Taxes Consolidation Act 1997 section 172B

Dividend withholding tax on relevant distributions

Section 172B sets out the obligation on Irish resident companies to deduct dividend withholding tax (DWT) from relevant distributions, with special rules for scrip dividends and other non-cash distributions, and provides for certain exemptions.

• An Irish resident company must deduct DWT from all relevant distributions made to a specified person, unless an exemption applies. The recipient must accept the deduction, and the company is treated as having paid the full amount.
• Where a distribution takes the form of additional shares (a scrip dividend) or another non-cash form, DWT is not physically withheld but the company must pay an equivalent amount to the Collector-General. For scrip dividends, the number of shares issued is reduced; for other non-cash distributions, the company can recover the DWT from the recipient as a simple contract debt.
• Companies must retain all DWT-related declarations, certificates, and notifications for the longer of six years, or three years after they cease making distributions to the relevant person. Revenue may request and examine these records at any time.
• Exemptions from DWT apply where the distribution is made to an EU parent company under the Parent Subsidiaries Directive, where it is paid from certain exempt profits (such as commercial forestry), or where it is paid to an Irish resident company that owns more than 50% of the distributing company.