530D.— (1) Where a principal notifies the Revenue Commissioners in accordance with section 530C, the Revenue Commissioners shall issue a deduction authorisation to the principal in respect of the relevant payment to which the notification relates.
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(2)A deduction authorisation issued under subsection (1) shall— (a) specify, in accordance with section 530E, the rate of tax to be deducted from the payment, including, as appropriate, zero, and (b) authorise the principal concerned to deduct a specified sum of tax or no tax from the relevant payment.
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(3)At the end of each return period, the Revenue Commissioners shall issue a deduction summary to each registered principal in respect of that return period.
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(4)The Revenue Commissioners shall issue deduction authorisations and deduction summaries by electronic means.
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(5)The Revenue Commissioners shall make regulations for the purposes of this section and such regulations may provide for— (a) the type of electronic means to be used by the Revenue Commissioners, (b) the format of such communication, (c) the period of validity of deduction authorisations including circumstances in which they shall be deemed to be cancelled, (d) the obligations on principals to satisfy themselves that deduction summaries accurately reflect details of all relevant payments made, and tax deducted, in the return period concerned, and (e) any other related matters.
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Rates of tax.
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530E.— (1) For the purpose of section 530D(2), the rate of tax— (a) shall be zero where the Revenue Commissioners have made a determination that the subcontractor is a person to whom section 530G applies, (b) shall be the standard rate (within the meaning of section 3) in force at the time of payment where the Revenue Commissioners have made a determination that the subcontractor is a person to whom section 530H applies, (c) shall be 35 per cent where the Revenue Commissioners have made a determination that the subcontractor is a person to whom neither section 530G nor section 530H apply.
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(2)Any reference to a determination in subsection (1) is to the most recent determination made by the Revenue Commissioners under section 530I or as determined on appeal in accordance with that section, in respect of the subcontractor concerned.
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Obligation on principals to deduct tax.
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530F.— (1) A principal to whom a deduction authorisation is issued under section 530D shall deduct tax from the relevant payment concerned only in accordance with the terms of the deduction authorisation.
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(2)Subject to subsection (3), a principal to whom section 530A applies who makes a relevant payment to a subcontractor in circumstances other than those referred to in subsection (1) shall— (a) be liable to pay tax to the Revenue Commissioners at the rate of 35 per cent on the amount of the relevant payment, and (b) without prejudice to any other penalty to which the principal may be liable and without prejudice to section 1078, be liable to a penalty of €5,000 or the amount of the tax payable under paragraph (a), whichever is the lesser, unless the principal submits the details of the relevant payment in the return required under section 530K for the period concerned, on or before the due date for that return.
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(3)(a) Where subsection (2)(a) applies and the principal submits the details of the relevant payment in a return for the relevant return period, the Revenue Commissioners shall establish the amount of tax that would have been due from the principal in respect of that payment had the rate of tax been the rate of tax last notified by the Revenue Commissioners to the subcontractor concerned under section 530I and, notwithstanding subsection (2)(a), the tax due from the principal in respect of that payment by virtue of that subsection shall be the amount so established. (b) Where paragraph (a) applies, the Revenue Commissioners shall notify the principal of whether any adjustment to his liability for the period arises on account of the application of that paragraph and the Revenue Commissioners may include provision in any regulations made by them under this Chapter to give effect to this subsection.
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(4)Where a principal makes a relevant payment to a subcontractor, the principal shall issue a copy of the deduction authorisation in relation to that payment to the subcontractor.
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(5)The amount of tax which a principal is liable to deduct under subsection (1) from a relevant payment shall be due and payable by the principal concerned to the Revenue Commissioners in respect of the return period in which the payment is made.
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(6)The amount of tax which a principal is liable to pay to the Revenue Commissioners by virtue of subsection (2)(a) shall be due and payable by the principal concerned to the Revenue Commissioners in respect of the return period in which the payment is made.
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Zero rate subcontractor.
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530G.— (1) Subject to subsections (2) and (3), this section applies to a person in relation to whom the Revenue Commissioners are satisfied that the person— (a) is or is about to become a subcontractor engaged in the business of carrying out relevant operations, (b) carries on or will carry on business from a fixed place established in a permanent building and has or will have such equipment, stock and other facilities as in the opinion of the Revenue Commissioners are required for the purposes of the business, (c) properly and accurately keeps and will keep any business records to which section 886(2) refers and any other records normally kept in connection with such a business, (d) has throughout the previous 3 years complied with all the obligations imposed by the Tax Acts, the Capital Gains Tax Acts and the Value-Added Tax Acts, in relation to— (i) the payment or remittance of taxes, interest and penalties, (ii) the delivery of returns, and (iii) the supply, on request, of accounts or other information to a Revenue officer, and (e) in the case of a person who was resident outside the State at some time during the previous 3 years, has throughout that period complied with all the obligations comparable to those mentioned in paragraphs (c) and (d) imposed by the laws of the country in which that person was resident at any time during that period.
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(2)This section does not apply to a person— (a) engaged in the business of carrying out relevant contracts in partnership unless all persons in that partnership are persons to whom this section applies and unless the partnership business itself has complied with the obligations referred to in subsection (1) and the Revenue Commissioners are satisfied that it will continue to comply with those obligations, (b) which is a company, unless each director of the company and any person who is either the beneficial owner of, or able, directly or indirectly, to control more than 15 per cent of the ordinary share capital of the company, are persons to which paragraphs (c) and (d) of subsection (1) refer, (c) who is or was a proprietary director or proprietary employee of a company engaged in the business of carrying out relevant contracts unless the company is a person to whom paragraphs (c) and (d) of subsection (1) refer, (d) who, for good reason, the Revenue Commissioners consider unlikely to comply in the future with the obligations referred to in paragraph (c) or (d) of subsection (1), or (e) if relevant operations (being construction operations, forestry operations or meat processing operations, as the case may be) similar to those being carried out or to be carried out by that person were previously, or are being, carried out by another person (in this subsection referred to as the ‘second-mentioned person’), and the second-mentioned person— (i) is a company connected (within the meaning of section 10 as it applies for the purposes of the Tax Acts) with the first-mentioned person or would have been such a company but for the fact that the company has been wound up or dissolved without being wound up, (ii) is a company and the first-mentioned person is a partner in a partnership in which— (I) a partner is or was able, or (II) where more than one partner is a shareholder, those partners together are or were able, directly or indirectly, whether with or without a connected person or connected persons (within the meaning of section 10 as it applies for the purposes of the Tax Acts), to control more than 15 per cent of the ordinary share capital of the company, or (iii) is a partnership and the first-mentioned person is a company in which— (I) a partner is or was able, or (II) where more than one partner is a shareholder, those partners together are or were able, directly or indirectly, whether with or without a connected person or connected persons (within the meaning of section 10 as it applies for the purposes of the Tax Acts), to control more than 15 per cent of the ordinary share capital of the company,
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but this paragraph does not apply if the second-mentioned person concerned is a person to whom paragraphs (c) and (d) of subsection (1) refer.
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(3)This section also applies to a person who satisfies the Revenue Commissioners that, in all the circumstances, the matter or matters referred to in subsection (1) or (2), which would otherwise cause such person not to be a person to whom this section applies, ought to be disregarded for the purposes of this section.
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Standard rate subcontractor.
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530H.— (1) Subject to subsection (2), this section applies to a person in relation to whom the Revenue Commissioners are satisfied that the person— (a) is or is about to become a subcontractor engaged in the business of carrying out relevant operations, (b) carries on or will carry on business from a fixed place established in a permanent building and has or will have such equipment, stock and other facilities as in the opinion of the Revenue Commissioners are required for the purposes of the business, (c) properly and accurately keeps and will keep any business records to which section 886(2) refers and any other records normally kept in connection with such a business, (d) has throughout the previous 3 years complied substantially with the obligations imposed by the Tax Acts, the Capital Gains Tax Acts and the Value-Added Tax Acts, (e) in the case of a person who was resident outside the State at some time during the previous 3 years, has throughout that period complied with the obligations comparable to those mentioned in paragraph (c) and has throughout that period complied substantially with the obligations comparable to those mentioned in paragraph (d) imposed by the laws of the country in which that person was resident at any time during that period, (f) has provided to the Revenue Commissioners whatever information is required by them to register the person for tax purposes, and (g) is not a person to whom section 530G applies.
