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6 1967

INCOME TAX ACT, 1967

PART XXII

Relief from Double Taxation

Agreements relating to Northern Ireland and Great Britain.

355. —(1) The confirmation, by section 2 of the Finance Act, 1926 , section 8 of the Finance Act, 1928 , section 2 of the Finance Act, 1948 , section 10 of the Finance Act, 1959 , and section 34 of the Finance Act, 1960 , of the agreements in force at the commencement of this Act between the State and the United Kingdom which are set forth in Schedule 6, Part I, is not affected by the repeal, by this Act, of those sections.

(2) Accordingly the first of the said agreements, as modified by the second, third, fourth and fifth of the said agreements, shall, for any year of assessment for which, under the law of the United Kingdom, it has effect with respect to exemption and relief from United Kingdom tax, have effect with respect to exemption or relief to be granted from Irish tax, and the references in the said agreements to enactments repealed by this Act shall be taken for that purpose to be references to the corresponding provisions of this Act:

Provided that, in Article 2(1) of the first of the said agreements, as amended by Article 2 of the second of the said agreements, the references to section 27 of the Finance Act, 1920, shall be taken for the said purpose to be references to Schedule 6, Part II, which re-enacts the provisions of the said section 27 with the amendments made therein by subsequent enactments and with certain omissions and adaptations of provisions and phrases which have become inapt or unnecessary.

(3) For the purpose of giving effect to the said agreements, this Act, in relation to—

(a) persons resident in the State, whether or not also resident in Northern Ireland or Great Britain; and

(b) claims by persons resident in Northern Ireland or Great Britain,

shall, for any year for which the said agreements are in force, have effect subject to the modifications set out in Schedule 6, Part III.

(4) For the purpose of carrying out any obligation under Article 2 of the Agreement of the 23rd June, 1960, set forth in Schedule 6, Part I, the Government may by order direct that any provisions of this Act specified in the order, being provisions affecting in any way exemptions from income tax of persons resident in the State, shall not affect, and be deemed not to have affected, exemptions from income tax which persons enjoy as not resident in the State but resident in the United Kingdom, and any such order shall have effect accordingly.

Further relief for certain double residents.

356. —Where the Revenue Commissioners are satisfied in respect of any person—

(a) that such person is entitled under Article 2 of the Agreement made 25th April, 1928, set forth in Schedule 6, Part I, to be allowed relief from double taxation for any particular year, and

(b) that the principal place of abode of such person for the said year was situate in Northern Ireland or Great Britain, and

(c) that such person did not in the said year spend in the aggregate more than six months in the State, and

(d) that the total amount of income tax and sur-tax (including British as well as Irish income tax and sur-tax) payable by such person for the said year after deduction of all such relief from double taxation as aforesaid exceeds the total amount of British income tax and sur-tax which would have been payable by such person for the said year if he had not been resident in the State for that year,

the Revenue Commissioners may grant to such person such further relief from Irish income tax and sur-tax as in their opinion is just, but not exceeding the amount by which the total amount of income tax and sur-tax (including British as well as Irish income tax and sur-tax) mentioned in paragraph (d) exceeds the total amount of British income tax and sur-tax mentioned in that paragraph.

Allowance of United Kingdom corporation tax as a credit against income tax.

357. —(1) In this section and Schedule 7—

company” means any body corporate;

corporation tax” means the tax in Northern Ireland and Great Britain known as corporation tax;

profits” in relation to income tax means income.

(2) Subject to the provisions of Schedule 7, corporation tax payable in respect of profits arising in Northern Ireland or Great Britain shall, to the extent to which it is to be taken into account for the purposes of this section, be allowed as a credit against the income tax chargeable for any year of assessment by reference to those profits.

(3) Where a dividend is paid by a company resident in Northern Ireland or Great Britain to a company which beneficially owns, directly or indirectly, not less than three-quarters of the ordinary share capital of the former company, the credit shall take into account the corporation tax payable by the former company in respect of its profits.

(4) The corporation tax payable in respect of any profits shall be taken into account for the purposes of this section—

(a) where the profits are subject to corporation profits tax, only to the extent that it cannot, on due claim having been made in that behalf, be allowed as a credit against corporation profits tax, or

(b) where the profits are not subject to corporation profits tax, only to the extent that it could not, on due claim having been made in that behalf, have been allowed as a credit against corporation profits tax if the profits had been subject to that tax as profits of a company incorporated by or under the laws of the State.

