Taxes Consolidation Act 1997 Schedule 24 paragraph 5

Limit on total credit - income tax

Paragraph 5 sets out the limit on the amount of credit that may be allowed against Irish income tax for foreign tax paid on foreign income, by reference to the taxpayer's effective rate of Irish tax.

• The foreign tax credit cannot exceed the Irish income tax that would be charged on the foreign income at the taxpayer's effective rate, calculated by dividing total income tax payable by total income for the year.
• In computing the effective rate, total tax payable excludes any double taxation relief credits but is reduced by tax the person may charge against another; total income is similarly reduced by income on which tax may be charged against another person.
• Where credit for foreign tax is allowed under Schedule 24, no separate relief may be claimed in respect of the same income under section 830.
• Where the high earner restriction in Chapter 2A of Part 15 applies, the effective rate is calculated by dividing the income tax payable under section 485E by the individual's adjusted income as defined in section 485C.