Taxes Consolidation Act, 1997 (Number 39 of 1997)
831Implementation of Council Directive No. 90/435/EEC concerning the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States.
[FA91 s36]
(1)(a) In this section—
[25]>
“arrangements” means arrangements having the force of law by virtue of [18]>section 826<[18][20]>[18]>section 826(1)(a)<[18]<[20][20]>section 826(1)<[20];
<[25]
“bilateral agreement” means any [26]>arrangements<[26][26]>arrangements having the force of law by virtue of section 826(1)<[26], protocol or other agreement between the Government and the government of another Member State;
[5]>
“company” means a company of a Member State;
<[5]
[5]>
“company”[7]>, other than in the expression “unlimited company” in subsection (5A),<[7] means a company of a Member State;
<[5]
“company of a Member State” has the meaning assigned to it by Article 2 of the Directive;
[19]>
“the Directive” means Council Directive No. 90/435/EEC of 23 July 1990[8]>, as amended by Council Directive No. 2003/123/EC of 22 December 20031,<[8]1 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States;
<[19]
[21]>
[19]>
“the Directive” means Council Directive No. 90/435/EEC of 23 July 19901 as amended;
<[19]
<[21]
[24]>
[21]>
“the Directive” means Council Directive 2011/96/EU of 30 November 20111 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States;
<[21]
<[24]
[24]>
“the Directive” means Council Directive 2011/96/EU of 30 November 20111, as amended, on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States;
<[24]
“distribution” means income from shares or from other rights, not being debt claims, to participate in a company’s profits, and includes any amount assimilated to income from shares under the taxation laws of the State of which the company making the distribution is resident;
“foreign tax” means any tax which—
(i) is payable under the laws of a Member State other than the State, and
(ii) (I) is specified in [22]>paragraph (c) of Article 2<[22][22]>Annex I, Part B<[22] of the Directive, or
(II) is substituted for and is substantially similar to a tax so specified;
“Member State” means a Member State of the European Communities;
[1]>
“parent company” means a company resident in the State which owns at least 25 per cent of the share capital of a company not so resident, but where a bilateral agreement contains a provision to the effect—
(i) that a company shall only be a parent company during any uninterrupted period of at least 2 years throughout which at least 25 per cent of the share capital of the company not resident in the State is owned by the first-mentioned company, or
(ii) that—
(I) the requirement (being the requirement for the purposes of this definition) that a company resident in the State own at least 25 per cent of the share capital of the company not so resident shall be treated as a requirement that the company so resident holds at least 25 per cent of the voting rights in the company not so resident, or
(II) that requirement shall be so treated and a company shall only be a parent company during any uninterrupted period of at least 2 years throughout which at least 25 per cent of the voting rights in the company not resident in the State is held by the first-mentioned company,
then, in its application to a company to which the provision in the bilateral agreement applies, this definition shall apply subject to that provision and shall be construed accordingly.
<[1]
[1]>
“parent company” means a company (referred to in this definition as the “first-mentioned company”) being—
[9]>
(i) a company resident in the State which owns at least 25 per cent of the share capital of another company which is not so resident, or
<[9]
[9]>
(i) a company which owns at least 5 per cent of the share capital of another company which is not resident in the State, or
<[9]
(ii) a company not resident in the State which owns at least [10]>25 per cent<[10][10]>5 per cent<[10] of the share capital of another company which is resident in the State,
but where a bilateral agreement contains a provision to the effect—
(I) that a company shall only be a parent company during any uninterrupted period of at least 2 years throughout which at least [10]>25 per cent<[10][10]>5 per cent<[10] of the share capital of the other company is owned by the first-mentioned company, or
(II) that—
(A) the requirement (being the requirement for the purposes of this definition) that a company own at least [10]>25 per cent<[10][10]>5 per cent<[10] of the share capital of another shall be treated as a requirement that the first-mentioned company holds at least [10]>25 per cent<[10][10]>5 per cent<[10] of the voting rights in the other company, or
(B) that requirement shall be so treated and a company shall only be a parent company during any uninterrupted period of at least 2 years throughout which at least [10]>25 per cent<[10][10]>5 per cent<[10] of the voting rights in the other company is held by the first-mentioned company,
then, in its application to a company to which the provision in the bilateral agreement applies, this definition shall apply subject to that provision and shall be construed accordingly;
“tax”, in relation to a relevant territory, means any tax imposed in that territory which corresponds to income tax or corporation tax in the State.
<[1]
(b) For the purposes of this section, a company shall be a subsidiary of another company which owns shares or holds voting rights in it where the other company’s ownership of those shares or holding of those rights is sufficient for that other company to be a parent company.
(c) A word or expression used in this section and in the Directive has, unless the contrary intention appears, the same meaning in this section as in the Directive.
