Direct Tax Acts, Finance Act 2018

172B Dividend withholding tax on relevant distributions
FA99 s27; FA00 s30; FA01 s43

[(1) Except where otherwise provided by this Chapter, where, on or after the 6th day of April, 1999, a company resident in the State makes a relevant distribution to a specified person –

(a) the company shall deduct out of the amount of the relevant distribution dividend withholding tax in relation to the relevant distribution,

(b) the specified person shall allow such deduction on the receipt of the residue of the relevant distribution,

and

(c) the company shall be acquitted and discharged of so much money as is represented by the deduction as if that amount of money had actually been paid to the specified person.

(2) Except where otherwise provided by this Chapter, where, at any time on or after the 6th day of April, 1999, a company resident in the State makes a relevant distribution to a specified person and the relevant distribution consists of an amount referred to in paragraph (b) or (c) of section 172A(2) (being an amount equal to the amount which the specified person would have received if that person had received the relevant distribution in cash instead of in the form of additional share capital of the company), subsection (1) shall not apply, but –

(a) the company shall reduce the amount of the additional share capital to be issued to the specified person by such amount as will secure that the value at that time of the additional share capital issued to the specified person does not exceed an amount equal to the amount which the person would have received, after deduction of dividend withholding tax, if the person had received the relevant distribution in cash instead of in the form of additional share capital of the company,

(b) the specified person shall allow such reduction on the receipt of the residue of the additional share capital,

(c) the company shall be acquitted and discharged of so much money as is represented by the reduction in the value of the additional share capital as if that amount of money had actually been paid to the specified person,

(d) the company shall be liable to pay to the Collector-General an amount (which shall be treated for the purposes of this Chapter as if it were a deduction of dividend withholding tax in relation to the relevant distribution) equal to the dividend withholding tax which, but for this subsection, would have been required to be deducted from the relevant distribution, and

(e) the company shall be liable to pay that amount in the same manner in all respects as if it were the dividend withholding tax which, but for this subsection, would have been required to be deducted from the relevant distribution.

(3) Except where otherwise provided by this Chapter, where, on or after the 6th day of April, 1999, a company resident in the State makes a relevant distribution to a specified person and the relevant distribution consists of a non-cash distribution, not being a relevant distribution to which subsection (2) applies, subsection (1) shall not apply, but the company –

(a) shall be liable to pay to the Collector-General an amount (which shall be treated for the purposes of this Chapter as if it were a deduction of dividend withholding tax in relation to the relevant distribution) equal to the dividend withholding tax which, but for this subsection, would have been required to be deducted from the amount of the relevant distribution,

(b) shall be liable to pay that amount in the same manner in all respects as if it were the dividend withholding tax which, but for this subsection, would have been required to be deducted from the relevant distribution, and

(c) shall be entitled to recover a sum equal to that amount from the specified person as a simple contract debt in any court of competent jurisdiction.

(4) A company resident in the State shall treat every relevant distribution to be made by it on or after the 6th day of April, 1999, to a specified person as a distribution to which this section applies, but, where the company has satisfied itself that a relevant distribution to be made by it to a specified person is not, by virtue of the following provisions of this Chapter, a distribution to which this section applies, the company shall, subject to those provisions, be entitled to so treat relevant distributions to be made by it to the specified person until such time as it is in possession of information which can reasonably be taken to indicate that a relevant distribution to be made to the specified person is or may be a relevant distribution to which this section applies.

[(4A) (a) A company resident in the State shall keep and retain for the longer of the following periods –

(i) a period of 6 years, or

(ii) a period which, in relation to the relevant distributions in respect of which the declaration or notification is made or, as the case may be, given, ends not earlier than 3 years after the date on which the company has ceased to make relevant distributions to the person who made the declaration or, as the case may be, gave the notification to the company,

all declarations (and accompanying certificates) and notifications (not being a notice given to the company by the Revenue Commissioners) which are made or, as the case may be, given to the company in accordance with this Chapter and Schedule 2A.

(b) A company resident in the State shall, on being so required by notice in writing given to the company by the Revenue Commissioners, make available to the Commissioners, within the time specified in the notice –

(i) all declarations, certificates or notifications referred to in paragraph (a) which have been made or, as the case may be, given to the company, or

(ii) such class or classes of such declarations, certificates or notifications as may be specified in the notice.

(c) The Revenue Commissioners may examine or take extracts from or copies of any declarations, certificates or notifications made available to the Commissioners under paragraph (b).]2

(5) The provisions of the Tax Acts relating to the computation of profits or gains shall not be affected by the deduction of dividend withholding tax in relation to relevant distributions in accordance with this section and, accordingly, the amount of such relevant distributions shall, subject to section 129, be taken into account in computing for tax purposes the profits or gains of persons beneficially entitled to such distributions.

[(6) This section shall not apply to a relevant distribution where section 831(5) applies in relation to that distribution.]3

[(7) This section shall not apply where a relevant distribution is made by a company resident in the State and that distribution is –

(a) a distribution made out of exempt profits within the meaning of section 140,

(b) a distribution made out of disregarded income within the meaning of section 141 and to which subsection (3)(a) of that section applies, or

(c) a distribution made out of exempted income within the meaning of section 142.]4

[(8) This section shall not apply where a relevant distribution is made by a company resident in the State to another company so resident and the company making the relevant distribution is a 51 per cent subsidiary of that other company.]5]1

Go to Revenue Guidance Notes on TCA

Amendments

1 Section inserted by FA99 s27

2 Inserted by FA00 s30

3 Substituted by FA00 s30

4 Inserted by FA00 s30

5 Inserted by FA01 s43

Case Law

Imposition of withholding tax on dividends paid by resident company to non-resident parent contrary to EU law. Denkavit International BV & another v Ministre De l’Économie, des Finances et de l’Industrie – [2007] STC 452

Irish Tax Review Articles

Taxation of Outbound Payments by Companies. Interest, Royalties, Annual Payments, Dividends and Related Withholding Tax Issues. Declan Connolly and Conrad Turley, Irish Tax Review, January, 2007

Sections referred to in text

section 129 [Irish resident company distributions not generally chargeable to corporation tax]

section 140 [Distributions out of profits or gains from stallion fees, stud greyhound services fees and occupation of certain woodlands]

section 141 [Distributions out of income from patent roylaties]

section 142 [Distributions out of profits of certain mines]

section 172A [Interpretation – dividend withholding tax]

section 831 [Implementation 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]

Sch 2A [Dividend withholding tax]

Cross references

172C Exemption from dividend withholding tax for certain persons

172D Exemption from dividend withholding tax for certain non-resident persons

172E Qualifying intermediaries

172F Obligations of qualifying intermediary in relation to relevant distributions

172G Authorised withholding agent

172H Obligations of authorised withholding agent in relation to relevant distributions

172K Returns, payment and collection of dividend withholding tax

1078 Revenue offences