Taxes Consolidation Act 1997 section 835I

Interpretation

Section 835I defines the key terms used in the controlled foreign company (CFC) rules in Part 35B and sets out when companies are treated as associated companies for the purposes of those rules.

• A controlled foreign company (CFC) is a non-resident company controlled by an Irish resident company (the "controlling company"); a CFC charge may arise where the Irish corporation tax on equivalent profits exceeds the foreign tax actually paid by the CFC, resulting in a tax advantage.
• The section defines core concepts including "accounting profit", "corresponding chargeable profits in the State", "corresponding corporation tax in the State", "foreign chargeable profits", "undistributed income", "chargeable company", "chargeable income" and "relevant Irish activities".
• Key terms such as "significant people function" and "key entrepreneurial risk-taking function" are construed consistently with the OECD's 2010 Report on the Attribution of Profits to Permanent Establishments, and "relevant assets and risks" are those that would not exist but for functions performed in Ireland on behalf of the CFC.
• A company is an "associated company" of another where either holds at least 25% of the other's share capital, voting power or distributable profits, or a third person holds at least 25% of each company's share capital, voting power or distributable profits.