Taxes Consolidation Act 1997 section 72

Charge to tax on sums applied outside the State in repaying certain loans

Section 72 is an anti-avoidance provision that prevents individuals taxed on the remittance basis from avoiding Irish tax on foreign income by using loan arrangements to enjoy that income in Ireland without technically remitting it.

• Foreign income used to repay a loan taken out in Ireland, or a foreign loan whose proceeds were brought to Ireland, is treated as income remitted to Ireland and is therefore subject to Irish tax.
• Chains of replacement loans cannot be used to circumvent the rules — if a new loan is taken out to repay an earlier qualifying loan, the new loan is also caught by the provision.
• Where a borrower deposits income or assets with a lender as security for a loan (rather than formally repaying it), and the loan terms depend on the value of that deposit, the income is treated as having been applied towards repaying the loan.
• Since 20 February 1997, these rules apply to anyone who is either resident or ordinarily resident in Ireland (and not domiciled here), not just those who are ordinarily resident.