S.I. No. 381/1951:

RELIEF OF DOUBLE TAXATION (TAXES ON INCOME : IRELAND--U.S.A.).

RELIEF OF DOUBLE TAXATION (TAXES ON INCOME : IRELAND--U.S.A.).

REGULATIONS DATED 31ST DECEMBER, 1951, MADE BY THE REVENUE COMMISSIONERS UNDER SECTION 12 of THE FINANCE ACT, 1950 (No. 18 of 1950).

The Revenue Commissioners, in exercise of the powers conferred on them by section 12 of the Finance Act, 1950 (No. 18 of 1950), hereby make the following regulations :--

1.--(1) These regulations may be cited as the Relief of Double Taxation (Taxes on Income : Ireland-U.S.A.) Regulations, 1951.

(2) In these regulations, unless the context otherwise requires--

the expresson " the Convention " means the convention set forth in Part I of the Second Schedule to the Finance Act, 1950 (No. 18 of 1950) ;

the expression " United States dividend " means a dividend from a United States source (or any part of such a dividend) from which United States tax has been withheld at the rate of 15 per cent. in accordance with the provisions of the Convention ;

the expression " paying agent " means any person who falls to be treated for the purposes of the Income Tax Acts as a person entrusted with the payment of any United States dividend ;

the expression " gross amount ", in relation to any United States dividend, means the amount which after deduction of 15 per cent. thereof leaves the amount entrusted to the paying agent for payment ;

the expression " the Commissioners " means the Revenue Commissioners ;

other expressions have the same meaning as in the Income Tax Acts.

Deduction of income tax from United States dividends. Adjustments in respect of United States tax.

2. Where a paying agent is required to deduct and account for Irish income tax on any United States dividend, the amount to be deducted and accounted for shall, except in any case or class of case as to which the Commissioners otherwise direct, be an amount equal to--

(a) income tax at the standard rate on the gross amount of the dividend, less

(b) the amount of the United States tax withheld from the dividend, which shall be taken to be 15 per cent. of the gross amount of the dividend.

3.--(1) Where a paying agent is authorised to refrain from deducting Irish income tax from any United States dividend, on the ground that the person beneficially entitled to the dividend is not resident in the State, he shall withhold on account of United States tax, out of the money in his hands, an amount equal to 15 per cent. of the gross amount of the dividend, and shall be acquitted and discharged of the amount so withheld as if it had been actually paid to the said person.

(2) Not later than fifteen days after the end of every period of three months ending on the 31st March, 30th June, 30th September or 31st December, the paying agent shall--

(a) pay to the Commissioners all amounts withheld by him under paragraph (1) of this Regulation in the last-ended such period, and

(b) render to the Commissioners a statement in duplicate in a form approved by the Commissioners showing the total amount entrusted to him for payment in respect of all United States dividends from which he has withheld amounts under that paragraph during that period, the total gross amount of those dividends, and the total amount so withheld.

(3) Where any United States dividend is received without deduction of Irish income tax by a person in the State (other than a paying agent) who is not beneficially entitled thereto, and the person beneficially entitled thereto is not resident in the State, the provisions of this Regulation shall apply (subject to any necessary modification) to the former person as if he were a paying agent who was authorised to refrain from deducting Irish income tax from the dividend on the ground mentioned in paragraph (1).

4. Where, after Irish income tax has been deducted from any United States dividend, it is proved to the satisfaction of the Commissioners that the person beneficially entitled to the dividend is not resident in the State, the Commissioners shall retain, on account of United States tax, out of any repayment due to that person in respect of the tax so deducted, either the whole of such repayment or an amount equal to 15 per cent. of the gross amount of the dividend, whichever is the lesser, and the Commissioners shall be acquitted and discharged of the amount so retained as if it had been actually repaid to that person.

5. All amounts paid to the Commissioners under paragraph (2) of Regulation 3 or retained by them under Regulation 4 shall be paid to the taxation authorities of the United States in accordance with such arrangements as may be made for the purpose between the Commissioners and those authorities.

Procedure for payment without deduction of tax of income exempt under the Convention.

6.--(1) The provisions of this Regulation shall have effect where the Convention provides for the exemption from Irish income tax of any class of income, being income from which deduction of income tax is authorised or required by the Income Tax Acts.

(2) Any person who pays income of any such class (referred to in this Regulation as " the Irish payer ") to a person in the United States who is beneficially entitled to the income (such person being referred to in this Regulation as " the non-resident ") may be required, by notice given by or on behalf of the Commissioners, to pay any such income to the non-resident without deduction of income tax, and where such notice is given any income from any source specified in the notice, being income for a year for which the Convention has effect, which the Irish payer pays, after the date of the notice, to the non-resident whose name is specified therein shall, subject to the following provisions of this Regulation, be paid without deduction of income tax.

(3) Where, but for the notice, the Irish payer would have been required to deduct and account for income tax on making any payment, such a requirement shall not apply if the payment has been made without deduction of tax by virtue of the notice.

(4) Where, but for the notice, the Irish payer would have been entitled to deduct and retain income tax on making any payment, there shall be made to him, against the income tax otherwise payable by him for the year in which the payment became due, an allowance equal to the amount of income tax which, but for the notice, he would have been entitled to deduct and retain on making the payment but by virtue of the notice has not deducted.

(5) Any notice given under paragraph (2) of this Regulation may be expressed to become ineffective if certain specified events happen or, whether so expressed or not, may be cancelled by a notice of cancellation given by or on behalf of the Commissioners, and, if to the knowledge of the Irish payer any of those events happens or if such notice of cancellation is given, any payment made to the non-resident by the Irish payer after the happening of that event becomes known to the Irish payer or after the date of that notice, as the case may be, shall be subject to deduction of income tax in accordance with the Income Tax Acts.

(6) If it is discovered, after a notice has been given under paragraph (2) of this Regulation, that the non-resident is not entitled to exemption from income tax in respect of income from any source specified in the notice, any income tax which, but for the notice, would have been deductible from any payment made to the non-resident by the Irish payer but by virtue of the notice has not been so deducted--

(a) may be assessed on the non-resident under Case VI of Schedule D by the inspector of taxes, or

(b) shall, if a direction to that effect is given by or on behalf of the Commissioners, be deducted by the Irish payer out of so much of the first payment made to the non-resident after the date of the direction as remains after the deduction of any tax deductible therefrom under the Income Tax Acts, and any balance which cannot be deducted out of the first such payment shall be deducted, subject to the same limitation, out of the next such payment, and so on until the whole, of the income tax (the amount of which shall be specified in the direction) has been deducted.

Any income tax which the Irish payer is required to deduct under sub-paragraph (b) of this paragraph shall be accounted for as if it were income tax deductible under Rule 21 of the General Rules.

(7) A notice may be given under paragraph (2) of this Regulation where income is paid to a person authorised to receive that income on behalf of the non-resident, and in such a case the references in this Regulation to payment to the non-resident shall be treated as including references to payment to that person.

(8) Paragraphs (2) and (5) of this Regulation shall not apply to payments in respect of coupons for any interest, but any such payment may, under arrangements approved by the Commissioners, be made without deduction of tax if the non-resident or any person acting on his behalf makes a claim, in a form approved by the Commissioners, to the Irish payer to that effect, and paragraphs (3), (4) and (6) of this Regulation shall apply in the case of any payment so made, with the substitution, for the references in those paragraphs to the notice, of references to the claim.

By Order of the Revenue Commissioners.

D. MCALEESE,

Secretary.

31st DECEMBER, 1951.