(5) In a case in which relief is allowed under this section, section 363 (3) shall have effect in relation to a dividend paid before the passing of the Finance Act, 1966, as it has effect in relation to a dividend paid before the making by the Government of an order to which section 361 (1) relates.

Convention with United States of America.

358. —(1) The confirmation, by section 12 of the Finance Act, 1950 , of the Convention set forth in Schedule 8 and concluded on the 13th day of September, 1949, between the Government of Ireland and the Government of the United States of America is not affected by the repeal, by this Act, of the said section 12.

(2) For the purpose of giving effect to the Convention, the provisions set forth in Schedule 10 shall have effect.

(3) The Revenue Commissioners may from time to time make regulations in relation to the granting of the reliefs specified in the Convention and may, in particular, by those regulations provide—

(a) for securing that no such reliefs from taxation imposed by the laws of the United States of America as are provided for in the Convention shall enure to the benefit of persons not entitled thereto, and

(b) for authorising, in cases where tax deductible from any periodical payment has, in order to comply with the terms of the Convention, not been deducted and it is discovered that the Convention does not apply to that payment, the recovery of the tax by assessment on the person entitled to the payment or by deduction from subsequent payments.

Relief in respect of ships documented under laws of United States of America.

359. —Exemption shall be granted from tax in respect of so much of the income of a citizen of the United States of America not resident in the State or of a corporation organised in the United States of America as is derived from the operation of a ship or ships documented under the laws of the United States of America.

Agreement with Canada.

360. —(1) The confirmation, by section 14 of the Finance Act, 1955 , of the Agreement set forth in Schedule 9 and concluded on the 28th day of October, 1954, between the Government of Ireland and the Government of Canada is not affected by the repeal, by this Act, of the said section 14.

(2) For the purpose of giving effect to the Agreement the provisions set forth in Schedule 10 shall have effect.

(3) The Revenue Commissioners may from time to time make regulations in relation to the granting of the reliefs specified in the Agreement and may, in particular, by those regulations provide—

(a) for securing that no such reliefs from taxation imposed by the laws of Canada as are provided for in the Agreement shall enure to the benefit of persons not entitled thereto, and

(b) for authorising, in cases where tax deductible from any periodical payment has, in order to comply with the terms of the Agreement, not been deducted and it is discovered that the Agreement does not apply to that payment, the recovery of the tax by assessment on the person entitled to the payment or by deduction from subsequent payments.

Agreements for relief from double taxation of income.

361. —(1) If the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of income tax, sur-tax or corporation profits tax and any taxes of a similar character, imposed by the laws of the State or by the laws of that territory, and that it is expedient that those arrangements should have the force of law, then, subject to the provisions of this Part, the arrangements shall, notwithstanding anything in any enactment, have the force of law.

(2) The provisions of Schedule 10 shall have effect where arrangements which have the force of law by virtue of this section provide that tax payable under the laws of the territory concerned shall be allowed as a credit against tax payable in the State.

(3) Any arrangements to which the force of law is given under this section may include provision for relief from tax for periods before the passing of this Act or before the making of the arrangements and provisions as to income which is not itself subject to double taxation, and the preceding provisions of this section shall have effect accordingly.

(4) For the purposes of subsection (1), arrangements made with the head of a foreign state shall be regarded as made with the government thereof.

(5) Any order made under this section may be revoked by a subsequent order and any such revoking order may contain such transitional provisions as appear to the Government to be necessary or expedient.

(6) Where an order is proposed to be made under this section, a draft thereof shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann.

(7) Where any arrangements have the force of law by virtue of this section, the obligation as to secrecy imposed by any enactment shall not prevent the Revenue Commissioners or any authorised officer of the Revenue Commissioners from disclosing to any authorised officer of the government with which the arrangements are made such information as is required to be disclosed under the arrangements.

(8) The Revenue Commissioners may from time to time make regulations generally for carrying out the provisions of this section or any arrangements having the force of law thereunder and may, in particular, but without prejudice to the generality of the foregoing, by those regulations provide—

(a) for securing that relief from taxation imposed by the laws of the territory to which any such arrangements relate does not enure to the benefit of persons not entitled thereto, and

(b) for authorising, in cases where tax deductible from any periodical payment has, in order to comply with any such arrangements, not been deducted and it is discovered that the arrangements do not apply to that payment, the recovery of the tax by assessment on the person entitled to the payment or by deduction from subsequent payments.

Relief on profits from business of sea or air transport.