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(2)For the purposes of subsection (1)(d), the Revenue Commissioners may make regulations identifying matters to be taken into account by them, including— (a) the payment or remittance of taxes, interest and penalties, (b) the delivery of returns, (c) the supply, on request, of accounts or other information to a Revenue officer, and (d) the extent to which any non-compliance is being addressed.
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(3)This section does not apply to— (a) a person engaged in the business of carrying out relevant contracts in partnership unless all persons in that partnership are persons to whom this section applies and unless the partnership business itself has complied with the obligations referred to in subsection (1) and the Revenue Commissioners are satisfied that it will continue to comply with those obligations, or (b) a person if the Revenue Commissioners form an opinion that deductions from relevant payments at the standard rate of tax for the year of assessment will be insufficient to fully satisfy the income tax liability of the person for that year.
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Determination of rates.
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530I.— (1) For the purpose of establishing the rate of tax referred to in section 530E(1), the Revenue Commissioners shall, from time to time, determine whether a subcontractor is a person to whom section 530G applies, a person to whom section 530H applies or a person to whom neither section 530G nor 530H applies.
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(2)Following a determination under subsection (1), the Revenue Commissioners shall notify the subcontractor of their determination.
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(3)(a) On receipt of a notification under subsection (2), a subcontractor who is aggrieved by the determination of the Revenue Commissioners may, by notice in writing given to the Revenue Commissioners within 30 days of the date of the determination, appeal to the Appeal Commissioners. (b) The Appeal Commissioners shall hear and determine an appeal made to them under this subsection as if it were an appeal against an assessment to income tax and the provisions of the Income Tax Acts relating to such appeals and to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications. (c) Pending the determination of an appeal under this section, the Revenue Commissioners may issue a deduction authorisation under this Chapter and— (i) nothing in this subsection shall prejudice the validity of any such deduction authorisation issued, and (ii) the principal concerned shall comply with the terms of any such deduction authorisation.
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Register of principals.
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530J.— (1) The Revenue Commissioners shall keep and maintain a register of principals for the purposes of this Chapter.
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(2)Every principal to whom section 530B applies shall register as a principal with the Revenue Commissioners, unless he or she stands registered under section 531 immediately before the commencement of this section.
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(3)The Revenue Commissioners shall make regulations for the purposes of this section and such regulations may provide for— (a) keeping and maintaining the register, (b) registration and time for registration, (c) notification of change in relevant details, (d) notification of cessation as a principal, (e) cancellation of registration, (f) the use of electronic means in connection with the registration process, and (g) any other related matters.
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Return by principal.
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530K.— (1) On or before the due date relating to a return period, a principal shall make a return to the Collector-General of all relevant payments made by him or her during that return period and shall specify on that return the amount of his or her tax liability under this Chapter.
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(2)(a) For the purposes of subsection (1), where the Revenue Commissioners issue, under section 530D(3), a deduction summary to a principal for a return period, the details on that summary shall, for all the purposes of the Tax Acts, be deemed to be a return made by the principal to the Collector-General of all relevant payments made by the principal during that return period and the amount of tax specified on that summary shall be deemed to be the amount specified by the principal of his or her tax liability under this Chapter. (b) Paragraph (a) does not apply where the principal amends the details on the deduction summary in accordance with regulations made under this section and submits a return under subsection (1) in accordance with those amended details.
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(3)Without prejudice to section 530F, the amount of tax specified in a return made or deemed to have been made under this section shall be due and payable by the principal concerned to the Revenue Commissioners.
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(4)A return required under this section, including a return to which section 530M applies, shall be made by electronic means and the relevant provisions of Chapter 6 of Part 38 shall apply.
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(5)The Revenue Commissioners shall make regulations for the purposes of this section and such regulations may provide for— (a) the type of electronic means by which principals shall communicate with the Revenue Commissioners, (b) the format of such communication, (c) the circumstances in which and the means by which a principal may accept or reject data contained in the deduction summary for the purposes of submitting the return required by this section, (d) the circumstances in which and the means by which a transaction may be carried forward into a deduction summary of the subsequent return period, (e) the obligations of a principal in relation to a payment notified to the Revenue Commissioners under section 530C which the principal no longer intends to make, (f) the circumstances in which and the means by which a principal is required to add transactions to the return, which are not reflected on the deduction summary, and (g) any other related matters.
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Payment of tax by principal.
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530L.— (1) Tax due and payable in accordance with this Chapter shall be paid to the Collector-General not later than the due date relating to the return period concerned.
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(2)Where tax is due and payable for a period covering more than one return period by virtue of section 530N, the due date relating to that tax shall be the due date relating to the earliest return period covered by the relevant assessment or return.
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(3)A surcharge arising by virtue of section 530M shall be due and payable to the Revenue Commissioners and shall be payable at the same time as the amount of tax to which it relates is payable.
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Late returns and amendments.
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530M.— (1) Notwithstanding the requirements of section 530K(1), a principal may make or amend the return required by that section after the due date relating to that return.
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(2)Without prejudice to section 530F, where a principal makes or amends a return in accordance with subsection (1), then— (a) the amount of tax specified on that return shall be due and payable by that principal to the Revenue Commissioners, and (b) that principal shall be subject to a surcharge of €100.
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(3)The Revenue Commissioners shall serve notice on the principal of the total amount of tax and surcharge due and payable under this section for the return period or periods concerned.
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(4)Where enforcement action for the recovery of tax specified in a return made or deemed made under section 530K has been taken, this section shall not apply until that action has been completed, unless the Revenue Commissioners otherwise direct.
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(5)The Revenue Commissioners shall make regulations for the purposes of this section and such regulations may provide for— (a) the type of electronic means by which principals shall communicate with the Revenue Commissioners, (b) the format of such communication, (c) the circumstances in which and the means by which a principal may, as appropriate, accept or reject data contained in the deduction summary for the purposes of submitting the return required by this section, (d) the circumstances in which and the means by which a transaction may, as appropriate, be carried forward into a deduction summary of the subsequent return period, (e) the obligations, as appropriate, of a principal in relation to a payment notified to the Revenue Commissioners under section 530C which the principal no longer intends to make, (f) the circumstances in which and the means by which a principal is required to include transactions in a return, (g) the format of returns which can be made in a case where a principal is appealing an assessment under section 530N, and (h) any other related matters.
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Assessment by Revenue officer.
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530N.— (1) Where, in respect of a return period, a Revenue officer has reason to believe that a principal has not made a return under section 530K or 530M or that the amount of tax due and payable by a principal under this Chapter for a return period was greater than the amount of tax, if any, specified in a return made or deemed to have been made by that principal for that return period, then, without prejudice to any other action which may be taken, the officer may make an assessment in one sum of the total amount of tax which in his or her opinion is due and payable by the principal in respect of that return period.
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(2)Without prejudice to section 530F, but subject to subsection (5), the amount of tax specified in an assessment under subsection (1) shall be due and payable to the Revenue Commissioners from the person so assessed.
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(3)(a) A Revenue officer may, where he or she considers it necessary, amend an assessment of tax made under subsection (1). (b) Without prejudice to anything in this Chapter, the provisions of sections 955, 956 and 1048 (including those relating to time limits) shall, with any necessary modifications, apply to the making and amending of an assessment under this section.
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(4)(a) Where, in accordance with this section, the Revenue officer makes or amends an assessment, he or she shall give notice to the person assessed showing the total amount of tax due and payable in accordance with the assessment. (b) Where the person assessed is a registered principal, the Revenue officer shall issue the notice of assessment or of amended assessment by electronic means.
