On April 5, 2024 the Irish Department of Finance opened a public consultation on a Strawman proposal to introduce a participation exemption for foreign dividends to the Irish corporation tax system. In this respect the Irish Department of Finance has published a so-called Feedback Statement. The consultation period runs from April 5, 2024 to the close of business on May 8, 2024.

The proposed participation exemption will provide an exemption from corporation tax in respect of qualifying dividends received from foreign subsidiaries in accounting periods commencing on or after January 1, 2025.


The Strawman proposal


Scope of Relief

  • Relief will be provided in the form of an exemption from corporation tax. Where qualifying criteria are satisfied, 100% of the dividend will be in scope.
  • Entities in scope – the regime will apply to companies within the charge to Irish corporation tax. This includes Irish resident companies and certain non-resident companies carrying on a trade in the State through a branch or agency.
  • Qualification for the regime – companies will have flexibility to opt in to the participation exemption regime, with an election to apply for a minimum period of 3 years. The election would apply in respect of all potentially in-scope foreign dividends received by the company during the period in which it is elected in to the exemption.
  • Geographic scope – dividends received from companies that are resident for tax purposes in the EU/EEA or jurisdictions with which Ireland has a double taxation agreement will qualify.
  • Profits in scope – qualification will not be restricted to dividends derived from trading profits.
  • Where the exemption is availed of, a tax credit will not be available in respect of foreign tax paid on the foreign dividend.


Dividends/distributions in scope

  • The exemption will apply to foreign dividends and other types of distributions that represent income from shares or from other rights, not being debt claims, to participate in a company’s profits. This includes income from other corporate rights which is subjected to the same tax treatment as income from shares by the laws of the State of which the company making the distribution is resident.
  • In broad terms, relief will apply to distributions in the nature of income, such that “capital distributions” within the meaning of section 583 TCA 1997 would not qualify (e.g. a distribution in the course of dissolving or winding up a company).
  • Qualification for the exemption will be established by reference to a minimum level of control over the ordinary shares of the foreign subsidiary. Where that qualification has been established, the exemption may also apply in respect of dividends received from that company on other types of shares, such as preference shares. This may require anti-avoidance provisions against artificial arrangements, similar to section 138 TCA 1997 for example.
  • Companies must control at least 5% of the ordinary share capital for an un-interrupted period of twelve months up to and including the date of the dividend. Dividends in respect of newly acquired participations may also qualify provided the shares are subsequently held for a period of up to twelve months after the date of the dividend (i.e. a minimum overall holding period of twelve months).
  • The 5% control test will be established by reference to up to four criteria; ownership of ordinary share capital (direct or indirect); holding of voting rights; entitlement to profits available for distribution; and entitlement to assets on a winding-up of the company.
  • The availability of a participation exemption as set out above is not intended to impact existing provisions relating to portfolio investments in section 21B TCA 1997.



  • The dividend must not be deductible for tax purposes in any other jurisdiction.
  • Dividends received from a jurisdiction on the EU list of non-cooperative jurisdictions for tax purposes, as reflected in the TCA 1997 on the date of the dividend, will not qualify for relief.
  • Relief will apply only in respect of the payment of a dividend where it would be reasonable to consider that the payment is made for bona fide commercial purposes 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 tax.



  • Relief will be available in respect of dividends received in accounting periods commencing on or after 1 January 2025.
  • The election to avail of the participation exemption will be made via the Form CT1 corporation tax return and will apply for a minimum period of 3 years in respect of all qualifying dividends received by the company. An election cannot be revoked once made.
  • Companies will be required to report foreign dividends subject to exemption as part of the CT1 return.
  • The existing Schedule 24 provisions will continue to operate as normal for distributions not in scope of the exemption.
  • A company that elects in to the participation exemption may have an amount of unrelieved foreign tax credit carrying forward at the time of the election. This credit would remain available for offset under Schedule 24 provisions against distributions not in scope of the exemption, or for use in future years if the company ceases to elect in to the participation exemption regime.


The Feedback Statement as released by the Irish Department of Finance on April 5, 2024 can be downloaded here. In the Feedback Statement you find more information on how to respond to the consultation in for example § 4.3 and § 5.5.



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