Taxes Consolidation Act 1997 section 452

Application of section 130 to certain interest

Section 452 allows an Irish company to elect to treat interest paid to a foreign parent company as a trading expense rather than as a distribution, where certain conditions are met.

• Under section 130(2)(d)(iv), interest paid by an Irish company to a non-resident parent or associate company can be classified as a distribution, making it non-deductible as a trading expense — section 452 provides a mechanism to avoid this outcome.
• The relief applies where the interest is paid in the ordinary course of trade, would otherwise be deductible but for section 130(2)(d)(iv), and is paid to a company resident in an EU Member State or a country with which Ireland has a tax treaty in force or signed.
• A separate provision extends the relief to yearly interest paid to companies resident anywhere in the world, provided the interest is not already covered by the EU/treaty-country rule.
• The relief is not automatic — the company must make a written election, submitted with its corporation tax return for the relevant accounting period.

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