S.I. No. 425/1999 - Double Taxation Relief (Taxes on Income and Capital Gains) (United States of America) Order, 1999

1. This Convention shall be subject to ratification in accordance with the applicable procedures in Ireland and the United States of America and instruments of ratification shall be exchanged as soon as possible.

2. This Convention shall enter into force upon the exchange of instruments of ratification and shall have effect in respect of dividends paid on or after the first day of the second month next following the date on which the Convention enters into force.

IN WITNESS WHEREOF, the undersigned, being duly authorised thereto by their respective Governments, have signed this Convention.

DONE at Washington in duplicate, this 24th day of September, 1999.

For the Government of

For the Government of

Ireland

United States of America

SEAN O HUIGINN

PHILIP WEST

GIVEN under the Official Seal of the Government, this 22nd day of December, 1999.

BERTIE AHERN,

Taoiseach.

EXPLANATORY NOTE

(This note is not part of the Instrument and does not purport to be a legal interpretation.)

This Order gives the force of law to the Convention amending the Convention between the Government of Ireland and the Government of the United States of America which is set out in the Schedule. The effect of the Convention is summarised below.

The existing Double Taxation Convention between Ireland and the United States of America was signed at Dublin on 28 July, 1997 and replaced an earlier Convention in force since 1951.

The current Convention makes an amendment to the existing 1997 Convention to reflect recent changes in US policy in relation to foreign investors in Real Estate Investment Trusts (REITs).

PROVISIONS OF THE AMENDING CONVENTION

Article I replaces paragraph 4 of Article 10 (Dividends) of the 1997 Convention.

It enlarges the circumstances under which dividends paid by a Real Estate Investment Trust (REIT) in the United States to Irish resident shareholders can benefit from the reduced 15% withholding tax on dividends provided by paragraph 2(

b

) of Article 10 of the 1997 Convention.

Sub-paragraph (

a

) of the replacement paragraph 4 retains the benefit of the 15% withholding tax for individual holders which was provided by the original paragraph 4. Sub-paragraphs (

b

) and (

c

) respectively extend the same benefit to dividends paid by a publicly traded REIT to shareholders with not more than a 5% interest in the REIT and to dividends paid by a REIT which is diversified to shareholders with not more than a 10% interest in the REIT.

Article 2 provides that the provisions of the Convention will enter into force when each country has completed its constitutional requirements for ratification and both have exchanged their instruments of ratification. It will thereupon have effect for dividends paid on or after the first day of the second month next following the date of entry into force.

WHEREAS it is enacted by

sections 826

(1) and

828

of the

Taxes Consolidation Act, 1997

(No. 39 of 1997), that if the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of income tax, corporation tax or capital gains tax and any taxes of a similar character, imposed by the laws of the State or by the laws of that territory, and that it is expedient that those arrangements should have the force of law, the arrangements shall, notwithstanding anything in any enactment other than

section 168

of the

Taxes Consolidation Act, 1997

, have the force of law

AND WHEREAS it is further enacted by

section 826

(6) of the

Taxes Consolidation Act, 1997

, that where such an order is proposed to be made, a draft of the order shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann

AND WHEREAS a draft of the following Order has been laid before Dáil Éireann and a resolution approving of the draft has been passed by Dáil Éireann

NOW, the Government, in exercise of the powers conferred on them by

sections 826

(1) and

828

of the

Taxes Consolidation Act, 1997

(No. 39 of 1997), hereby order as follows