Chapter 2

Controlled foreign company charge

835Q. Undistributed income

(1) For the purposes of this Part, the undistributed income of a controlled foreign company for an accounting period shall be its distributable profits for the accounting period, less any relevant distributions made in respect of the accounting period.

(2) For the purposes of subsections (1) and (3), the distributable profits of a controlled foreign company for an accounting period shall be the amount included in the accounting profits of the company which, notwithstanding any prohibition on the making of a distribution under the laws of the territory in which the controlled foreign company is resident or otherwise, are available for distribution to members of the company and which can reasonably be attributed to relevant Irish activities performed by a controlling company or a company connected with the controlling company for that accounting period.

(3) For the purpose of subsection (1), a relevant distribution made in respect of an accounting period means an amount determined by the formula—

A x (B/C)

where—

A is the amount of the distribution made in respect of the accounting period,

B is the amount of the distributable profits for the accounting period, and

C is the amount of the accounting profit of the controlled foreign company for the accounting period.

(4) The reference in subsection (3) to the amount of the distribution made in respect of the accounting period is a reference to such an amount—

(a) as is distributed to—

(i) a person who is, by virtue of the laws of a relevant Member State, resident for the purposes of tax in a relevant Member State which imposes, without any reduction computed by reference to the amount of such distribution, a tax that generally applies to distributions receivable in that territory, by persons, from sources outside that territory, or

(ii) a person resident in the State,

(b) as is paid or payable—

(i) during the accounting period, or

(ii) within 9 months after the end of the accounting period,

and

(c) where subparagraph (i) of paragraph (a) applies, as has been subject to tax in the relevant Member State referred to in that subparagraph.

(5) The reference in subsection (4)(c) to tax is a reference to tax that has been paid and has not been and does not fall to be repaid, in whole or in part, to the controlled foreign company or any other person on the making of a claim or otherwise.

(6) For the purpose of this section, a distribution made in respect of an accounting period shall be regarded as being made out of the distributable profits of that period to the extent of that profit and, in relation to any excess of the distribution over that profit, out of the most recently accumulated distributable profits.