FINANCE ACT, 1950

• (b) (i) as respects Irish income tax, for the year of assessment beginning on the 6th day of April in the calendar year in which the exchange of instruments of ratification takes place and subsequent years;

• (ii) as respects Irish surtax, for the year of assessment beginning on the 6th day of April immediately preceding the calendar year in which the exchange of instruments of ratification takes place, and subsequent years; and

• (iii) as respects Irish corporation profits tax, for any chargeable accounting period beginning on or after the first day of April in the calendar year in which the exchange of instruments of ratification takes place, and for the unexpired portion of any chargeable accounting period current at that date.

Article XXIII.

• (1) The present Convention shall continue in effect indefinitely but either of the Contracting Parties may, on or before the 30th day of June in any calendar year following the calendar year in which the exchange of instruments of ratification takes place, give to the other Contracting Party, through diplomatic channels, notice of termination and, in such event, the present Convention shall cease to be effective—

• (a) as respects United States tax, for the taxable years beginning on or after the first day of January in the calendar year next following that in which such notice is given;

• (b) (i) as respects Irish income tax, for any year of assessment beginning on or after the 6th day of April in the calendar year next following that in which such notice is given; (ii) as respects Irish surtax, for any year of assessment beginning on or after the 6th day of April in the calendar year in which such notice is given; and (iii) as respects Irish corporation profits tax, for any chargeable accounting period beginning on or after the first day of April in the calendar year next following that in which such notice is given and for the unexpired portion of any chargeable accounting period current at that date.

• (2) The termination of the present Convention or of any Article thereof shall not have the effect of reviving any treaty or arrangement abrogated by the present Convention or by treaties previously concluded between the Contracting Parties.

IN WITNESS WHEREOF the above-named Plenipotentiaries have signed the present Convention and have affixed thereto their seals.

Done at Dublin, in duplicate, this thirteenth day of September 1949.

For the Government of Ireland:

P. McGILLIGAN

SEÁN MacBRIDE

For the Government of the United States of America:

GEORGE A. GARRETT.

Part II.

PROVISIONS AS TO RELIEF FROM INCOME TAX (INCLUDING SUR-TAX) AND CORPORATION PROFITS TAX BY WAY OF CREDIT IN RESPECT OF UNITED STATES TAX.

Interpretation.

the expression “the Convention” means the convention set forth in Part I of this Schedule;

the expression “income tax” includes sur-tax except where the context otherwise requires;

the expression “income” in relation to corporation profits tax, means profits;

the expression “the Irish taxes” means income tax (including sur-tax) and corporation profits tax;

the expression “United States tax” has the same meaning as in Article I of the Convention.

General.

2.—(1) Subject to the provisions of this Part of this Schedule, where, under the Convention, credit is to be allowed against any of the Irish taxes chargeable in respect of any income, the amount of the Irish taxes so chargeable shall be reduced by the amount of the credit.

• (2) The credit to be allowed shall be first applied in reducing the amount of any corporation profits tax chargeable in respect of the income and, so far as it cannot be so applied, in reducing the income tax chargeable in respect thereof.

• (3) Nothing in this paragraph authorises the allowance of credit against any Irish tax against which credit is not allowable under the Convention.

Requirements as to incorporation and residence.

3.—(1) Credit shall not be allowed against corporation profits tax unless the company in respect of whose income the corporation profits tax is chargeable is incorporated by or under the laws of the State.

• (2) Credit shall not be allowed against income tax for any year of assessment unless the person in respect of whose income the tax is chargeable is resident in the State for that year.

Limit on total credit—corporation profits tax.

Limit on total credit—income tax.

5.—(1) The amount of the credit to be allowed against income tax for United States tax in respect of any income shall not exceed the sum which would be produced by computing the amount of that income in accordance with the Income Tax Acts (including this Act), and then charging it to income tax for the year of assessment for which the credit is to be allowed, but at the following rate, that is to say—

• (a) in the case of a person whose income is chargeable to income tax but not to sur-tax, a rate ascertained by dividing the income tax payable by that person for that year by the amount of the total income of that person for that year;

• (b) in the case of a person whose income is chargeable to sur-tax, the sum of the following rates—

• (i) the rate which would have been the appropriate rate in his case if his income had been chargeable to income tax but not to sur-tax; and

• (ii) the rate ascertained by dividing the sur-tax payable by him for that year by the amount of his total income for that year:

Provided that where, under the Convention, credit is not to be allowed against sur-tax for the year, the rate shall be calculated in all cases as in the case of persons whose incomes are chargeable to income tax but not to sur-tax, and where, under the Convention, credit is not to be allowed except against sur-tax for the year, the rate shall be that ascertained by dividing the sur-tax payable by the person in question for the year by the amount of his total income for the year.

• (2) For the purpose of determining the said rate, the tax payable by any person for any year shall be computed without regard to any relief in respect of life assurance premiums and without any reduction thereof for any credit allowed or to be allowed under the Convention, but shall be deemed to be reduced by any tax which, otherwise than under Rule 20 of the General Rules, the person in question is entitled to charge against any other person, and the total income of any person shall be deemed to be reduced by the amount of any income the income tax upon which that person is entitled to charge as aforesaid.

• (3) Where credit for United States tax falls to be allowed in respect of any income and any relief would, but for the provisions of this subparagraph, fall to be allowed in respect of that income under the provisions of section 3 of the Finance Act, 1941 (No. 14 of 1941), as amended by section 2 of the Finance Act, 1943 (No. 16 of 1943), the said relief shall not be allowed.