(2) Subject to subsections (3) and (4), where a parent company [11]>[2]>which is resident in the State<[2]<[11] receives a distribution chargeable in the State to corporation tax, other than a distribution in a winding up, from its subsidiary—[3]>which is a company not resident in the State<[3]
(a) credit shall be allowed for—
[12]>
(i) any withholding tax charged on the distribution by the Federal Republic of Germany, the Hellenic Republic or the Portuguese Republic, pursuant to the derogations provided for in Article 5 of the Directive, and
<[12]
[12]>
(i) any witholding tax charged on the distribution by a Member State pursuant to a derogation duly given from [23]>Article 5.1<[23][23]>Article 5<[23] of the Directive,
<[12]
(ii) any foreign tax, not chargeable directly or by deduction in respect of the distribution, which is borne by the company making the distribution, and is properly attributable to the proportion of its profits which is represented by the distribution, in so far as that foreign tax exceeds so much of any tax credit in respect of the distribution as is payable to the parent company by the Member State in which the company making the distribution is [13]>resident,<[13][13]>resident, and<[13]
[14]>
(iii) any foreign tax borne by a company that would be allowed under paragraph 9B of Schedule 24 if in subparagraphs (2) and (3) “and is connected with the relevant company” in each place where it occurs were deleted.
<[14]
against corporation tax in respect of the distribution to the extent that credit for such withholding tax and foreign tax would not otherwise be so allowed, and
(b) notwithstanding Chapter 2 of Part 4, the distribution shall not be a dividend to which that Chapter applies.
[15]>
(2A) Subject to subsections (3) and (4), where by virtue of the legal characteristics of a subsidiary (being a company which is not resident in the State) of a parent company, the parent company is chargeable to tax in the State on its share of the profits of the subsidiary company as they arise credit shall be allowed for so much of—
(a) any foreign tax borne by the subsidiary, and
(b) any foreign tax that would be treated as tax paid by the subsidiary company under paragraph 9B of Schedule 24 if—
(i) the subsidiary company were the foreign company for the purposes of that paragraph, and
(ii) in subparagraphs (2) and (3) of that paragraph “and is connected with the relevant company” in both places where it occurs were deleted,
as is properly attributable to the proportion of the subsidiary’s profits which are chargeable on the parent company in the State against corporation tax in respect of the profits so chargeable on the parent company to the extent that credit for such foreign tax would not otherwise be so allowed.
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(3) Where by virtue of subsection (2)(a) [16]>or (2A)<[16] a company is to be allowed credit for tax payable under the laws of a Member State other than the State, Schedule 24 shall apply for the purposes of that subsection as if—
(a) the provisions of that subsection were [27]>arrangements<[27][27]>arrangements having the force of law by virtue of section 826(1)<[27] providing that tax so payable shall be allowed as a credit against tax payable in the State, and
(b) references in Schedule 24 to a dividend were references to a distribution within the meaning of this section.
(4) Subsection (2) shall apply without prejudice to any provision of a bilateral agreement.
[4]>
(5) Chapter 8A of Part 6, other than section 172K, shall not apply to a distribution made to a parent company which is not resident in the State by its subsidiary which is a company resident in the State.
[17]>
[6]>
(5A) Subsection (5) shall apply to a distribution made by an unlimited company within the meaning of section 5(2)(c) of the Companies Act, 1963, as it would apply if the unlimited company were a company of a Member State.
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<[17]
(6) Subsection (5) shall not have effect in relation to a distribution made to a parent company if the majority of the voting rights in the parent company are controlled directly or indirectly by persons, other than persons who by virtue of the law of any relevant territory are resident for the purposes of tax in such a relevant territory (within the meaning assigned by section 172A), unless it is shown that the parent company exists for bona fide commercial reasons and does not form part of any arrangement or scheme of which the main purpose, or one of the main purposes, is the avoidance of liability to income tax (including dividend withholding tax under Chapter 8A of Part 6), corporation tax or capital gains tax.
<[4]
[28]>
(7) (a) Subsections (1) to (5) shall not apply to an arrangement or a series of arrangements which—
(i) has been put in place for the main purpose of, or one of the main purposes of which is, obtaining a tax advantage that defeats the object or purpose of the Directive, and
(ii)is not genuine having regard to all the facts and circumstances.
(b) For the purposes of paragraph (a)(ii), an arrangement or series of arrangements shall be regarded as not genuine to the extent that it is not put into place for valid commercial reasons which reflect economic reality.
(c) In this subsection and subsection (6), an arrangement may comprise more than one step or part.
<[28]
[5]
Substituted by FA00 s33(a). Applies as respects distributions made on or after 6 April 2000.
[18]
Substituted by FA04 sched3(1)(y). This section shall have effect as on and from 25 March 2004
[21]
Substituted by FA12 sched6(1)(j)(i)(I). Has effect as on and from 31 March 2012.
[25]
Deleted by FA15 s34(1)(a). Has effect in respect of distributions made or received on or after 21 December 2015.
[26]
Substituted by FA15 s34(1)(b). Has effect in respect of distributions made or received on or after 21 December 2015.
[27]
Substituted by FA15 s34(1)(c). Has effect in respect of distributions made or received on or after 21 December 2015.
[28]
Inserted by FA15 s34(1)(d). Has effect in respect of distributions made or received on or after 21 December 2015.