Taxes Consolidation Act 1997 section 835AO

Withholding tax mismatch outcome

Section 835AO defines what constitutes a withholding tax mismatch outcome arising from a hybrid transfer and provides the formula used to neutralise it.

• A withholding tax mismatch outcome arises where an entity enters into a hybrid transfer and the purpose of the transfer is to secure withholding tax relief for more than one party.
• The mismatch is neutralised by reducing the relief available for tax withheld at source by the fraction A/B.
• A is the profit of the entity from the hybrid transfer on which domestic tax finally falls to be borne; B is the gross income of the entity under the hybrid transfer.
• The reduction applies notwithstanding anything to the contrary in Schedule 24 (relief for foreign tax).