Effect on computation of income of allowance of credit.

7.—(1) Subject to the provisions of this paragraph, where credit for United States tax falls to be allowed against any of the Irish taxes in respect of any income, no deduction for United States tax (whether in respect of that or any other income) shall be made in computing the amount of that income for the purposes of corporation profits tax.

• (2) Where the income includes a dividend and, under the Convention, United States tax not chargeable directly or by deduction in respect of the dividend is to be taken into account in considering whether any, and if so what, credit is to be allowed against the Irish taxes in respect of the dividend, the amount of the income shall, for the purposes of corporation profits tax, be treated as increased by the amount of the United States tax not so chargeable which falls to be taken into account in computing the amount of the credit.

• (3) Notwithstanding anything in the preceding provisions of this paragraph, where part of the United States tax in respect of the income (including any such tax which, under sub-paragraph (2) of this paragraph, falls to be treated as increasing the amount of the income) cannot be allowed as a credit against any of the Irish taxes, the amount of the income shall be treated for the purposes of corporation profits tax as reduced by that part of that United States tax.

8.—(1) Where credit for United States tax falls to be allowed against any of the Irish taxes in respect of any income, the following provisions of this paragraph shall have effect as respects the computation, for the purposes of income tax, of the amount of that income.

• (2) Where the income tax payable depends on the amount received in the State, the said amount shall be treated as increased by the amount of the credit allowable against income tax.

• (3) Where the last preceding sub-paragraph does not apply—

• (a) no deduction shall be made for United States tax (whether in respect of the same or any other income); and

• (b) where the income includes a dividend and under the Convention United States tax not chargeable directly or by deduction in respect of the dividend is to be taken into account in considering whether any, and if so what, credit is to be allowed against the Irish taxes in respect of the dividend, the amount of the income shall be treated as increased by the amount of the United States tax not so chargeable which falls to be taken into account in computing the amount of the credit; but

• (c) notwithstanding anything in the preceding provisions of this sub-paragraph, where any part of the United States tax in respect of the income (including any such tax which, under clause (b) of this sub-paragraph, falls to be treated as increasing the amount of the income) either falls to be allowed as a credit against corporation profits tax, or cannot be allowed as a credit against any of the Irish taxes, the amount of the income shall be treated for the purposes of income tax as reduced by that part of that United States tax.

• (4) In relation to the computation of the total income of a person for the purpose of determining the rate mentioned in paragraph 5 of this Part of this Schedule, the preceding provisions of this paragraph shall have effect subject to the following modifications—

• (a) for the reference in sub-paragraph (2) to the amount of the credit allowable against income tax, there shall be substituted a reference to the amount of the United States tax in respect of the income (in the case of a dividend, United States tax not chargeable directly or by deduction in respect of the dividend being left out of account); and

• (b) clauses (b) and (c) of sub-paragraph (3) shall not apply,

and subject to those modifications shall have effect in relation to all income in the case of which credit falls to be allowed for United States tax.

Special provisions as to Dividends.

The relevant profits are—

• (a) if the dividend is paid for a specified period, the profits of that period;

• (b) if the dividend is not paid for a specified period, but is paid out of specified profits, those profits;

• (c) if the dividend is paid neither for a specified period nor out of specified profits, the profits of the last period for which accounts of the body corporate were made up which ended before the dividend became payable:

Provided that if, in a case falling under sub-paragraph (a) or subparagraph (c) of this paragraph, the total dividend exceeds the profits available for distribution of the period mentioned in the said subparagraph (a) or the said sub-paragraph (c), as the case may be, the relevant profits shall be the profits of that period plus so much of the profits available for distribution of preceding periods (other than profits previously distributed or previously treated as relevant for the purposes of this paragraph) as is equal to the excess; and for the purposes of this proviso the profits of the most recent preceding period shall first be taken into account, then the profits of the next most recent preceding period, and so on.

10.—Where—

• (a) the Convention provides, in relation to dividends of some classes, but not in relation to dividends of other classes, that United States tax not chargeable directly or by deduction in respect of dividends is to be taken into account in considering whether any, and if so what, credit is to be allowed against the Irish taxes in respect of the dividends; and

• (b) a dividend is paid which is not of a class in relation to which the Convention so provides,

then, if the dividend is paid to a company which controls, directly or indirectly, not less than one half of the voting power in the company paying the dividend, credit shall be allowed as if the dividend were a dividend of a class in relation to which the Convention so provides.

Miscellaneous.

13.—(1) Subject to the provisions of paragraph 14 of this Part of this Schedule, any claim for an allowance by way of credit for United States tax in respect of any income shall be made in writing to the inspector of taxes not later than six years from the end of the relevant year of assessment, and, if the inspector objects to any such claim, it shall be heard and determined by the Special Commissioners as if it were an appeal to them against an assessment to income tax and the provisions of the Income Tax Acts relating to the re-hearing of an appeal or the statement of a case for the opinion of the High Court on a point of law, shall, with the necessary modifications, apply accordingly.

• (2) In this paragraph, the expression “the relevant year of assessment” means, in relation to credit for United States tax in respect of any income, the year of assessment for which that income falls to be charged to income tax or would fall so to be charged if any income tax were chargeable in respect thereof.