Taxes Consolidation Act 1997, Schedule 24 paragraph 9E

Treatment of unrelieved foreign tax (pooling)

Paragraph 9E provides for the pooling of unrelieved foreign tax, allowing excess foreign tax credits on dividends from related non-resident companies to be set against Irish corporation tax on other foreign dividends.

• Where foreign tax on a dividend from a related non-resident company exceeds the available Irish tax credit, the excess (unrelieved foreign tax) may be pooled and offset against Irish tax on other foreign dividends received in the same accounting period.
• Two separate pools apply: one for dividends taxable at the 25% rate (relevant dividends) and one for dividends taxable at the 12.5% rate (specified dividends). Excess from the 25% pool may be set against dividends in either pool, but excess from the 12.5% pool may only be set against other specified dividends.
• The amount of unrelieved foreign tax available for pooling is reduced by a formula to reflect the tax benefit already obtained from the reduction in taxable income, resulting in 75% of the excess being available for the 25% pool and 87.5% for the 12.5% pool.
• Any unrelieved foreign tax that cannot be fully offset in the current accounting period may be carried forward indefinitely to succeeding accounting periods.