Taxes Consolidation Act 1997 section 835N

Adjustment to amount of foreign tax

Section 835N sets out the rules for determining the amount of foreign tax paid or borne by a controlled foreign company (CFC) in its jurisdiction of residence for the purposes of the effective tax rate (ETR) test, including adjustments to ensure the foreign tax and corresponding Irish tax are compared on an equivalent basis.

• Where foreign tax is paid on aggregate profits of a CFC and other consolidated companies, the tax must be apportioned between the companies on a just and reasonable basis.
• Income included in the CFC's foreign chargeable profits but not taken into account for Irish tax purposes must be excluded when determining the amount of foreign tax.
• Expenditure not deducted in calculating foreign chargeable profits but allowable for Irish tax purposes must be included when determining the amount of foreign tax.
• Any foreign QDTT payable or borne by the CFC may also be taken into account, and where it is paid by another entity on the CFC's behalf it must be apportioned on a just and reasonable basis.