Part 36 of the Principal Act is amended by the insertion after section 845 of the following:
"845A. Non-application of section 130 in the case of certain interest paid by banks.
(1) In this section, 'bank' means -
(a) a person who is a holder of a licence granted under section 9 of the Central Bank Act, 1971, or
(b) a person who holds a licence or other similar authorisation under the law of any other Member State of the European Communities which corresponds to a licence granted under the said section 9.
(2) This subsection shall apply to so much of any interest as -
(a) is a distribution by virtue only of section 130(2)(d)(iv),
(b) is payable by a bank carrying on a bona fide banking business in the State and would but for section 130(2)(d)(iv) be deductible as a trading expense in computing the amount of the bank's income from its banking business, and
(c) represents no more than a reasonable commercial return for the use of the principal in respect of which the interest is paid by
…