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(5)(a) Subject to paragraph (b), where notice is given to a person under subsection (4), the person may, if he or she claims that the total amount of tax assessed is excessive, on giving notice in writing to the Revenue officer within the period of 30 days from the date of the notice, appeal to the Appeal Commissioners. (b) A person to whom notice is given under subsection (4), shall not be entitled to appeal to the Appeal Commissioners— (i) in the case of a person who has made a return (including a deemed return) under section 530K or a return under section 530M, until that person has paid the tax and any surcharge due and payable on the basis of his or her return together with the related interest due under section 530Q, and (ii) in any other case, until the person has made a return under section 530M for the return period concerned and has paid the tax and surcharge due and payable on the basis of that return together with the related interest due under section 530Q. (c) The provisions of the Tax Acts relating to appeals shall, with any necessary modifications, apply to appeals against assessments made under this section as if those appeals were appeals against an assessment to income tax. (d) On the determination of an appeal, the tax contained in an assessment or in an amended assessment shall, subject to section 530F, be due and payable by the person assessed to the Revenue Commissioners.
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(6)A Revenue officer may make an assessment for a return period or for any number of consecutive return periods and an assessment may be issued before the end of the period to which it relates.
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(7)(a) Subject to paragraph (b), where a Revenue officer makes an assessment for a number of consecutive return periods, the person to whom notice is given shall not be entitled to appeal to the Appeal Commissioners until such a time as the person— (i) makes the return required in respect of each return period covered by the assessment, or (ii) elects to make one return covering the full period assessed and makes that return, and subsection (5) shall apply with any necessary modifications. (b) Where paragraph (a)(ii) applies, a hearing of the Appeal Commissioners shall be in respect of the full period assessed.
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(8)The Revenue Commissioners shall make regulations for the purposes of this section and such regulations may provide for— (a) the issuing of notices of assessment or amended assessment including the means by which such notices shall be issued, (b) the transmission of information in connection with appeals, (c) the format and transmission of returns in connection with appeals, (d) the procedures to apply to give effect to subsection (7), and (e) any other related matters.
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Computation of subcontractor’s profit.
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530O.— In computing, for the purposes of Schedule D, the profits or gains arising or accruing to a subcontractor who receives a payment from which tax has been deducted in accordance with section 530F, the payment shall be treated as being of an amount equal to the aggregate of the net amount received after deduction of the tax and the amount of the tax deducted.
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Credit for deducted tax.
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530P.— (1) Where a principal deducts tax from a subcontractor in accordance with section 530F, the subcontractor shall be treated as having paid to the Revenue Commissioners, on the date of the deduction, an amount of income tax or corporation tax equal to the amount of the deduction.
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(2)For the purposes of this Chapter, tax treated in accordance with subsection (1) shall be known as deducted tax.
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(3)The Revenue Commissioners shall notify each subcontractor concerned of the amount of deducted tax, if any, which the subcontractor shall be treated as having paid under subsection (1).
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(4)Subject to subsection (5), deducted tax shall be treated as a payment on account of income tax or corporation tax, as the case may be, for the chargeable period in which tax was deducted under section 530F.
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(5)Notwithstanding subsection (4), deducted tax which is not required to cover an amount of preliminary tax (as defined in section 950) appropriate to a chargeable period, which is declared by the subcontractor to be due in respect of that period, shall be available for offset under section 960H, as if it were an overpayment for the purposes of that section.
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(6)Where a Revenue officer makes an assessment to income tax or corporation tax on a subcontractor for a chargeable period or section 954(4) applies, deducted tax related to that period reduced by any amount offset or which is required to be offset under section 960H may, subject to section 865, be repaid to the subcontractor.
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(7)No repayment of deducted tax shall be made, except in accordance with subsection (6).
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Interest.
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530Q.— Where an amount of tax or surcharge which a person is liable to pay under this Chapter to the Collector-General is not paid by the due date concerned, simple interest on the amount outstanding shall be paid by the person to the Collector-General and shall be calculated from the due date concerned until payment, for any day or part of a day during which the amount remains unpaid, at the rate of 0.0274 per cent.
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Partnerships.
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530R.— (1) As respects relevant contracts, where relevant operations are performed by a gang or group of persons (including persons in partnership), notwithstanding that any payment or part of a payment in respect of such relevant operations is made by the principal to one or more of the gang or group or to some other person, then, for the purposes of section 530P, such payment or part of a payment shall be deemed to have been made by the principal to the individual members of that gang or group in the proportions in which the payment or any amount in respect of the payment is to be divided amongst them.
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(2)Except where the principal concerned makes a separate payment to each member of the gang or group, a person authorised by the gang or group, or in the case of a partnership, the precedent partner, shall, in respect of relevant payments, give to the Revenue Commissioners— (a) the name, address and tax reference number of every person in the gang or group who is entitled to any part of the payment or any amount in respect of the payment, and (b) the amount or proportion of the payment or the amount in respect of the payment to which each person, named by virtue of this provision, is entitled.
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(3)The Revenue Commissioners shall make regulations for the purposes of this section and such regulations may provide for the manner in which the information referred to in subsection (2) is to be given and the steps to be taken by the Revenue Commissioners on receipt of such information.
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(4)Without prejudice to the duties and obligations of partners in a partnership, in a case where the principal is a partnership, all things required to be done by the principal under this Chapter shall be done by the precedent partner within the meaning of Part 43.
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Record keeping.
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530S.— (1) Before giving a notification to the Revenue Commissioners under section 530C, a principal shall obtain from the subcontractor concerned an invoice setting out appropriate details of the work giving rise to the payment and bearing the subcontractor’s name, business address and tax reference number.
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(2)Where a relevant contract is being performed by a gang or group of persons (including persons in partnership), the invoice required under subsection (1) shall bear the name, business address and tax reference number of the gang or group and the names of the individual members of the gang or group.
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(3)Every subcontractor shall furnish to a principal, on request, all such information or particulars as are required by the principal to enable the principal to comply with this Chapter.
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(4)(a) Without prejudice to other provisions of the Tax Acts, each subcontractor shall keep and maintain a record of all relevant payments received by him or her and the record shall state, in relation to each such payment, the date of the payment, the amount of the payment, the amount of tax, if any, deducted from the payment by the principal and the name of the person from whom the payment was received. (b) Each subcontractor shall keep and maintain each copy of a deduction authorisation supplied by a principal under section 530F(4).
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(5)Without prejudice to other provisions of the Tax Acts, the obligations contained in subsections (3) and (4) of section 886 to keep and retain records and linking documents apply to all records, documents or other data created or maintained manually or by any electronic means for the purposes of this Chapter.
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(6)The Revenue Commissioners may make Regulations for the purposes of this section and such Regulations may provide for— (a) the creation, keeping and retention of records by principals by electronic or other means, and (b) the creation, keeping and retention of records by subcontractors by electronic or other means.
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Inspection of records.
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530T.— Without prejudice to other provisions of the Tax Acts, any person, or any employee of a person, who has made or received a relevant payment, shall produce to a Revenue officer for inspection all documents and records relating to the relevant payment as are in such person’s power, possession or procurement which have been requested by the Revenue officer.
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Civil penalties.
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530U.— (1) In proceedings for the recovery of a penalty under section 530F or the recovery of a penalty under section 1052, 1054 or 1077E in relation to matters arising under this Chapter— (a) a certificate signed by a Revenue officer which certifies that he or she has inspected the relevant records of the Revenue Commissioners and that it appears from them that a deduction authorisation, deduction summary or other notice, statement or described document, was duly given to a stated person by stated means, including electronic means, on a stated day shall be evidence until the contrary is proved that that person received that deduction authorisation, deduction summary or other notice, statement or described document in the ordinary course, (b) a certificate signed by a Revenue officer which certifies that he or she has inspected the relevant records of the Revenue Commissioners and that it appears from them that on a stated day or within a stated period, a stated person was a registered principal (within the meaning of section 530) shall be evidence until the contrary is proved that on a stated day or within a stated period, a stated person was a registered principal (within the meaning of section 530), and (c) a certificate certifying as provided for in paragraph (a) or (b) of this subsection and purporting to be signed by a Revenue officer may be tendered in evidence without proof and shall be deemed until the contrary is proved to have been signed by such officer.
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(2)Chapter 3A of Part 47 applies, with any necessary modifications, to a penalty arising under section 530F.
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Miscellaneous.
