Irish Revenue has released eBrief, updating Tax and Duty Manual 08-03-06 regarding the payment and receipt of interest and royalties without income tax deduction. The update clarifies the application of reduced withholding tax under double taxation agreements (DTAs) in situations where there is a brief delay in receiving the necessary form and tax residence certificate from the recipient of interest payments.
The updated guidance states that instances may arise where there is a delay in receipt of a completed certified Form 8-3-6 Interest, or completed uncertified Form 8-3-6 Interest and tax residence certificate, by the person making the interest payment and that there may be a contractual obligation to make the payment prior to the receipt of completed form.
In such cases, the person paying the interest may rely upon information obtained in relation to the recipient that is required by anti-money laundering regulations to establish a prima facie case that the recipient is resident in a DTA territory.
Where such a prima facie case is established, the person may pay interest applying withholding tax at the appropriate DTA rate for a period of 90 days, commencing from the date of the first payment of interest to that recipient. This 90-day period is provided to facilitate the recipient of the payment to complete and certify Form 8-3-6 Interest or complete an uncertified Form 8-3-6 Interest and obtain a tax residence certificate and provide the necessary documentation to the person paying the interest as noted above.
Where the completed certified Form 8-3-6 Interest or completed uncertified Form 8-3-6 Interest together with tax residence certificate are not provided to the person paying interest within the 90-day period described above, then:
- Withholding tax which ought to have been deducted on payment of interest must be accounted for and paid, by the person paying the interest, in accordance with Part 8 TCA 1997; and
- Withholding tax at the standard rate will apply to all future payments of interest to that recipient, until such time as the self-certification declaration and tax authority certification/tax residence certificate is provided to the person paying the interest.
The obligation to account for withholding tax which has been, or which ought to have been, deducted rests on the person by or through whom the payment is made.
