Finance Act, 1991
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Implementation of Council Directive No. 90/435/EEC. |
36.—(1) (a) In this section— | |
“arrangements” means arrangements having the force of law by virtue of section 361 of the Income Tax Act, 1967 ; | ||
“bilateral agreement” means any arrangements, protocol or other agreement between the Government and the government of another Member State; | ||
“company” means a company of a Member State; | ||
“company of a Member State” has the meaning assigned to it by Article 2 of the Directive; | ||
“the Directive” means Council Directive No. 90/435/EEC of 23 July 1990 * , on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States; | ||
“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 paragraph (c) of Article 2 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 Economic Community; | ||
“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: | ||
Provided that 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 two years throughout which at least 25 per cent. of the share capital of the company which is 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 which is 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 which is not so resident, or | ||
(II) the said requirement shall be so treated and a company shall only be a parent company during any uninterrupted period of at least two years throughout which at least 25 per cent. of the voting rights in the company which is 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 have effect subject to that provision and be construed accordingly. | ||
(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 that is used in this section and is also used in the Directive has, unless the contrary intention appears, the same meaning in this section that it has in that Directive. | ||
(2) Subject to subsections (3) and (4), where, on or after the 1st day of January, 1992, a parent company receives a distribution chargeable in the State to corporation tax, other than a distribution in a winding up, from its subsidiary: | ||
(a) credit shall be allowed for— | ||
(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 | ||
(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 resident, | ||
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 any provision of Part XXXI of the Income Tax Act, 1967, the distribution shall not be a dividend to which that Part applies. | ||
(3) Where by virtue of paragraph (a) of subsection (2) a company is to be allowed credit for tax payable under the laws of a Member State other than the State, the provisions of Schedule 10 to the Income Tax Act, 1967 , shall have effect for the purposes of that subsection as if— | ||
(a) the provisions of that subsection were arrangements providing that tax so payable shall be allowed as a credit against tax payable in the State, and | ||
(b) references in the said Schedule 10 to a dividend were references to a distribution as defined in this section. | ||
(4) Subsection (2) shall have effect without prejudice to any provision of a bilateral agreement. | ||