Taxes Consolidation Act 1997 section 817V

Payment of interest

Section 817V applies defensive measures to outbound deductible payments of interest made by an Irish-resident company, or an Irish branch of a non-resident company, to an associated entity or permanent establishment located in a specified territory (tax haven), disapplying existing exemptions from income tax and withholding tax obligations where such payments fall within scope.

• Where a company enters into arrangements whose main purpose (or one of the main purposes) is to circumvent this section, those arrangements are disregarded and the defensive measures apply as if the arrangements had not been made.
• Interest paid on a quoted Eurobond or wholesale debt instrument held in a recognised clearing system is not subject to withholding tax under this section where the paying company does not, and could not reasonably be expected to, know that the interest is being paid to an associated entity or permanent establishment in a specified territory.
• A portion of an interest payment is excluded from the scope of the defensive measures where the recipient entity in the specified territory pays a corresponding amount onward to another person within 12 months, that onward payment would itself have been an excluded payment if made directly by the company, and all payments were made for bona fide commercial purposes.
• The only entity to which the defensive measures apply is the company making the relevant payment of interest, so that a clearing house or other intermediary is not liable for any withholding tax arising on a payment within scope.