Taxes Consolidation Act 1997 Schedule 24 paragraph 9F

Credit for unrelieved foreign tax against interest from associate companies

Paragraph 9F provides relief for surplus foreign tax on interest received by a company from an associated company in a treaty country, by allowing the surplus to be credited against Irish tax on other similar interest.

• Where foreign tax on interest from an associated company exceeds the Irish corporation tax on that interest, the excess cannot normally be offset against Irish tax on other income.
• This paragraph allows the unrelieved portion of the surplus foreign tax to be credited against corporation tax on other relevant interest from foreign associated companies sourced in treaty countries.
• Interest qualifies as relevant interest only if it forms part of trading income, arises in a treaty country, and the paying and receiving companies are associated (one being a 25% subsidiary of the other, or both being 25% subsidiaries of a third company).
• The amount of unrelieved foreign tax available for credit is 75% of the surplus (where the corporation tax rate is 25%), calculated by the formula ((100 − R) / 100) × D, where R is the tax rate and D is the surplus foreign tax.