Finance Act, 1926

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FIRST SCHEDULE.

PART I.

Agreement between the British Government and the Government of the Irish Free State in respect of Double Income Tax.

The British Government and the Government of the Irish Free State, being desirous of concluding an Agreement for the reciprocal exemption from income tax and super-tax of persons who are resident in Great Britain (including Northern Ireland) or in the Irish Free State but are not resident in both countries and for the reciprocal granting of relief from double taxation in respect of income tax (including super-tax) to persons who are resident in both countries, and being desirous of making such supplemental, consequential and incidental provisions as appear necessary or proper for the purposes of such Agreement, have agreed as follows:—

1. (a) Any person who proves to the satisfaction of the Commissioners of Inland Revenue that for any year he is resident in the Irish Free State and is not resident in Great Britain or Northern Ireland shall be entitled to exemption from British income tax for that year in respect of all property situate and all profits or gains arising in Great Britain or Northern Ireland and to exemption from British super-tax for that year.

(b) Any person who proves to the satisfaction of the Revenue Commissioners that for any year he is resident in Great Britain or Northern Ireland and is not resident in the Irish Free State shall be entitled to exemption from Irish Free State income tax for that year in respect of all property situate and all profits or gains arising in the Irish Free State, and to exemption from Irish Free State super-tax for that year.

(c) Exemption under this Article may be given either by discharge or by repayment of tax, or otherwise, as the case may require.

2. Relief from double taxation in respect of income tax (including super-tax) in the case of any person who is resident both in Great Britain or Northern Ireland and in the Irish Free State shall be allowed from British income tax and Irish Free State income tax respectively in accordance with and under the provisions of section 27 of the Finance Act, 1920 , provided, however, that—

(a) the rate of relief to be allowed from British income tax shall be one-half of that person's appropriate rate of British tax or one-half of his appropriate rate of Irish Free State tax, whichever is the lower,

(b) the rate of relief to be allowed from Irish Free State income tax shall be one-half of that person's appropriate rate of British tax or one-half of his appropriate rate of Irish Free State tax, whichever is the lower,

(c) for the purpose of determining that person's appropriate rate of British tax, the rate of British income tax shall be ascertained by dividing by the amount of his total income from all sources as estimated for income tax purposes the amount of tax payable by him on that income before deduction of any relief granted in respect of life assurance premiums or any relief granted under the provisions of the said section 27 as amended by this Article, and the rate of British super-tax shall be ascertained by dividing the amount of the super-tax payable by that person by the amount of his total income from all sources as estimated for super-tax purposes,

(d) for the purpose of determining that person's appropriate rate of Irish Free State tax, the rate of Irish Free State income tax shall be ascertained by dividing by the amount of his total income from all sources as estimated for income tax purposes the amount of tax payable by him on that income before deduction of any relief granted in respect of life assurance premiums or any relief granted under the provisions of the said section 27 as amended by this Article, and the rate of Irish Free State super-tax shall be ascertained by dividing the amount of the super-tax payable by that person by the amount of his total income from all sources as estimated for super-tax purposes.

3. (a) Any person who is entitled to exemption from British income tax by virtue of Article 1 (a) of this Agreement in respect of property situate and profits or gains arising in Great Britain or Northern Ireland shall, if and so far as the Oireachtas of the Irish Free State so provides, and subject to any exemption or relief to which he may be entitled under the laws in force in the Irish Free State, be chargeable to Irish Free State income tax in respect of such property, profits or gains.

(b) Any person who is entitled to exemption from Irish Free State income tax by virtue of Article 1 (b) of this Agreement in respect of property situate and profits or gains arising in the Irish Free State shall, if and so far as the British Parliament so provides, and subject to any exemption or relief to which he may be entitled under the laws in force in Great Britain and Northern Ireland, be chargeable to British income tax in respect of such property, profits or gains.

(c) Any person who is entitled to relief by virtue of Article 2 of this Agreement shall, subject to such relief, be chargeable, if and so far as the British Parliament so provides, to British income tax in respect of property situate and profits or gains arising in the Irish Free State in like manner in all respects as if he were resident in Great Britain or Northern Ireland but not resident in the Irish Free State and shall, subject to such relief as aforesaid, be chargeable, if and so far as the Oireachtas of the Irish Free State so provides, to Irish Free State income tax in respect of property situate and profits or gains arising in Great Britain or Northern Ireland in like manner in all respects as if he were resident in the Irish Free State but not resident in Great Britain or Northern Ireland.

4. For the purposes of this Agreement a company, whether incorporated by or under the laws of Great Britain or of Northern Ireland or of the Irish Free State or otherwise, shall be deemed to be resident in that country only in which its business is managed and controlled.

5. The Commissioners of Inland Revenue and the Revenue Commissioners may from time to time make arrangements generally for carrying out this Agreement and may in particular make such arrangements as may be practicable to avoid the collection of both British and Irish Free State income tax on the same income without allowance for any relief due under this Agreement, and the Commissioners of Inland Revenue and the Revenue Commissioners may make such regulations as they respectively think fit for carrying out such arrangements.

6. The obligation as to secrecy imposed by any enactment with regard to income tax shall not prevent the disclosure by any authorised officer of the British Government to any authorised officer of the Government of the Irish Free State or by any authorised officer of the Government of the Irish Free State to any authorised officer of the British Government of such facts as may be necessary to enable full effect to be given to this Agreement.

