Taxes Consolidation Act 1997 Schedule 24 paragraph 9H

Dividends paid out of transferred profits

Paragraph 9H provides for foreign tax credit relief where the profits of one foreign company become the profits of another foreign company otherwise than by the payment of a dividend, and a dividend is subsequently paid out of those profits to an Irish-resident company.

• Where a foreign company (the "first company") pays tax on its profits and those profits pass to another foreign company (the "second company") other than by way of dividend, the second company is treated as having paid the tax originally paid by the first company for the purposes of allowing credit under Schedule 24.
• The rule applies where the second company, or any other foreign company further down the chain, pays a dividend out of those transferred profits to an Irish-resident company.
• The foreign tax credit available to the Irish company is capped at the amount that would have been allowable had the profits been transferred from the first company to the second company by way of a dividend rather than by the actual transfer mechanism used.
• No credit is available where the profits of the first company became profits of the second company under a scheme or arrangement a main purpose of which is the avoidance of tax.