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530V.— (1) Regulations made under this Chapter shall be laid before Dáil Éireann as soon as may be after they are made and, if a resolution annulling those regulations is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulations are laid before it, the regulations shall be annulled accordingly, but without prejudice to the validity of anything previously done under them.
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(2)On the death of a principal, anything which the principal would have been liable to do under this Chapter shall be done by the personal representative of the principal.
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(3)Anything to be done by the Revenue Commissioners under this Chapter may be done by any Revenue officer.
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(4)(a) Notwithstanding the provisions of any other enactment, the provisions of this Chapter shall, subject to paragraphs (b) and (c) apply to a relevant payment made to a liquidator or a receiver. (b) Where tax is deducted under this Chapter from a relevant payment made to a liquidator or receiver in respect of a relevant contract which is entered into by that liquidator or receiver after his or her appointment as such, the tax so deducted shall be treated as a payment on account of tax for the chargeable period concerned after the appointment of the liquidator or receiver. (c) Where tax is deducted under this Chapter from a relevant payment made to a liquidator or receiver in respect of a relevant contract which was entered into prior to his or her appointment as such, the tax so deducted shall be treated as a payment on account of tax for the chargeable period prior to the appointment of the liquidator or receiver.”, (l) in section 904(1), in the definition of “records” by substituting “Chapter 2 of Part 18 and regulations made under that Chapter” for “section 531 and regulations made under that section”, (m) in section 960O(4)(a) by substituting “due and payable under Chapter 2 of Part 18 and regulations made under that Chapter” for “deducted under section 531(1)” in subparagraph (ii) and by deleting subparagraph (iii), (n) in section 960P(3) by substituting “due and payable under Chapter 2 of Part 18 and regulations made under that Chapter” for “deducted under section 531(1)” in paragraph (c) and by deleting paragraph (d), (o) in section 980(8A) by inserting the following after paragraph (b)— “(c) For the purpose of this section, a notification issued, within the previous 12 months, by the Revenue Commissioners under section 530I that the named person is a person to whom section 530G applies shall be treated as a certificate for the purposes of this subsection.”, (p) in section 1077E(1) in the definition of “period”, by inserting “or a return period, as defined in section 530” after “accounting period”, (q) in section 1078(2)(ii)(i), by substituting “Chapter 2 of Part 18” for “section 531(1)”, (r) in section 1078(2)(ii)(ii), by substituting “Chapter 2 of Part 18” for “section 531(3A)”, (s) in section 1078(9), by substituting “Sections 530U, 987(4) and 1052(4)” for “Sections 987(4) and 1052(4)”, (t) in section 1089(1) by substituting “section 530Q, 531(9) or 991” for “section 531(9) or 991”, and (u) in Schedule 29 by substituting “Chapter 2 of Part 18 and regulations made under that Chapter” for “section 531 and Regulations under that section” in each place where it occurs.
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(2)The Principal Act is amended in section 531 by inserting the following after subsection (5A)— “(5B) Where a claim to repayment, under regulations made in accordance with paragraph (b) or (c) of subsection (5), is based on tax deducted from a payment made to a subcontractor under subsection (1), the date of payment of that tax shall be deemed to be the date on which the certificate of deduction issued by a principal under regulation 6 of the Income Tax (Relevant Contracts) Regulations 2000 in respect of such tax is submitted to the Revenue Commissioners and the provisions of the Tax Acts shall apply accordingly.”.
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(3)
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Section 16
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(3)(b) of the Value-Added Tax Consolidation Act 2010 is amended— (a) by substituting “section 530A” for “section 531(1)”, and (b) by substituting “section 530A(1)(b)” for “section 531(1)(b)”.
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(4)(a) This section, with the exception of subsection (2), comes into operation on such day as the Minister for Finance may by order appoint. (b) Section 531 of the Principal Act and regulations made under that section shall not apply as regards payments made on or after the day referred to in paragraph (a) under a relevant contract, as defined in section 530 of that Act.
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Measures relating to false claims.
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21.— The Principal Act is amended— (a) in section 864 by substituting the following for subsection (1)(a): “(a) all claims for exemption or for any allowance, credit or deduction under those Acts,”, (b) in section 864 by inserting the following after subsection (2): “(3) Any person who— (a) makes or delivers to the Revenue Commissioners, or (b) knowingly or carelessly assists in or induces another to make or deliver to the Revenue Commissioners, any incorrect account, declaration, information, particulars, return or statement, including by means of approved electronic communications (within the meaning of section 864A), in connection with any claim for exemption or for any allowance, credit, deduction, relief or repayment shall be liable to a penalty of €3,000.”, (c) in section 864A(1)(c) by inserting “credit,” after “claim for an allowance,”, (d) in section 864A(1)(d) by inserting “credit,” after “an allowance,” in both places where it occurs, (e) by substituting the following for section 960: “Date for payment of income tax other than under self assessment.
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960.— (1) Subject to subsection (2), income tax contained in an assessment (other than an assessment made under Part 41) for any year of assessment shall be payable on or before 30 September in that year, except that income tax included in any such assessment for any year of assessment which is made on or after 30 September in that year shall be deemed to be due and payable not later than one month from the date on which the assessment is made.
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(2)Where, for a year of assessment, any claim for exemption or for any allowance, credit, deduction, relief or repayment was granted on the basis of an incorrect account, declaration, information, particulars, return or statement or any other form of claim, then income tax contained in an assessment (other than an assessment made under Part 41) for the year of assessment or in a statement sent in accordance with Regulation 37 of the Income Tax (Employments) (Consolidated) Regulations 2001 ( S.I. No. 559 of 2001 ) for the year of assessment shall be due and payable— (a) on 1 July in the year of assessment, where the exemption, allowance, credit, deduction, relief or repayment was given in the year of assessment before that date, (b) on 1 January in the year following the year of assessment, where the exemption, allowance, credit, deduction, relief or repayment was given in the year of assessment but on or after 1 July, (c) on the date the allowance, credit, deduction, relief or repayment was given, where that date is after the end of the year of assessment.”, (f) in Chapter 1C of Part 42 by inserting the following after section 960P: “Recovery of amounts received by a person following the lodgement of an incorrect account, etc.
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960Q.— (1) All amounts of money received from the Revenue Commissioners by a person shall be repaid by that person to the Revenue Commissioners where those amounts arose from the making or delivery for any purpose of the Acts of any incorrect account, declaration, information, particulars, return or statement in connection with any claim for exemption or for any allowance, credit, deduction, relief or repayment.
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(2)All amounts of money to be repaid to the Revenue Commissioners under subsection (1) shall— (a) be determined by a Revenue officer, (b) for the purposes of this Part, be deemed to be amounts of tax which are due and payable to the Revenue Commissioners.
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(3)Notwithstanding anything in the Acts, the determination referred to in subsection (2)(a) may be made at any time.
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(4)Where any person is aggrieved by a determination made by a Revenue officer under this section, section 949 shall apply to such determination as if it were a determination made on a matter referred to in section 864.
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(5)(a) Amounts of tax which, by virtue of subsection (2), are due and payable to the Revenue Commissioners may be included in assessments made by an inspector or other Revenue officer. (b) Where an assessment is made in accordance with paragraph (a), an inspector or other Revenue officer shall give notice to the person assessed of the assessment made but it shall not be necessary to set out in the notice of assessment any particulars other than particulars as to the amount of tax to be paid by the person assessed.
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(6)Notwithstanding anything in the Tax Acts, the assessment referred to in subsection (5) may be made at any time.”, and (g) in section 1080 by substituting the following for paragraph (2)(b): “(b) Subject to this section and section 1081— (i) any tax charged by any assessment to income tax, and (ii) any tax contained in a statement sent in accordance with Regulation 37 of the Income Tax (Employments) (Consolidation) Regulations 2001 ( S.I. No. 559 of 2001 ), shall, notwithstanding any appeal against such assessment or statement, carry interest from the date when, if there were no appeal against the assessment or statement, the tax would become due and payable under section 960 until payment, and the amount of that interest shall be determined in accordance with paragraph (c).”.
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Cesser of financial resolutions.
