Taxes Consolidation Act 1997 Schedule 24 paragraph 8

Special provisions as to dividends

Paragraph 8 of Schedule 24 sets out the rules for identifying the "relevant profits" of a foreign company paying a dividend, for the purpose of calculating the underlying foreign tax credit available to an Irish investor under a double taxation agreement.

• Where a dividend is paid for a specified period or out of specified profits, the relevant profits are the profits of that period or those specified profits respectively; otherwise, the relevant profits are those of the last accounting period ending before the dividend became payable.
• If the dividend exceeds the distributable profits of the identified period, the shortfall is made up by drawing on the distributable profits of earlier periods, taking the most recent period first and working backwards.
• Only profits not previously distributed or previously treated as relevant for the purposes of this paragraph may be drawn upon to cover such an excess.
• The underlying foreign tax to be credited is the portion of the foreign corporation tax borne by the paying company on the relevant profits that is properly attributable to the proportion of those profits represented by the dividend.