Taxes Consolidation Act 1997 section 835T

Effective tax rate exemption

Section 835T provides an exemption from the controlled foreign company (CFC) charge where the tax paid by the CFC in its own jurisdiction meets a minimum effective tax rate threshold.

• The CFC charge does not apply where the aggregate of the foreign tax and foreign qualified domestic top-up tax (QDTT) paid, payable or borne by the CFC is not less than half the aggregate of the corresponding corporation tax and corresponding QDTT in the State.
• The amount of foreign tax paid or borne by the CFC is determined in accordance with section 835N, which requires adjustments to ensure a like-with-like comparison with the corresponding Irish tax liability.
• Any foreign tax or foreign QDTT that has been or will be repaid to the CFC (or any other person) is excluded from the calculation, as is any foreign QDTT that is payable but not ultimately paid or borne by the CFC.
• The test is positioned as an exemption of last resort, given the significant administrative burden it imposes; companies should consider all other exemptions before undertaking it.