Taxes Consolidation Act 1997 Schedule 24 paragraph 9DB

Unilateral relief (royalty income)

Paragraph 9DB provides unilateral credit relief against Irish corporation tax for foreign withholding tax deducted from royalties that form part of a company's trading income, where no double taxation treaty relief is available.

• Unilateral credit relief applies to "relevant royalties" — royalties forming part of a company's trading income from which foreign withholding tax has been deducted and for which no treaty credit is available.
• The relief reduces the company's corporation tax liability by 87.5 per cent of the relevant foreign tax borne, subject to a cap equal to the corporation tax attributable to the relevant royalties.
• Corporation tax attributable to relevant royalties is 12.5 per cent of the company's income referable to those royalties (after deducting the foreign tax), determined by apportioning total trading income in proportion to the relevant royalties receivable.
• A pooling mechanism allows unrelieved foreign tax — where treaty or unilateral relief cannot fully absorb the foreign tax due to insufficient income — to be set against other foreign royalty income in the same accounting period, allocated at the company's discretion.