Ireland taxes dividends from non-resident
companies at the rate of 25 per cent, subject to a unilateral
credit for foreign taxes, including underlying taxes.
This regime has been improved by permitting onshore single
basket pooling of all foreign tax credits. Excess credits
on one dividend can be offset against other dividends.
Surplus tax credits in any one period can be carried forward
to subsequent periods for use in relation to foreign dividends
in those periods.
Ireland is not providing a tax exemption
for foreign dividends but the generous nature of the
single basket pooling provided should give a broadly
similar effect in many instances.
Credit is given for underlying
taxes through any layer of holdings. Credit is being extended
to sub-federal taxes, i.e. State and Municipal taxes on
profits, which is a valuable feature of a foreign tax
credit system.
Unilateral tax credit relief
is available where there is a minimum holding of not less
than 5 per cent of the voting power in the company paying
the dividend.
