Taxes Consolidation Act 1997 Schedule 24 paragraph 7

Effect on computation of income of allowance of credit

Paragraph 7 of Schedule 24 sets out how foreign income is to be computed for Irish income tax or corporation tax purposes when a credit for foreign tax is being claimed under a double taxation agreement.

• Where foreign income is taxed on a remittance basis, the amount assessable is the sum actually received in the State plus the foreign tax credit allowable against Irish tax.
• In non-remittance basis cases, no deduction is given for foreign tax when computing the foreign income; instead, the income is taken at its gross amount before any foreign tax.
• Where a foreign dividend carries an underlying tax credit (that is, tax charged on the paying company's profits), the gross dividend is further increased by the portion of that underlying foreign tax taken into account under the relevant double taxation agreement.
• Any foreign tax for which credit cannot be given against Irish income tax or corporation tax may be allowed as a deduction from the foreign income, subject to a cap for corporation tax purposes based on the relevant income as calculated under paragraph 4.