7. Any question that may arise between the parties to this Agreement as to the interpretation of this Agreement or as to any matter arising out of or incidental to the Agreement shall be determined by such tribunal as may be agreed between them, and the determination of such tribunal shall, as between them, be final.

8. This Agreement shall be subject to confirmation by the British Parliament and by the Oireachtas of the Irish Free State and shall have effect only if and so long as legislation confirming the Agreement is in force both in Great Britain and Northern Ireland and in the Irish Free State.

PART II.

Modifications of Income Tax Acts in Relation to Persons Resident in Saorstát Eireann whether or not also Resident in Great Britain or Northern Ireland.

1. In respect of property situate and profits or gains arising in Great Britain or Northern Ireland.

(1) The Rules applicable to Case IV of Schedule D of the Income Tax Act, 1918, shall have effect as if Rule 2 thereof had been omitted, and the Rules applicable to Case V of Schedule D of the Income Tax Act, 1918, shall have effect as if Rule 3 thereof had been omitted:

(2) In Rule 1 of the Rules applicable to Case V of Schedule D of the Income Tax Act, 1918, for the words “on an average of the three preceding years, as directed in Case I,” there shall be substituted the words “arising in the year of assessment”:

(3) The following Rule shall be substituted for Rule 2 of the Rules applicable to Case V of Schedule D of the Income Tax Act, 1918:—

The tax in respect of income arising from possessions in Great Britain or Northern Ireland, other than stocks, shares, or rents, shall be computed either on the full amount thereof arising in the year of assessment or on the full amount thereof on an average of such period as the case may require and as may be directed by the Special Commissioners, so that according to the nature of the income the tax may be computed on the same basis as that on which it would have been computed if the income had arisen in Saorstát Eireann, and subject in either case to a deduction on account of any annual interest or any annuity or other annual payment payable out of the income to a person not resident in Saorstát Eireann and the provisions of the Income Tax Acts (including those relating to the delivery of statements) shall apply accordingly; and the person chargeable and assessable shall be entitled to the same allowances, deductions, and reliefs as if the income had arisen in Saorstát Eireann:

Provided that, in the case of lands, tenements, hereditaments, or heritages in Great Britain or Northern Ireland in the occupation of a person resident in Saorstát Eireann which, had they been situate in Saorstát Eireann would have been chargeable to tax according to section 187 of the Income Tax Act, 1918, as amended by section 5 of the Finance Act, 1923 (No. 21 of 1923) in respect of the property therein and the occupation thereof on an annual value estimated otherwise than in relation to profits, tax shall be charged under this Rule and the income arising therefrom shall be taken to be an amount (subject to deduction as aforesaid) determined as follows, that is to say:—

(a) where the tax would in the circumstances aforesaid have been chargeable under Schedule A, the amount shall be taken to be the annual value as reduced for the purposes of collection of the lands, tenements, hereditaments, or heritages, as ascertained for the year of assessment for the purposes of the charge to income tax under Schedule A in Great Britain or Northern Ireland, as the case may be, and

(b) where the tax in the circumstances aforesaid would have been chargeable under Schedule B, the amount shall be taken to be the assessable value of the lands, tenements, hereditaments, or heritages as ascertained for the year of assessment for the purposes of the charge to income tax under Schedule B in Great Britain or Northern Ireland, as the case may be.

(4) Notwithstanding anything contained in Rule 5 (1) of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, in estimating the amount of annual profits or gains arising or accruing from any trade, profession or vocation a deduction shall be allowed on account of lands, tenements, hereditaments, heritages, or other premises situate in Great Britain or Northern Ireland and used in whole or in part for the purpose of that trade, profession or vocation of an amount equal to the amount charged to tax under Case V of Schedule D of the Income Tax Act, 1918, by virtue of the preceding sub-paragraph in respect of the income arising from such lands, tenements, hereditaments, heritages or other premises or the part so used.

2. In the definition of “foreign life assurance fund” in section 237 of the Income Tax Act, 1918, the expression “United Kingdom” shall mean Great Britain and Ireland.

3. Section 2 of the Finance Act, 1925 (which grants an exemption for charities in Great Britain or Northern Ireland) shall cease to have effect.

4. (1) Any claim for exemption from income tax or super-tax on the ground that the claimant is resident in Great Britain or Northern Ireland and is not resident in Saorstát Eireann shall be made to the Revenue Commissioners in such form as they may prescribe, and the said Commissioners shall on proof of the facts to their satisfaction allow the claim accordingly:

Provided that section 17 of the Income Tax Act, 1918, shall apply to the claimant for such exemption in like manner as it applies to a claimant for relief.

(2) Any person who is aggrieved by the decision of the Revenue Commissioners on a claim made by him as aforesaid, may, by notice in writing to that effect given to the Revenue Commissioners within twenty-one days from the date on which notice of the decision is given to him, make an application to have his claim heard and determined by the Special Commissioners.

(3) Where any such application as aforesaid is made, the Special Commissioners shall hear and determine the claim in like manner as an appeal made to them against an assessment, and all the provisions of the Income Tax Acts relating to such an appeal (including the provisions relating to the statement of a case for the opinion of the High Court on a point of law but excluding the provisions of section 196 of the Income Tax Act, 1918), shall apply accordingly with any necessary modifications.