Revenue Note for Guidance

The content shown on this page is a Note for Guidance produced by the Irish Revenue Commissioners. To view the section of legislation to which the Note for Guidance applies, click the link below:

Revenue Note for Guidance

753B Application

Summary

This section sets out when this Chapter applies and the applicable tax treatment where this Chapter applies.

Details

(1) This Chapter shall apply to financial transactions entered into on or after 1 January 2020 other than-

  1. Transactions involving equities quoted on a recognised stock exchange which are lent across dividend payment dates unless:
    • the dividend is paid in cash, and
    • the stock seller would have been entitled to a refund of (or exempt from) any tax withheld on dividends paid/accrued under:
      • domestic law, or
      • the terms of a tax treaty

        had they not entered into the financial transaction and received the dividend directly instead.
  2. Transactions involving interest bearing, discounted or premium-bearing securities, which are lent across coupon payment dates unless
    • The stock seller would have been entitled to a refund of (or exempt from) any tax withheld on interest paid/accrued under
      • domestic law, or
      • the terms of a tax treaty

        had they not entered into the financial transaction and received the interest directly instead, or
    • Both parties to the transaction are subject to the interest withholding tax provisions.

(2) Where this Chapter applies to a financial transaction, one should consider the substance of the financial transaction (being short term lending) rather than its legal form (being the sale and repurchase of qualifying securities) so that—

  1. The disposal/reacquisition of qualifying securities or equivalent stock are not treated as disposals/acquisitions for CGT purposes.
  2. Any financial gains arising or accruing to a stock seller or a stock buyer
    • under a financial transaction, and
    • (where applicable) the corresponding repurchase agreement
      shall be treated as if they arose from the lending of money or money’s worth at interest.
  3. Any manufactured payment shall be—
    • deductible against dividends received by the stock buyer in accordance with section 753C(2) and (3)
    • taxed as a dividend in the hands of the stock seller in accordance with section 753(5) and (6).

Relevant Date: Finance Act 2019