Taxes Consolidation Act 1997 section 753C

Payment and receipt of dividends or interest and manufactured payments under a stock borrowing or repurchase agreement

Section 753C sets out the tax treatment of dividends and interest received by stock buyers under financial transactions that straddle payment dates, and the corresponding manufactured payments made to stock sellers.

• A stock buyer may deduct manufactured payments from the related dividend or interest, but only up to the amount received after foreign tax relief and before encashment tax, and no deduction is available where the buyer is tax-exempt or no Irish tax arises on the income.
• Where the dividend or interest exceeds the manufactured payment, the excess is taxable as interest income in the hands of the stock buyer.
• Manufactured payments received by the stock seller are generally taxed as if the seller had received the actual dividend or interest directly, preserving any exemptions that would have applied to the real income.
• Where a manufactured payment exceeds the net dividend or interest the stock buyer received (after foreign withholding tax but before encashment tax), the stock seller is charged to tax on the excess under Case IV of Schedule D.