Corporation Tax Act, 1976

• Permanent Page URL

Treatment of tax-free income of non-resident banks, etc.

51.—(1) Where a banking business, an insurance business or a business consisting wholly or partly in dealing in securities is carried on in the State by a person not resident therein, then—

(a) in computing for the purposes of this Act the profits arising from, or loss sustained in, the business, and

(b) in the case of an insurance business, also in computing the profits or loss from pension business and general annuity business under section 39,

the provisions of section 11 shall not prevent the inclusion of interest, dividends and other payments to which section 50 (securities of foreign territories) or 462 (exemption of dividends of non-residents) of the Income Tax Act, 1967 , extends notwithstanding the exemption from tax conferred by those sections respectively.

(2) Where—

(a) any such business as aforesaid is carried on in the State by a person not ordinarily resident therein, and

(b) in making any such computation as aforesaid with respect to that business, interest on tax-free securities is excluded by virtue of a condition of the issue of such securities,

any expenses attributable to the acquisition or holding of, or to any transaction in, the securities (but not including in those expenses any interest on borrowed money), and any profits or losses so attributable, shall also be excluded in making that computation.

(3) In the case of an overseas life assurance company as defined in section 50—

(a) in computing for the purposes of section 43 the income from the investments of the life assurance fund of the company, any interest, dividends and other payments to which section 50 or 462 of the Income Tax Act, 1967 , extends shall be included notwithstanding the exemption from tax conferred by those sections respectively.

(b) where in computing the said income interest on any tax-free securities is excluded by virtue of a condition of the issue of such securities, the relief under section 47 (2) shall be reduced so as to bear to the amount of relief which would be granted but for this paragraph the same proportion as the amount of that income, excluding the said interest, bears to the amount of that income including that interest, and

(c) where subsection (2) applies to the pension business or general annuity business of the company the relief under section 47 (3) or (4), as the case may be, shall be reduced so as to bear to the amount of the relief which would be so granted but for this paragraph the same proportion as the amount of the income (excluding interest on tax-free securities) from investments and deposits of the company's life assurance fund and separate annuity fund, if any, referable to that business bears to the said income so referable including such interest.

(4) In this section and in section 52 “tax-free securities” means securities to which section 464 (issue of securities with exemption from tax), 470 (securities of Irish local authorities issued abroad) or 474 (exemption of certain securities from tax) of the Income Tax Act, 1967 , applies and which were issued with a condition regulating the treatment of the interest thereon for tax purposes such that interest on the securities is excluded in computing income or profits.

(5) In this section “insurance business” includes assurance business within the meaning of section 3 of the Insurance Act, 1936 .

(6) In subsection (1) “securities” includes stocks and shares.