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22.— (1) The financial resolutions to which this section applies cease to have statutory effect on and from the passing of this Act.
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(2)This section applies to the following financial resolutions passed by Dáil Éireann on 7 December 2010: (a) Financial Resolution No. 20 (which restricts the way in which relief given under section 372AP of the Taxes Consolidation Act 1997 may be used); (b) Financial Resolution No. 21 (which restricts and, in certain circumstances, ceases certain capital allowances in respect of property incentives); (c) Financial Resolution No. 22 (which restricts the way in which certain capital allowances in respect of property incentives may be used).
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Amendment of Part 12 (principal provisions relating to loss relief, treatment of certain losses and capital allowances, and group relief) of Principal Act.
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23.— (1) Part 12 of the Principal Act is amended by inserting the following after Chapter 4: “Chapter 4A Limits on certain losses Interpretation and general (Chapter 4A).
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409F.— (1) This Chapter applies notwithstanding any other provision of the Tax Acts.
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(2)In this Chapter— ‘active partner’ has the same meaning as in section 409A; ‘active trader’ has the same meaning as in section 409D; ‘area-based capital allowance’ means any allowance made under Chapter 1 of Part 9 as that Chapter is applied— (a) by section 323, 331, 332, 341, 342, 343, 344, 352, 353, 372C, 372D, 372M, 372N, 372V, 372W, 372AC or 372AD for a chargeable period, or (b) by virtue of paragraph 11 of Schedule 32 for a chargeable period, including any such allowance made for a previous chargeable period and carried forward from that previous chargeable period in accordance with Part 9; ‘balancing allowance’ means any allowance made under section 274; ‘capital allowance’ means any allowance, or part of any allowance, specified in the definition of ‘specified capital allowance’ or ‘area-based capital allowance’; ‘chargeable period’ has the same meaning as in section 321 and a reference to a chargeable period or its basis period shall be construed in accordance with subsection (2) of that section; ‘relevant day’ shall be read in accordance with subsection (3); ‘relevant interest’ has the same meaning as in section 269; ‘residue of expenditure’ shall be construed in accordance with section 277; ‘specified amount of rent’, in relation to a building or structure and a person for a chargeable period, means the amount of the surplus in respect of the rent from the building or structure to which the person becomes entitled for the chargeable period, as computed in accordance with section 97(1); ‘specified capital allowance’ means any specified relief that is— (a) a writing down allowance made for a chargeable period, (b) a balancing allowance made for a chargeable period, or (c) an allowance made under Chapter 1 of Part 9 as that Chapter is applied by section 372AX, 372AY, 843 or 843A for a chargeable period, including any such allowance or part of such allowance made for a previous chargeable period and carried forward from that previous chargeable period in accordance with Part 9; ‘specified relief’ has the same meaning as in section 485C; ‘tax year’ means a year of assessment; ‘writing down allowance’ means any allowance made under section 272 and includes any such allowance as increased under section 273.
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(3)The Minister for Finance may by order appoint a day (in this Chapter referred to as the ‘relevant day’) to be the day on which this Chapter comes into effect, which day shall not in any case be earlier than 60 days after the publication of the impact assessment referred to in page B.8 of the Summary of 2011 Budget measures published by the Department of Finance on 7 December 2010.
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Restriction of capital allowances.
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409G.— (1) As respects any tax year, the amount, in relation to a building or structure, of any specified capital allowance that is carried forward in accordance with section 304 or 305 to that tax year or any subsequent tax year, being a tax year that is— (a) 7 years after the year in respect of which such a capital allowance was first made in relation to the building or structure, in a case where the first such allowance was made at a rate equal to 15 per cent, or (b) 10 years after the year in respect of which such a capital allowance was first made in relation to the building or structure, in a case where the first such allowance was made at a rate equal to 10 per cent, shall, subject to subsection (6), be zero for all the purposes of the Tax Acts.
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(2)The amount, in relation to a building or structure, of any specified capital allowance that— (a) is available to be carried forward, in accordance with section 308(3), to any accounting period, or (b) may, in accordance with section 308(4), be set against the profits of an accounting period preceding any accounting period to which paragraph (a) applies, being an accounting period that begins— (i) 7 years after the year in respect of which a capital allowance was first made in relation to the building or structure, in a case where the first such allowance was made at a rate equal to 15 per cent, or (ii) 10 years after the year in respect of which a capital allowance was first made in relation to the building or structure, in a case where the allowance was made at a rate equal to 10 per cent, shall be zero for all the purposes of the Tax Acts.
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(3)As respects any chargeable period— (a) the amount of any area-based capital allowance, other than such an allowance made under section 274, for a chargeable period (in this subsection referred to as the ‘first-mentioned chargeable period’) to be made in relation to a building or structure shall, instead of being determined in accordance with the provisions of the Tax Acts as they applied immediately before the relevant day and subject to paragraph (c), be an amount determined in accordance with paragraph (b), (b) the amount referred to in paragraph (a) is an amount given by the formula— A × 1 B where— A is the residue of expenditure calculated as if the relevant interest in the building or structure had been sold on the last day of the chargeable period or its basis period that immediately preceded the first-mentioned chargeable period, and B is the number of years or accounting periods, as the case may be, remaining in the period of 7 years beginning with the year or accounting period in which a capital allowance was first made in relation to that building or structure, (c) the amount of any area-based capital allowance to be made in relation to a building or structure, including any allowance made in accordance with paragraph (a), shall, for all the purposes of the Tax Acts, be reduced, subject to subsection (6), to an amount that is equal to 80 per cent of what that allowance would otherwise be if this paragraph did not have effect, and (d) where paragraph (c) applies in respect of any capital allowance it shall not apply again as respects that allowance or any part of that allowance that is carried forward in accordance with section 303, 304 or 308, as the case may be, to any other chargeable period that falls into the remaining period referred to in the meaning of ‘B’ in the formula in paragraph (b).
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(4)As respects any tax year— (a) the amount of any area-based capital allowance to be made in relation to a building or structure, and (b) the amount of any area-based capital allowance in relation to a building or structure to be carried forward in accordance with section 304 or 305, as those provisions are applied or modified by any other provision of the Tax Acts, shall, subject to subsection (6), be zero for all the purposes of the Tax Acts where the allowance is made for, or carried forward to, a tax year that is 7 years after the tax year in respect of which a capital allowance was first made in relation to that building or structure.
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(5)For all the purposes of the Tax Acts— (a) the amount of any area-based capital allowance to be made in relation to a building or structure, (b) the amount of any such allowance that is available to be carried forward in accordance with section 308(3) to any accounting period, or (c) the amount of any such allowance that may be set, in accordance with section 308(4), against the profits of an accounting period preceding any accounting period to which paragraph (a) applies, shall be zero where the allowance is made for, or carried forward to, an accounting period that is 7 years after the accounting period in respect of which a capital allowance was first made in relation to that building or structure or is available for setting against the profits of a preceding accounting period that is 6 years after the accounting period in respect of which a capital allowance was first made in relation to that building or structure.
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(6)(a) Subsections (1), (3) and (4) shall not apply to an individual where any specified capital allowance or area-based capital allowance is made in taxing a trade in relation to which trade the individual is an active partner or an active trader. (b) Subsection (3) shall not apply to a company where any specified capital allowance or area-based capital allowance is made in taxing that company’s trade.
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Restriction on use of capital allowances.
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409H.— (1) As respects any tax year, in the case of an individual who carries on a trade, including a trade carried on by 2 or more individuals in partnership, otherwise than as an active trader or an active partner, where a capital allowance, in relation to a building or structure, is made to the individual either in taxing that trade or by means of discharge or repayment of tax to which the individual is entitled by reason of the individual carrying on the trade concerned, then— (a) the capital allowance shall be made to the individual only in computing the income or profits from the trade concerned, and (b) the capital allowance shall not be made in computing any other income or profits or in taxing any other trade or in charging any other income to tax.
