Where an Irish resident company pays a dividend, it should consider any Dividend Withholding Tax (DWT) implications which may arise.
The basic principle is that DWT must be deducted at the time the distribution is being made unless the company has satisfied itself that the recipient is a non-liable person and is entitled to receive the distribution without deduction of DWT.
Companies must withhold DWT at the standard rate of tax for the year in which the distribution is made, currently 20%. It must be paid to the Revenue Commissioners by the 14th of the month following the month in which the distribution was made.
Certain recipients of distributions are specifically excluded from the scope of DWT while certain other persons are entitled to an exemption. It should be noted that exemption is not automatic and must be established by means of an appropriate declaration of exemption, which must be completed by the applicant and accompanied by the required certification.
Non-Irish resident shareholders and certain Irish companies, trusts, pension schemes, investment undertakings, company’s resident in any member State of the European Union and charities may be entitled to claim exemption from DWT.