(1) The Principal Act is amended -

(a) in Chapter 2 of Part 35, by the insertion of the following section after section 831A:

"831B. Participation exemption for certain foreign distributions

(1) In this section -

'EEA Agreement' means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by all subsequent amendments to that Agreement;

'EEA state' means a state which is a contracting party to the EEA Agreement;

'foreign tax', in relation to a territory other than the State, means a tax which -

(a) corresponds to corporation tax in the State,

(b) generally applies to income, profits and gains arising to a company that is resident for the purposes of tax in that territory, and

(c) is imposed at a nominal rate greater than zero per cent;

'listed territory' has the same meaning as it has in section 835YA subject to the modification that references to 'an accounting period beginning' shall be read as references to 'the making of a distribution';

'parent company', in relation to a relevant subsidiary, means a company that holds a qualifying participation in the relevant subsidiary and -

(a) is resident in the State, or

(b) not being resident in the State -