The Irish Revenue Commissioners published Revenue eBrief No. 095/25 on 6 May 2025, which provides guidance on the corporate tax participation exemption for distributions received from foreign subsidiaries. This exemption applies from 1 January 2025.

To support this, Tax and Duty Manual Part 35-02-11 has been released, offering detailed guidance on how the participation exemption under section 831B of the Taxes Consolidation Act 1997 (TCA 1997) works for certain foreign distributions.

The participation exemption was introduced in the Finance Act 2024. It allows companies to claim an exemption from corporation tax on certain dividends and other distributions received from foreign subsidiaries on or after 1 January 2025.

The manual explains how the exemption applies to parent companies that receive qualifying distributions from their foreign subsidiaries under section 831B.

Traditionally, Ireland has applied a “tax plus credit” system for relieving double taxation on foreign income. This allows credit for foreign tax paid, up to the amount of Irish tax due on the same income. This system is primarily based on Schedule 24 of the TCA.

However, section 831B introduces an alternative approach: the participation exemption, which provides full tax exemption on certain foreign distributions if the parent company holds a qualifying participation in the foreign subsidiary.

Companies have the option each year in their tax return to claim either the participation exemption or the “tax plus credit” method of double tax relief in respect of foreign dividend income, where qualifying conditions are met.

Earlier, Irish Revenue updated eBriefs in accordance with amendments introduced by the Finance Act 2024 (Act No. 43 of 2024).