects interest paid on or after 25 March 2002.
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(5) If you are a finance company (i.e., one which lends money and the interest income of which is taxed as a trading receipt), you need not deduct standard rate income tax from interest which you provided:...
