Taxes Consolidation Act 1997 section 835X

Relief for certain distributions

Section 835X provides relief where a controlled foreign company makes a distribution out of income that has already been subject to a CFC charge, by allowing a credit for the corporation tax paid on that charge against the tax arising on the distribution.

• Where a CFC makes a distribution out of chargeable income from a previous accounting period, the corporation tax paid on the CFC charge for that earlier period is allowed as a credit against tax on the distribution.
• A distribution made partly from chargeable income and partly from other income is treated as two separate distributions, and the credit applies only to the portion attributable to chargeable income.
• The relief prevents double taxation where income has already borne a CFC charge and is subsequently distributed to the Irish parent company.
• The credit is limited to the tax on the CFC charge attributable to the chargeable income from which the distribution is made.