Taxes Consolidation Act 1997 section 835P

Corresponding corporation tax in the State

Section 835P sets out how the corresponding Irish corporation tax of a controlled foreign company (CFC) is calculated by applying the appropriate tax rates to the different categories of corresponding chargeable profits.

• The corresponding corporation tax in the State is the total of corporation tax at the trading rate (12.5%) on Case I/II profits, corporation tax at the passive rate (25%) on Case III/IV/V profits, and capital gains tax on chargeable gains.
• The aim is that whatever rate would have applied had the CFC been resident in the State will apply to the income calculated under the corresponding chargeable profits rules.
• The assumption that there is no change in the place where the CFC carries on its activities is switched off when determining which Schedule D Case applies, so that the activities are treated as if carried on in the State.
• Without this deemed Irish-activity assumption, the CFC's income would always fall to be taxed as a foreign trade under Case III at 25%, rather than potentially qualifying for the 12.5% trading rate.