Taxes Consolidation Act 1997 Schedule 24, paragraph 10

Election not to take credit

Paragraph 10 allows a person to elect not to claim a foreign tax credit under a double taxation agreement, in which case the foreign tax may instead be treated as a deductible expense.

• A person may elect that credit for foreign tax shall not be allowed against Irish tax on a particular source of income.
• The election is made on an income-by-income basis, giving the taxpayer flexibility over which foreign taxes to credit and which to deduct.
• Where an election is made, the foreign tax paid is generally allowable as a deduction in computing the amount of the foreign income chargeable to Irish tax.
• This option may be beneficial where the foreign tax rate exceeds the Irish rate, as a deduction rather than a credit can sometimes produce a better overall result.