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(2)As respects any chargeable period, in computing the amount of profits or gains for the purposes of Case V of Schedule D— (a) any capital allowance in respect of a building or structure to be made to a person— (i) shall not exceed the specified amount of rent from the building or structure for that chargeable period, (ii) shall be made in charging the specified amount of rent under Case V of Schedule D for that chargeable period, and (iii) shall be available in charging the specified amount of rent, (b) section 278 shall apply with any modifications necessary to give effect to paragraph (a), and (c) section 305(1)(c) shall apply in relation to a capital allowance to be made in accordance with paragraph (a).
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(3)Notwithstanding any other provisions of this Part, and as respects the tax year or accounting period, as the case may be, in which the relevant day occurs, any capital allowance in relation to a building or structure shall not be made— (a) in charging profits or gains of a trade to income tax, other than the profits or gains of the trade referred to in subsection (1)(a), or (b) in charging any amount of rent under Case V of Schedule D, other than in charging the specified amount of rent, where the profits or gains arise, or that rent arises, in the period beginning on the relevant day and ending on the last day of the tax year or the accounting period concerned.”.
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(2)Subsection (1) applies as on and from the relevant day (within the meaning of section 409F(3) (inserted by subsection (1)) of the Taxes Consolidation Act 1997 ).
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Amendment of section 372AP (relief for lessors) of Principal Act.
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24.— (1) Section 372AP of the Principal Act is amended— (a) in subsection (1) by inserting the following after the definition of “relevant cost”: “ ‘relevant day’ has the same meaning as it does in Chapter 4A of Part 12;”, (b) in subsection (1) in paragraph (b)(ii) of the definition of “relevant period” by substituting “after the date of such completion,” for “after the date of such completion;”, (c) in subsection (1) in the definition of “relevant period” by inserting the following after paragraph (b)(ii): “but in relation to a premises which is not a qualifying premises or a special qualifying premises on a date that is 6 months after the relevant day solely by virtue of not being let on that day under a qualifying lease, the relevant period shall begin on that day and the provisions of this Chapter shall apply accordingly;”, (d) in subsection (2) by substituting “Subject to subsections (3), (4), (5), (8A), (8B) and (8C),” for “Subject to subsections (3), (4) and (5),”, (e) in subsection (3) by inserting the following after paragraph (b): “(c) For the purposes of paragraph (a) and notwithstanding paragraph (b), no deduction shall be given under subsection (2)(a) for any chargeable period which begins after the chargeable period in which the relevant period ends.”, (f) in subsection (8) by inserting the following after paragraph (b): “(c) Notwithstanding any other provision of this section, paragraph (a) shall not apply where the event mentioned in subsection (7)(b) occurs on or after the relevant day.”, and (g) by inserting the following after subsection (8): “(8A) Where the relevant period in relation to any qualifying premises or any special qualifying premises ends in any chargeable period ending— (a) before the relevant day, or (b) at any other time, then section 384 shall not apply to the amount of any excess (within the meaning of section 384(2)) in respect of eligible expenditure on that premises which is carried forward from that chargeable period— (i) where paragraph (a) applies, to the chargeable period in which the relevant day occurs and each subsequent chargeable period, and (ii) where paragraph (b) applies, to the next subsequent chargeable period and each subsequent chargeable period. (8B) (a) Where, by virtue of subsection (2), any eligible expenditure to which this section applies falls to be taken into account for any chargeable period in computing, under section 97(1), a deficiency in respect of any rent from a qualifying premises or a special qualifying premises, then, notwithstanding subsection (2), only so much of that eligible expenditure as does not exceed the amount of that rent shall be so taken into account and paragraph (c) is to apply as respects each subsequent chargeable period to any excess of that eligible expenditure over the amount of that rent (referred to in this subsection as ‘excess expenditure’).
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(b) Subject to paragraph (c), section 384 shall cease to apply to the amount of any excess (within the meaning of section 384(2)) in respect of eligible expenditure on any qualifying premises or any special qualifying premises which is carried forward from an earlier chargeable period to the chargeable period in which the relevant day occurs. (c) For the purposes of paragraph (a), but subject to subsection (8A), the amount of any excess (within the meaning of section 384(2)) in respect of eligible expenditure on any qualifying premises or any special qualifying premises which is carried forward from an earlier chargeable period to the chargeable period in which the relevant day occurs, shall be treated as eligible expenditure to which this section applies and which falls to be taken into account for the chargeable period in which the relevant day occurs in computing, under section 97(1), a deficiency in respect of any rent from that qualifying premises or that special qualifying premises. (d) Section 384 shall cease to apply for any chargeable period beginning on or after the relevant day to the amount of any excess (within the meaning of section 384(2)) in respect of eligible expenditure on any qualifying premises or any special qualifying premises to which this subsection applies. (e) Where, as respects each chargeable period to which paragraph (a) applies, there is an amount of excess expenditure, that amount shall be treated, for the purposes of subsection (2) and paragraph (a) (including any further application of this subsection), as if it were eligible expenditure to which this section applies which, by virtue of subsection (2), falls to be taken into account for the next succeeding chargeable period in computing, under section 97(1), a surplus or deficiency in respect of any rent from the qualifying premises or the special qualifying premises. (8C) For the purposes of subsections (8A) and (8B), section 485C(3)(ab) and paragraph 4 of Schedule 25C shall apply in determining the amount of any relief, to which this Chapter applies, to be carried forward from any chargeable period to each subsequent chargeable period. (8D) Notwithstanding any other provisions of this section, and as respects the chargeable period in which the relevant day occurs, any eligible expenditure in relation to a qualifying premises or a special qualifying premises shall not be taken into account in computing a deficiency in respect of any rent other than rent from that qualifying premises or special qualifying premises, where that rent arises in the period beginning on the relevant day and ending on the last day of the chargeable period.”.
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(2)Subsection (1) applies as on and from the relevant day (within the meaning of section 409F(3) (inserted by section 23 ) of the Taxes Consolidation Act 1997 ).
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Amendment of Chapter 2 (farming: relief for increase in stock values) of Part 23 of Principal Act.
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25.— (1) Chapter 2 of Part 23 of the Principal Act is amended— (a) in section 666(4)(a) by substituting “31 December 2012” for “31 December 2010”, (b) in section 666(4)(b) by substituting “year 2012” for “year 2010”, and (c) in section 667B(5)(b) by substituting “31 December 2012” for “31 December 2010”.
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(2)Subsection (1) comes into operation on such day or days as the Minister for Finance may by order or orders appoint and different days may be appointed for different purposes or different provisions.
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Abolition of exemption for certain income derived from patent royalties and related distributions.
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26.— The Principal Act is amended— (a) in section 141 by inserting the following after subsection (10): “(11) This section shall not apply to distributions made out of disregarded income on or after 24 November 2010.”, and (b) in section 234 by inserting the following after subsection (8): “(9) This section shall not apply to income from a qualifying patent which is paid to a person on or after 24 November 2010.”.
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Discontinuance of certain mining allowances.
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27.— The Principal Act is amended— (a) in section 677(1) by inserting “and before 1 January 2011,” after “1974,”, and (b) in section 678(2) by inserting “and before 1 January 2011,” after “1974,”.
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Amendment of section 817 (schemes to avoid liability to tax under Schedule F) of Principal Act.
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28.— (1) Section 817 of the Principal Act is amended in subsection (1)— (a) in paragraph (ca) by substituting the following for subparagraph (iii)— “(iii) notwithstanding paragraph (c), not to have been significantly reduced where the gain realised, or the proceeds in either or both money or money’s worth received, by the shareholder on that disposal is or are wholly or mainly attributable to payments or other transfers of value from another company or companies, which is or are controlled (within the meaning of section 432) by that shareholder or by that shareholder and persons connected with him or her, to the close company, and”, and (b) by inserting the following after paragraph (d)— “(e) For the purposes of this section, the holding of money by a company shall be deemed to be a business carried on by the company, regardless of how that money was contributed to, or acquired by, the company.”.
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(2)This section has effect as respects any disposal of shares on or after 26 January 2011.
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Certain settlements made by close companies.
