Taxes Consolidation Act 1997 section 452A

Application of section 130 of Principal Act to certain non-yearly interest

Section 452A allows a qualifying company — one that lends money in the ordinary course of its trade — to obtain a partial or full deduction for certain intra-group interest payments that would otherwise be treated as distributions under section 130(2)(d)(iv), with the extent of the relief depending on the rate of foreign tax borne on the interest by the recipient.

• Section 452A applies where a qualifying company (a lender) pays interest to a related company in a non-treaty territory and that interest would otherwise be treated as a distribution under section 130(2)(d)(iv) and thus be non-deductible.
• The relief operates by reference to a "deductible amount" calculated using the ratio of the "specified tax" (the lower of notional Irish tax at 12.5% and actual foreign tax paid) to the "additional tax" (notional Irish tax at 12.5% of the interest paid).
• Where the foreign tax rate equals or exceeds the Irish rate of 12.5%, the deductible amount equals the full amount of interest paid and a complete deduction is available; where the foreign rate is lower, only a proportionate deduction is allowed.
• The section was inserted by the Finance Act 2012 and applies to accounting periods commencing on or after 1 January 2012; a further amendment in the Finance (No. 2) Act 2023 extended the relief to certain interest payments subject to withholding tax under section 246(2).

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