Taxes Consolidation Act 1997 section 155

Restriction of certain reliefs in respect of distributions out of certain exempt or relieved profits

Section 155 is an anti-avoidance provision that restricts certain tax reliefs on distributions made out of exempt or relieved profits, targeting arrangements where investor risk has been artificially eliminated.

• The section applies where an agreement, arrangement or understanding exists that effectively eliminates the shareholder's risk of losing capital or not receiving agreed distributions on shares.
• Where the section applies, distributions that would otherwise be tax-exempt or tax-relieved (such as those from woodland income, patent royalties or Shannon exempt income) lose that status and are taxed under Case IV of Schedule D.
• Exceptions apply for companies wholly owned by non-residents and for non-resident recipients, ensuring foreign funding arrangements are not affected.
• Irish-resident shareholders cannot benefit from the non-resident exceptions — their tax liability is calculated as if those exceptions did not exist.