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29.— The Principal Act is amended— (a) in section 20(1) by substituting “sections 436, 436A, 437, 816(2)(b) and 817” for “436 and 437, and subsection (2)(b) of section 816”, (b) in section 130(1) by inserting “, 436A” after “sections 436”, and (c) by inserting the following section after section 436: “436A.— (1) (a) In this section— ‘member’, in relation to a company, includes a participator in the company other than a loan creditor of the company; ‘relative’ has the same meaning as in section 433(3)(a); ‘relevant settlement’, in relation to a close company, means a settlement made by, or on behalf of, the close company other than a settlement which— (i) is made expressly for the exclusive benefit of one or more than one person, who is neither a member of the company nor a relative of such a member, and (ii) does not allow at any time for the possibility of providing any benefit to such member or relative; ‘settlement’ has the same meaning as in section 10 and ‘settled’ shall be read accordingly. (b) For the purposes of this section, any participator in a company which controls another company shall be treated as being also a participator in that other company.
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(2)Where any amount, in money or money’s worth, is settled by, or on behalf of, a close company on or after 21 January 2011 in connection with a relevant settlement, that amount shall, for the purposes of the Tax Acts, be deemed to be a distribution by the company to the trustees of the settlement.
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(3)Where, on or after 21 January 2011, an individual who is or was a member of a close company, or a relative of such an individual, receives directly or indirectly an amount in money or money’s worth out of, or indirectly attributable to, assets comprised in a relevant settlement (whenever made) in relation to the close company, then so much of that amount as exceeds any consideration given by the individual or relative of the individual, as the case may be, to the extent that the individual or relative is not otherwise chargeable to income tax in respect of so much of that amount, shall be deemed for the purposes of the Income Tax Acts to be annual profits or gains of that individual or relative, as the case may be, chargeable to tax under Case IV of Schedule D for the year of assessment in which the amount is received.
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(4)This section shall not apply as respects a relevant settlement where it is shown to the satisfaction of the inspector or, on the hearing or the rehearing of an appeal, to the satisfaction of the Appeal Commissioners or a judge of the Circuit Court, as the case may be, that the settlement was not made as part of a scheme or arrangement the purpose or one of the purposes of which was the avoidance of tax.”.
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Amendment of Part 8 (annual payments, charges and interest) of Principal Act.
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30.— (1) Part 8 of the Principal Act is amended— (a) in section 256(1) in the definition of “appropriate tax”— (i) in paragraph (a) by substituting “27 per cent” for “25 per cent”, (ii) in paragraph (b) by substituting “27 per cent” for “25 per cent”, and (iii) in paragraph (c) by substituting “30 per cent” for “28 per cent”, and (b) in section 267B— (i) in subsection (2)(b) by substituting “27 per cent” for “25 per cent”, and (ii) in subsection (3)(b) by substituting “27 per cent” for “25 per cent”.
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(2)This section applies to any payment or crediting of relevant interest (within the meaning of Chapter 4 of Part 8 of the Principal Act) made on or after 1 January 2011.
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Life assurance policies and investment funds.
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31.— (1) The Principal Act is amended in section 730F(1)— (a) in paragraph (a) by substituting “30 per cent” for “28 per cent”, and (b) in paragraph (b) by substituting “(S + 30) per cent” for “(S + 28) per cent”.
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(2)The Principal Act is amended in section 730J— (a) in paragraph (a)(i)(I) by substituting “27 per cent” for “25 per cent”, (b) in paragraph (a)(i)(II)(A) by substituting “(S + 30) per cent” for “(S + 28) per cent”, (c) in paragraph (a)(i)(II)(B) by substituting “30 per cent” for “28 per cent”, and (d) in paragraph (a)(ii)(I) by substituting “(H + 27) per cent” for “(H + 25) per cent”.
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(3)The Principal Act is amended in section 730K(1)— (a) in paragraph (a) by substituting “(S + 30) per cent” for “(S + 28) per cent”, and (b) in paragraph (b) by substituting “30 per cent” for “28 per cent”.
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(4)The Principal Act is amended in Chapter 1A of Part 27— (a) in the formula in section 739D(5A) by substituting “(G 30)” for “(G 28)”, and (b) in section 739E(1)— (i) in paragraph (a) by substituting “27 per cent” for “25 per cent”, (ii) in paragraph (b) by substituting “30 per cent” for “28 per cent”, and (iii) in paragraph (ba) by substituting “(S + 30) per cent” for “(S + 28) per cent”.
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(5)The Principal Act is amended in Chapter 4 of Part 27— (a) in section 747D(a)(i)(I)(A) by substituting “(S + 30) per cent” for “(S + 28) per cent”, (b) in section 747D(a)(i)(I)(B) by substituting “27 per cent” for “25 per cent”, (c) in section 747D(a)(i)(II)(A) by substituting “(S + 30) per cent” for “(S + 28) per cent”, (d) in section 747D(a)(i)(II)(B) by substituting “30 per cent” for “28 per cent”, (e) in section 747D(a)(ii)(I) by substituting “(H + 27) per cent” for “(H + 25) per cent”, (f) in section 747E(1)(b)(i) by substituting “(S + 30) per cent” for “(S + 28) per cent”, and (g) in section 747E(1)(b)(ii) by substituting “30 per cent” for “28 per cent”.
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(6)(a) Subsection (1) applies and has effect as respects the happening of a chargeable event in relation to a life policy (within the meaning of Chapter 5 of Part 26 of the Principal Act) on or after 1 January 2011. (b) Subsection (2) applies and has effect as respects the receipt by a person of a payment in respect of a foreign life policy (within the meaning of Chapter 6 of Part 26 of the Principal Act) on or after 1 January 2011. (c) Subsection (3) applies and has effect as respects the disposal in whole or in part of a foreign life policy (within the meaning of Chapter 6 of Part 26 of the Principal Act) on or after 1 January 2011. (d) Subsection (4) applies and has effect as respects the happening of a chargeable event in relation to an investment undertaking (within the meaning of section 739B(1) of the Principal Act) on or after 1 January 2011. (e) Paragraphs (a) to (e) of subsection (5) apply and have effect as respects the receipt by a person of a payment in respect of a material interest in an offshore fund (within the meaning of Chapter 4 of Part 27 of the Principal Act) on or after 1 January 2011. (f) Paragraphs (f) and (g) of subsection (5) apply and have effect as respects the disposal in whole or in part by a person of a material interest in an offshore fund (within the meaning of Chapter 4 of Part 27 of the Principal Act) on or after 1 January 2011.
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Amendment of section 481 (relief for investment in films) of Principal Act.
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32.— (1) The Principal Act is amended in section 481— (a) in subsection (1) in the definition of “qualifying period” by substituting “31 December 2015” for “31 December 2012”, and (b) in subsection (8) by substituting “the year of assessment 2015” for “the year of assessment 2012”, and (c) in subsection (9) by substituting “the year of assessment 2015” for “the year of assessment 2012”.
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(2)This section comes into operation on such day as the Minister for Finance may by order appoint.
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Income tax relief for investment in corporate trades — employment and investment incentive and seed capital scheme.
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33.— (1) The Principal Act is amended— (a) by substituting the following for Part 16: “PART 16 Income Tax Relief for Investment in Corporate Trades — Employment and Investment Incentive and Seed Capital Scheme Interpretation (Part 16).