362. —(1) In this section—

business of sea or air transport” means the business of transporting persons, goods or mail carried on by the owner or charterer of ships or aircraft;

arrangement to which this section applies” means an arrangement entered into by the Government with the government of a foreign state with a view to affording relief from double taxation in cases where income derived from the business of sea or air transport is chargeable both in the State and in the foreign state to income tax, or to any tax corresponding to income tax, or to any other tax on profits, whether such arrangement is to afford relief as from the date when it is entered into, a date after that date or a date before that date.

(2) For the purposes of this section, an arrangement made with the head of a foreign state shall be regarded as made with the government thereof.

(3) Subject to subsections (4) and (5), the Government may by order confirm and give the force of law to an arrangement to which this section applies.

(4) Where an order is proposed to be made under this section, a draft thereof shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann.

(5) Where an order is made under this section, the arrangement to which it relates shall have the force of law only if and so long as such arrangement, in so far as it relates to the relief to be granted by the foreign state, has the force of law in that state.

Treatment of dividends for double taxation relief in certain cases.

363. —(1) In this section—

dividend” means a dividend from which deduction of tax is authorised by section 456;

the company” means a body of persons paying a dividend;

double taxation relief” means any credit for tax (other than British income tax) payable in any territory outside the State, which is allowable against Irish income tax by virtue of section 357 or of any international agreement having the force of law, including any such credit which has been taken into account in relation to any dividends receivable by the company;

the reduced Irish rate” means the rate of Irish income tax payable directly or by deduction by the company after taking double taxation relief into account.

(2) (a) Notwithstanding anything in this Act, no relief or repayment in respect of the tax deducted or authorised to be deducted from any dividend shall, in a case in which there is double taxation relief, be allowed at a rate exceeding the reduced Irish rate.

(b) Where the reduced Irish rate falls to be computed in relation to a dividend, the particulars to be given by the company in the statement required by sections 457 and 458 shall (in addition to the particulars required to be given apart from this section) include particulars of the reduced Irish rate.

(3) Where (whether before or after the passing of this Act) a dividend has been paid before the making by the Government of an order to which section 361 (1) relates, and any double taxation relief would have fallen to be taken into account in relation to that dividend if this section had applied thereto, that relief shall be taken into account as far as possible in determining the reduced Irish rate in relation to the first dividend payable by the company after the making of the order, and any part of that relief which cannot be so taken into account shall as far as possible be taken into account in relation to the next succeeding dividend, and so on.

(4) Where the whole or any part of any annual payment is payable out of a dividend, and the rate of relief or repayment allowable in respect of the tax deducted or authorised to be deducted from the dividend is affected by double taxation relief, the annual payment, or that part thereof, as the case may be, shall be deemed to be paid out of profits or gains not brought into charge to tax and section 434 shall apply accordingly, but the tax recoverable under section 434 from the person making the payment shall be reduced by an amount equal to tax on the payment or part of the payment at the reduced Irish rate applicable to the dividend.

Determination of “reduced Irish rate” for section 363.

364. —(1) In this section, “the reduced Irish rate”, “double taxation relief”, “the company” and “dividend” have the same meaning as in section 363.

(2) The reduced Irish rate in relation to any dividend shall be taken to be the rate which is produced by deducting—

(a) the rate of double taxation relief for the period for which the dividend is paid, from

(b) the rate of tax authorised to be deducted from the dividend by section 456.

(3) Subject to any adjustment which is required by section 363 (3) or by subsection (4) of this section, the rate of double taxation relief for the period for which the dividend is paid shall be taken to be—

(a) in the case of a dividend paid for a period which falls wholly within any year of assessment, the rate which is produced by dividing the double taxation relief for that year of assessment by a sum consisting of the total income of the company as computed for income tax purposes for that year reduced by the amount of any income the income tax upon which the company is entitled, otherwise than under section 456, to charge against any other person;

(b) in the case of a dividend paid for a period which falls partly within one year of assessment and partly within another year of assessment or other years of assessment, the rate which is produced by determining, in relation to each of those years,—

(i) the rate which would have been applicable if the dividend had been paid for a period falling wholly within that year, and

(ii) the portion of that rate which bears the same proportion to that rate as the part of the period for which the dividend is paid which falls within that year bears to the whole period,

and then aggregating the portions so determined.

