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Relief for double taxation caused by timing differences
The Irish Revenue Commissioners issued a statement on double tax relief for foreign branches of Irish corporations where time differences for accounting and tax purposes arise between Ireland and that location. Taxand Ireland explains the impact it will have on multinationals.
Before the Statement of Practice (SoP) was issued, where income was recognised for tax purposes in Ireland in an earlier accounting period than that of the foreign branch jurisdiction, no double taxation relief would have been available. This was because no double taxed income would arise in Ireland in the relevant accounting period.
Under the SoP, where unrelieved double taxation occurs due to a timing difference regarding recognition of income between Ireland and a foreign jurisdiction, relief may be available. The relief applies to foreign tax paid for accounting periods commencing on or after 1 January 2013.
The SoP provides for double tax relief by means of a carry back of foreign tax credit. The credit will arise where foreign tax arises solely as a result of differences in the timing of recognition of income for tax purposes in Ireland and a foreign jurisdiction.
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