Revenue eBrief No. 096/24

25 March 2024

Outbound payments defensive measures guidance

Finance (No.2) Act 2023 inserted Chapter 5 Outbound payments defensive measures in Part 33 of the Taxes Consolidation Act 1997 (‘TCA 1997’). The Chapter provides for the implementation of defensive measures, by way of withholding taxes, on outbound payments of interest and royalties, and on the making of distributions, in certain circumstances. The measures apply to payments or distributions by Irish resident companies, or payments by Irish branches of non-resident companies, to associated entities who are resident, or situated, in specified territories. The aim of these defensive measures is to prevent double non-taxation.

The measures contained in Chapter 5 of Part 33 remove certain exclusions from the obligation to deduct withholding taxes on outbound payments of interest and royalties, and on the making of distributions, to an associated entity who is resident, or situated, in certain territories.

This is coupled with the disapplication of exclusions from the charge to income tax for the non-Irish resident associated entity who receives the payment or distribution. In the case of the payments of royalties, the underlying charge to income tax for those payments, in the hands of recipients, has been expanded to match the withholding tax measure.

The territories within the scope of the measures are those included in Annex I of the EU list of non-cooperative jurisdictions for tax purposes and ‘no-tax’ and ‘zero-tax’ territories (together referred to as ‘specified territories’).