(4) Where any matter affecting the calculation of the rate of double taxation relief has not been fully determined at the time when the reduced Irish rate falls to be determined in relation to any dividend, the rate of double taxation relief shall be estimated according to the best of the information available at the time, and, if it is subsequently found that the rate so estimated was excessive or deficient, the appropriate adjustment shall be made in determining the reduced Irish rate applicable to the next subsequent dividend on the occasion of which it is practicable to make the adjustment, and shall be made by reducing or, as the case may be, increasing the rate of double taxation relief, as calculated for the purposes of that subsequent dividend in accordance with the foregoing subsection, by a rate which bears the same proportion to the excess or deficiency in the rate applicable to the first-mentioned dividend as the total amount of the first-mentioned dividend bears to the total amount of that subsequent dividend.

(5) Where the double taxation relief for any year of assessment includes any credit which has been taken into account for the purposes of determining the reduced Irish rate applicable to any dividends received by the company, the amount of that credit shall be taken to be the sum of the amounts which are produced by applying to each such dividend the rate which represents the excess of the rate of tax authorised to be deducted from that dividend by section 456 over the reduced Irish rate applicable to that dividend.

(6) For the purposes of this section, a dividend which is not expressed to be paid for any specified period shall be deemed to be paid for the last period for which accounts of the company were made up which ended before the dividend became payable.

Relief for foreign income tax in certain cases.

365. —(1) Where an individual has paid under this Act by deduction or otherwise, or is liable under this Act to pay, income tax, or income tax and sur-tax, for any year of assessment in respect of any part of his income arising in a country to which this section applies and shows to the satisfaction of the Revenue Commissioners—

(a) that he has paid external income tax in the said country in respect of the said part of his income, and

(b) that he was, prior to the said year of assessment, resident in the said country to which this section applies for a continuous period of not less than ten years or for a number of discontinuous periods amounting in the aggregate to not less than ten years or, where the said part of his income arises in any one (hereinafter referred to as the particular country) of the countries coming under the description lastly set forth in subsection (3), that he was, prior to the said year of assessment, resident in any two or more, one of which is the particular country, of the countries coming under the said description for periods amounting in the aggregate to not less than ten years, and

(c) that for the said year of assessment he was or is domiciled, resident, and ordinarily resident in the State, and

(d) that, in respect of the said year of assessment, he is not entitled to claim relief from double taxation under Article 2 of the Agreement made 25th April, 1928, set forth in Schedule 6, Part I,

the Revenue Commissioners may grant to such individual in respect of the said year of assessment such relief as is in their opinion just, but not exceeding whichever of the following amounts is the lesser, that is to say, one-half of the amount of the individual's Irish income tax for the said year of assessment or the amount of external income tax paid or payable by him in the said country in respect of the said part of his income after deduction of any relief to which he may be entitled in that country.

(2) In subsection (1)—

the amount of the individual's Irish income tax” means the amount of tax appropriate to the income of the individual referred to arising in a country to which this section applies, such tax being computed at a rate determined by dividing, by the amount of the total income from all sources of the said individual for the relevant year of assessment, the amount of income tax or income tax and sur-tax payable under this Act by the said individual for the said year of assessment in respect of his total income before the granting of any relief under this section;

external income tax” means a tax which is chargeable and payable under the law of a country to which this section applies and appears to the Revenue Commissioners to correspond to income tax or sur-tax chargeable under this Act.

(3) This section applies to the following countries, that is to say, the United States of America, Canada, Australia, New Zealand, the Republic of South Africa and also to any other country to which the repealed enactments corresponding to this section would apply but for their repeal.

(4) Nothing contained in the foregoing provisions of this section shall authorise the granting of relief under this section to any individual in respect of any year of assessment to such an extent as would reduce the aggregate of the amount of income tax, sur-tax (if any), and external income tax (as defined in subsection (2)) payable by such individual in respect of any part of his income arising in a country to which this section applies (such aggregate being computed after deduction of any relief to which he may be entitled in the said country) below the amount of income tax and sur-tax (if any) which would be payable by such individual in respect of the said part of his income if that part of his income had arisen in the State.

Extension of relief in certain cases.

366. —Where as regards any person to whom the provisions of section 2 of the Finance Act, 1941 , formerly applied—

(a) such person has income arising in a country outside the State and outside Northern Ireland and Great Britain in respect of which relief was formerly granted by virtue of those provisions, and

(b) the Revenue Commissioners are satisfied in relation to that income that the total tax, that is to say, Irish tax (including sur-tax) in respect of the income together with the corresponding tax of the said country, is in excess of what the said corresponding tax would have been if it had been computed on the basis that such person had been taxable as a person solely resident in the said country in respect of income arising from sources therein,

the Revenue Commissioners may grant a measure of relief not exceeding the amount of the excess.