Taxes Consolidation Act 1997 section 835O

Corresponding chargeable profits in the State

Section 835O sets out the assumptions that must be made when determining the corresponding chargeable profits in the State of a controlled foreign company (CFC) for the purposes of the effective tax rate (ETR) exemption.

• The corresponding chargeable profits are the hypothetical Irish taxable profits of a CFC, computed under Irish tax principles using prescribed assumptions, so that the ETR test can compare the foreign tax paid with the tax that would have been payable in Ireland.
• Key assumptions include that the CFC is resident in Ireland throughout the accounting period, is within the charge to corporation tax, is not a close company, and is not a member of a group or consortium.
• The CFC is assumed to have claimed all available allowances, reliefs and deductions to the maximum extent, and is not entitled to double taxation relief under the laws of its territory of residence.
• Corporation tax on profits of a trade carried on by the CFC through a branch or agency in the State is excluded from the computation, as those profits are already within the charge to Irish tax.