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Amendment of section 831 (implementation of Council Directive No. 90/435/EEC concerning the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States) of Principal Act.
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29.—Section 831 of the Principal Act is hereby amended—
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(a) in subsection (1)(a) by the substitution for the definition of “parent company” of the following definitions:
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“‘parent company’ means a company (referred to in this definition as the ‘first-mentioned company’) being—
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(i) a company resident in the State which owns at least 25 per cent of the share capital of another company which is not so resident, or
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(ii) a company not resident in the State which owns at least 25 per cent of the share capital of another company which is resident in the State,
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but where a bilateral agreement contains a provision to the effect—
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(I) that a company shall only be a parent company during any uninterrupted period of at least 2 years throughout which at least 25 per cent of the share capital of the other company is owned by the first-mentioned company, or
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(II) that—
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(A) the requirement (being the requirement for the purposes of this definition) that a company own at least 25 per cent of the share capital of another shall be treated as a requirement that the first-mentioned company holds at least 25 per cent of the voting rights in the other company, or
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(B) that requirement shall be so treated and a company shall only be a parent company during any uninterrupted period of at least 2 years throughout which at least 25 per cent of the voting rights in the other company is held by the first-mentioned company,
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then, in its application to a company to which the provision in the bilateral agreement applies, this definition shall apply subject to that provision and shall be construed accordingly;
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‘tax’, in relation to a relevant territory, means any tax imposed in that territory which corresponds to income tax or corporation tax in the State.”,
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(b) in subsection (2)—
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(i) by the insertion after “a parent company” of “which is resident in the State”, and
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(ii) by the insertion after “subsidiary” of “which is a company not resident in the State”,
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and
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(c) by the addition after subsection (4) of the following subsections:
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“(5) Chapter 8A of Part 6, other than section 172K, shall not apply to a distribution made to a parent company which is not resident in the State by its subsidiary which is a company resident in the State.
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(6) Subsection (5) shall not have effect in relation to a distribution made to a parent company if the majority of the voting rights in the parent company are controlled directly or indirectly by persons, other than persons who by virtue of the law of any relevant territory are resident for the purposes of tax in such a relevant territory (within the meaning assigned by section 172A), unless it is shown that the parent company exists for bona fide commercial reasons and does not form part of any arrangement or scheme of which the main purpose, or one of the main purposes, is the avoidance of liability to income tax (including dividend withholding tax under Chapter 8A of Part 6), corporation tax or capital gains tax.”.
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