835Z Interpretation (Part 35C).

(1) In this Part—

“arrangement” , other than in the definition of “entity” and “hybrid entity” , means—

(a) any transaction, action, course of action, course of conduct, scheme, plan or proposal,

(b) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable or intended to be enforceable by legal proceedings, and

(c) any series of or combination of the circumstances referred to in paragraphs (a) and (b),

whether entered into or arranged by one or two or more enterprises—

(i) whether acting in concert or not,

(ii) whether or not entered into or arranged wholly or partly outside the State, or

(iii) whether or not entered into or arranged as part of a larger arrangement or in conjunction with any other arrangement or arrangements,

but does not include an arrangement referred to in section 826;

“associated enterprise” shall be construed in accordance with section 835AA;

“chargeable period” has the same meaning as it has in Part 41A;

“controlled foreign company charge” has the same meaning as it has in Part 35B;

“deduction” in respect of a payment, or part thereof, refers to an amount—

(a) which may be taken into account as an expenditure or expense,

(b) in respect of which an allowance for capital expenditure may be made, or

(c) which may otherwise be deducted, allowed or relieved,

in computing the profits or gains on which tax falls finally to be borne for the purposes of domestic tax or foreign tax;

“deemed payment” means—

(a) in relation to a transaction between the head office of an entity and a permanent establishment of that entity, the allocation of payments, profits or gains from the head office to the permanent establishment, and

(b) in relation to a transaction between two or more permanent establishments of an entity, the allocation of payments, profits or gains from one permanent establishment to another;

“Directive (EU) 2016/1164” means Council Directive (EU) 2016/1164 of 12 July 20161 laying down rules against tax avoidance practices that directly affect the functioning of the internal market, as amended by Directive (EU) 2017/952;

“Directive (EU) 2017/952” means Council Directive (EU) 2017/952 of 29 May 20172 amending Directive (EU) 2016/1164 as regards hybrid mismatches with third countries;

“domestic tax” means income tax, corporation tax (including a controlled foreign company charge) or capital gains tax;

“double deduction” means a deduction in respect of the same payment for the purposes of domestic tax and foreign tax;

“double deduction mismatch outcome” shall be construed in accordance with section 835AD;

“dual inclusion income” , subject to section 835AB, means any amount which is included in both territories where the mismatch outcome has arisen;

“enterprise” means an entity or an individual;

“entity” means—

(a) a person (other than an individual),

(b) an undertaking (other than an individual), or

(c) an agreement, trust or other arrangement,

that has legal personality under the laws of the territory in which it is established;

“financial instrument deduction without inclusion mismatch outcome” shall be construed in accordance with section 835AJ;

“foreign company charge” has the same meaning as it has in Part 35B;

“foreign tax” means a tax chargeable on profits or gains, under the laws of a territory other than the State, that is similar to a domestic tax, but not including a withholding tax to the extent that such a tax is refundable where it has been levied;

“hybrid entity” means—

(a) a person (other than an individual),

(b) an undertaking (other than an individual), or

(c) an agreement, trust or other arrangement,

some or all of the profits or gains of which are treated, or would be so treated but for an insufficiency of profits or gains, under the tax law of one territory as arising or accruing to the entity on its own account, but, for the purposes of tax charged under the tax law of another territory, some or all of the profits or gains of which are treated, or would be so treated but for an insufficiency of profits or gains, as arising or accruing to another enterprise (in this Part referred to as “the participator” );

“included” in respect of a payment, means an amount of profits or gains arising from the payment—

(a) that is treated as arising or accruing to the payee where the payee—

(i) is chargeable to domestic tax or foreign tax, as the case may be, but not including any amount which is only so chargeable when it is remitted into the payee territory,

(ii) is a pension fund, government body or other entity that, under the laws of the territory in which it is established, is exempt from tax which generally applies to profits or gains in that territory,

(iii) is established in a territory, or part of a territory, that does not impose a foreign tax, or

