Taxes Consolidation Act 1997 Schedule 24 paragraph 9D

Prevention of excessive foreign tax credit

Paragraph 9D provides unilateral credit relief against Irish corporation tax for foreign withholding tax suffered on trading interest income received from countries with which Ireland has no double taxation treaty.

• "Relevant foreign tax" is foreign tax deducted from interest, corresponding to income tax or corporation tax, which has not been repaid, is not creditable under any treaty, and is not otherwise treated as reducing income under Schedule 24.
• "Relevant interest" is interest receivable by a company that forms part of its trading income and from which relevant foreign tax has been deducted.
• The corporation tax attributable to relevant interest is calculated by applying the standard corporation tax rate (12.5 per cent) to the company's income referable to the relevant interest, determined by apportioning total trading income in proportion to the relevant interest receivable.
• The credit for relevant foreign tax is given at 87.5 per cent (84 per cent for profits apportioned to the financial year 2002), and the credit cannot exceed the corporation tax attributable to the relevant interest.