Finance (No.2) Bill 2023: Outbound Payments

As readers will be aware from our article dated 13 July, during the summer the Department of Finance published a Feedback Statement on proposed new legislation to be introduced applying to outbound payments to prevent double non-taxation. 

Finance (No. 2) Bill 2023, published last week, contains the updated draft legislation following receipt of submissions to the feedback statement. This draft legislation contains a number of significant changes from the previous draft published. The most notable changes are discussed further below. 



It was originally intended that the new rules would apply to payments made on or after 1 January 2024. In the current draft, this date has been pushed back to 1 April 2024. 

In addition, there are grandfathering provisions that apply to arrangements which were in place on or before 19 October 2023 (the date of publication of the Finance Bill). In such cases, the new measures will not apply until 1 January 2025. 


Elimination of Double Taxation 

The stated aim of the legislation is to prevent double non-taxation. However, in the original drafting there was opportunity for double taxation to arise as a result of the new rules. For example, withholding tax could arise on the payment of interest for which no tax deduction was allowable. This appears to have been addressed in the updated draft legislation. 

Similarly for dividends, for which a tax deduction is generally not allowed, the updated legislation excludes dividends which are paid out of taxed profits. This allows businesses some time to evaluate the impact of the new rules and to restructure where necessary.  


Paid out within 12 months


Subject to meeting a bona fide commercial purposes test, the draft legislation contains a carve-out for interest payments where the entity to whom the interest is made, subsequently makes a payment of a corresponding amount within a defined time period to a person to whom such payment, had it been made directly by the Irish company, would not be caught by these new rules.  


Flow-through structures


Provisions also exist to facilitate a look-through approach in certain cases where the payments are made to an entity but the relevant payment is treated as arising or accruing to another entity for tax purposes. 


Payments to/from certain exempt entities


When considering whether double non-taxation arises, measures have been included to provide for situations where payments are made to or by certain tax-exempt entities, such as pension funds or government bodies. 


Anti-avoidance provisions

There are helpful changes to the anti-avoidance provisions which are more targeted towards arrangements that seek to circumvent these new rules. 


Quoted Eurobond & Wholesale Debt

The current draft of the legislation includes an exclusion for Quoted Eurobonds and Wholesale Debt instruments where it is reasonable to consider that the company making the interest payments is not, and should not be, aware that the interest is payable to an associated entity. 

It is important to remember that this is the first draft of the Finance (No. 2) Bill 2023. We can expect further changes to the Bill as it makes it way through the legislative process. However, it is encouraging to see that a number of the issues that were raised during the feedback process have been taken into account in the updated draft legislation. 

For more specific changes included in the Finance (No.2) Bill 2023, read the following expert insights:

For more information on this topic, or to discuss the potential implications for your business, please contact Angela Fleming, Head of Financial Services Tax, or your usual BDO tax contact.