(iv) is established in a territory that does not impose a tax that generally applies to profits or gains derived from payments receivable in that territory by enterprises from sources outside that territory,

or

(b) that is subject to a controlled foreign company charge or a foreign company charge;

“investor” means an enterprise or the permanent establishment of an entity, against whose profits or gains a deduction is made in respect of a payment in the investor territory;

“investor territory” , in relation to a payment, means a territory, other than the payer territory, where the payment is deductible;

“mismatch outcome” means any or all of the following, as the context requires:

(a) a double deduction mismatch outcome;

(b) a permanent establishment deduction without inclusion mismatch outcome;

(c) a financial instrument deduction without inclusion mismatch outcome;

(d) a payment to a hybrid entity deduction without inclusion mismatch outcome;

(e) a payment by a hybrid entity deduction without inclusion mismatch outcome;

“payee” , in respect of a payment, means an enterprise or permanent establishment of an entity—

(a) which receives that payment or is treated as receiving that payment under the laws of any territory, other than where that payment is received or treated as being received, as the case may be, in a fiduciary or representative capacity,

(b) which is a participator,

(c) to the benefit of which the payment is treated as arising or accruing under the laws of any territory, or

(d) on which a controlled foreign company charge or foreign company charge is made by reference to that payment;

“payee territory” means a territory in which a payee is established;

“payer” means—

(a) an enterprise, or

(b) the permanent establishment of an entity,

against whose profits or gains a deduction is made in respect of a payment in a payer territory;

“payer territory” means—

(a) in a case in which the payment concerned is made by a hybrid entity or a permanent establishment, the territory in which the hybrid entity or permanent establishment, as the case may be, is established, and

(b) in all other cases, the territory where the payment in respect of which the deduction concerned is incurred, sourced or made;

“payment” means—

(a) a transfer of money or money’s worth, or

(b) a deemed payment;

“payment by a hybrid entity deduction without inclusion mismatch outcome” shall be construed in accordance with section 835AM;

“payment to a hybrid entity deduction without inclusion mismatch outcome” shall be construed in accordance with section 835AL;

“permanent establishment deduction without inclusion mismatch outcome” shall be construed in accordance with section 835AG;

“structured arrangement” means an arrangement involving a transaction, or series of transactions, under which a mismatch outcome arises, where—

(a) the mismatch outcome is priced into the terms of the arrangement, or

(b) the arrangement was designed to give rise to a mismatch outcome;

“tax period” means—

(a) in respect of a charge to domestic tax, a chargeable period,

(b) in respect of a charge to foreign tax, a period equivalent to a chargeable period, or

(c) where the entity concerned is not charged to tax, the period for which financial statements are prepared.

(2) A reference to a provision of the law of a territory, other than the State, similar to this Part, or a provision of this Part, is a reference to a provision enacted to—

(a) give effect to Directive (EU) 2016/1164,

(b) implement the Final Report on Neutralising the Effects of Hybrid Mismatch Arrangements published by the Organisation for Economic Co-operation and Development on 5 October 2015,

(c) implement the Final Report on Neutralising the Effects of Branch Mismatch Arrangements published by the Organisation for Economic Co-operation and Development on 27 July 2017, or

(d) otherwise neutralise a mismatch outcome,

where that provision has a similar effect to this Part, or a provision of this Part, as the case may be.

(3) A word or expression which is used in this Part and is also used in Directive (EU) 2016/1164 has, unless the context otherwise requires, the same meaning in this Part as it has in Directive (EU) 2016/1164.

(4) A reference in this Part—

(a) to the territory in which an entity is established, shall—

(i) in a case in which the entity is registered, incorporated or created under the laws of one territory, but has its place of effective management in another territory, be construed as a reference to the territory in which the entity has its place of effective management, and

(ii) in all other cases, be construed as a reference to the territory in which the entity is registered, incorporated or created,

and

(b) to the territory in which a permanent establishment is established, shall be construed as a reference to the territory in which the permanent establishment carries on a business.