Taxes Consolidation Act 1997 Schedule 24 paragraph 9B

Dividends paid between related companies: relief for Irish and third country taxes

Paragraph 9B of Schedule 24 provides for credit against Irish corporation tax on dividends received by an Irish parent company from related foreign companies, taking into account foreign tax, Irish tax, and qualified domestic top-up tax borne by those companies on the profits represented by the dividends.

• An Irish-resident parent (or an EU/EEA-resident company taxed through an Irish branch) may claim credit for underlying tax paid by a related foreign subsidiary on the profits out of which a dividend is paid, including any foreign qualified domestic top-up tax attributable to those profits.
• Where the foreign subsidiary itself received dividends from a lower-tier related company, underlying tax borne by that lower-tier company is treated as tax paid by the foreign subsidiary and may be credited upward, and so on through any number of tiers provided each company is at least a 5 per cent subsidiary of the one above it and of the Irish parent.
• For an Irish company in the chain, only Irish corporation tax and any foreign tax credit to which the company is entitled under the Schedule are taken into account; for a foreign company, credit is only available if it would have been available had the foreign company been Irish-resident.
• Two companies are related if 5 per cent of the first company's voting power is controlled by the second company (or by a company of which the second is a 50 per cent subsidiary), and the same 5 per cent test applies to determine whether a company is connected with the Irish parent.