Taxes Consolidation Act 1997 section 817W

Payment of royalties

Section 817W applies defensive tax measures to royalty payments made by an Irish-resident company, or an Irish branch of a non-resident company, to an associated entity or its permanent establishment located in a specified territory (tax haven).

• Where a company (or an Irish branch of a non-resident company) pays a deductible royalty to an associated entity resident in a specified territory (or to a permanent establishment situated in one), the payment is deemed to be annual profits arising from property in the State, creating a charge to Irish income tax, and is treated as an annual payment subject to withholding tax under section 238.
• Existing exemptions that would otherwise relieve the royalty from income tax or remove the obligation to deduct withholding tax — specifically section 242A(3) and (4) — are disapplied, so the full force of the withholding and charging provisions applies.
• Where a royalty payment could fall to be taxed both under the capital sums provisions for patent rights in section 757 and under this section, the defensive measures in this Chapter take precedence.
• A targeted anti-avoidance rule provides that any arrangement entered into by any person, where it is reasonable to consider that a main purpose is to circumvent this section, will be disregarded and the section applied as if the arrangement had not been entered into.