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488.— (1) In this Part— ‘associate’ has the same meaning in relation to a person as it has by virtue of subsection (3) of section 433 in relation to a participator, except that the reference in paragraph (b) of that subsection to any relative of a participator shall be excluded from such meaning; ‘average relevant amount’ means the total of the emoluments (other than non-pecuniary emoluments) paid by a qualifying company to the qualifying employees referred to in the definition of employment relevant number, in the year of assessment in which, in relation to a subscription for eligible shares, a relevant period ends, divided by the employment relevant number; ‘average threshold amount’ means the total of the emoluments (other than non-pecuniary emoluments) paid by the qualifying company to the qualifying employees referred to in the definition of employment threshold number, in the year of assessment preceding the year of assessment in which the subscription for eligible shares was made, divided by the employment threshold number; ‘basic pay rate’, in relation to a qualifying employee of a qualifying company, means the employee’s emoluments (other than non-pecuniary emoluments) per hour from the company in respect of an employment held with the company; ‘control’, except in sections 492(7) and 505(2)(b), shall be construed in accordance with subsections (2) to (6) of section 432; ‘debenture’ has the same meaning as in section 2 of the Companies Act 1963 ; ‘director’ shall be construed in accordance with section 433(4); ‘distribution system operator’ has the same meaning as in the Electricity Regulation Act 1999 ; ‘eligible shares’ means new ordinary shares which, throughout the period of 3 years beginning on the date on which they are issued, carry no present or future preferential right to dividends or to a company’s assets on its winding up and no present or future preferential right to be redeemed; ‘emoluments’ has the same meaning as in section 983; ‘employment relevant number’ means the total number of qualifying employees in receipt of emoluments from the qualifying company in the year of assessment in which, in relation to a subscription for eligible shares, a relevant period ends; ‘employment threshold number’ means the total number of qualifying employees in receipt of emoluments from the qualifying company in the year of assessment preceding the year of assessment in which the subscription for eligible shares was made; ‘energy from renewable sources’ means energy from renewable non-fossil sources, that is to say wind, solar, aerothermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases and includes the development of any facilities for the storage of energy from renewable sources;
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‘expenditure on research and development’ has the same meaning as in section 766; ‘financial activities’ means the provision of, and all matters relating to the provision of, financing or refinancing facilities by any means which involves, or has an effect equivalent to, the extension of credit; ‘financing or refinancing facilities’ includes— (a) loans, mortgages, leasing, lease rental and hire-purchase, and all similar arrangements, (b) equity or other investment, (c) the factoring of debts and the discounting of bills, invoices and promissory notes, and all similar instruments, and (d) the underwriting of debt instruments and all other kinds of financial securities; ‘financial assets’ includes shares, gilts, bonds, foreign currencies and all kinds of futures, options and currency and interest rate swaps, and similar instruments, including commodity futures and commodity options, invoices and all types of receivables, obligations evidencing debt (including loans and deposits), leases and loan and lease portfolios, bills of exchange, acceptance credits and all other documents of title relating to the movement of goods, commercial paper, promissory notes and all other kinds of negotiable or transferable instruments; ‘full-time employee’ and ‘full-time director’ have the same meanings respectively as in section 250; ‘green energy activities’ means activities undertaken with a view to producing energy from renewable sources; ‘grid connection agreement’ means an agreement with the transmission system operator or distribution system operator, or an offer from the transmission system operator or distribution system operator to enter into an agreement for connection to, or use of, the transmission or distribution system; ‘market value’ shall be construed in accordance with section 548; ‘ordinary shares’ means shares forming part of a company’s ordinary share capital; ‘planning consent’ means any consent, permission or approval required under the Planning and Development Acts 2000 to 2010 before development can be lawfully carried out; ‘qualifying company’ has the meaning assigned to it by section 494; ‘qualifying employee’, in relation to a qualifying company, means an employee (within the meaning of section 983), other than a director, of that company who, throughout his or her period of employment with that company is employed by that company for not less than 4 week days, of each week; ‘qualifying new venture’ means a venture consisting of relevant trading activities which are set up and commenced by a new company other than—
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(a) activities which were previously carried on by another person and to which the company has succeeded, or (b) a venture, the activities of which were previously carried on as part of another person’s trade or profession; ‘relevant employment’, in relation to a specified individual, means employment throughout the relevant period by the company in which the specified individual makes a relevant investment (being that individual’s first such investment in that company) and where the specified individual is a full-time employee or full-time director of the company; ‘relevant investment’, in relation to a specified individual, means the amount or the aggregate of the amounts subscribed in a year of assessment by the specified individual for eligible shares in a qualifying company which carries on or intends to carry on relevant trading activities; ‘relevant period’, in relation to relief in respect of any eligible shares issued by a company, means— (a) subject to paragraphs (b) and (c), the period beginning on the date on which the shares were issued and ending either 3 years after that date or, where the company was not at that date carrying on relevant trading activities, 3 years after the date on which it subsequently began to carry on such activities, (b) as respects a relevant employment, the period beginning on the date on which the shares are issued or, if later, the date on which the employment commences and ending 12 months after that date, and (c) as respects a specified individual, the period beginning on the date on which the shares are issued and ending either one year after that date or, where the company was not at that date carrying on relevant trading activities, one year after the date on which it subsequently began to carry on such activities; ‘relevant trading activities’ means activities carried on in the course of a trade the profits or gains of which are charged to tax under Case I of Schedule D, excluding activities related to— (a) adventures or concerns in the nature of trade, (b) dealing in commodities or futures or in shares, securities or other financial assets, (c) financing activities, (d) the provision of services, which would result in a close company (within the meaning of section 430) that provides those services being treated as a service company for the purposes of section 441 if that close company had no other source of income, (e) dealing in or developing land, (f) the occupation of woodlands within the meaning of section 232, (g) operating or managing hotels, guest houses, self catering accommodation or comparable establishments or managing property used as an hotel, guest house, self catering accommodation or comparable establishment,
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(h) operating or managing nursing homes or residential care homes or managing property used as a nursing home or residential care home, (i) operations carried on in the coal industry or in the steel and shipbuilding sectors, and (j) the production of a film (within the meaning of section 481), but including tourist traffic undertakings; ‘research and development activities’ has the same meaning as in section 766; ‘specified individual’ has the meaning assigned to it by section 495; ‘specified period’ means the period beginning on the incorporation of the company (or, if the company was incorporated more than 2 years before the date on which the shares were issued, beginning 2 years before that date) and ending 3 years after the issue of the shares; ‘specified relevant period’ has the meaning assigned in section 766 to relevant period; ‘relief’ means relief under section 489 and 493, as the case may be, and references to the amount of the relief shall be construed in accordance with subsection (2) of section 489 and subsections (2) and (3) of section 493, as the case may be; ‘tourist traffic undertakings’ means— (a) the operation of tourist accommodation facilities for which the National Tourism Development Authority maintains a register in accordance with the Tourist Traffic Acts 1939 to 2003, other than hotels, guest houses and self catering accommodation, (b) the operation of such other classes of facilities as may be approved of for the purpose of the relief by the Minister for Finance, in consultation with the Minister for Tourism, Culture and Sport, on the recommendation of the National Tourism Development Authority in accordance with specific codes of standards laid down by it, or (c) the promotion outside the State of— (i) one or more tourist accommodation facilities for which the National Tourism Development Authority maintains a register in accordance with the Tourist Traffic Acts 1939 to 2003, or (ii) any of the facilities mentioned in paragraph (b); ‘transmission system operator’ has the same meaning as in the Electricity Regulation Act 1999 ; ‘unquoted company’ means a company none of whose shares, stocks or debentures are— (a) listed in the official list of a stock exchange, or (b) quoted on an unlisted securities market of a stock exchange other than— (i) on the market known, and referred to in this definition, as the Enterprise Securities Market of the Irish Stock Exchange, or (ii) on the Enterprise Securities Market of the Irish Stock Exchange and on any similar or corresponding market of the stock exchange of one or more Member States of the European Union; but this subparagraph shall not apply unless the shares, stocks or debentures are quoted on the Enterprise Securities Market of the Irish Stock Exchange before or at the same time as they are initially quoted on an unlisted securities market of a stock exchange of another Member State of the European Union.
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(2)References in this Part to a disposal of shares include references to a disposal of an interest or right in or over the shares, and an individual shall be treated for the purposes of this Part as disposing of any shares which the individual is treated by virtue of section 587 as exchanging for other shares.
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(3)References in this Part to the reduction of any amount include references to its reduction to nil.
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The relief.
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489.— (1) This section applies for affording relief from income tax where— (a) an individual who qualifies for the relief subscribes for eligible shares in a qualifying company, (b) those shares are issued to the individual for the purpose of raising money by a qualifying company where that money was used, is being used or is intended to be used by the qualifying company— (i) for the purposes of carrying on relevant trading activities, or (ii) in the case of a company which has not commenced to trade, in incurring expenditure on research and development within the meaning of section 766, and (c) the use of the money as set out in paragraph (b) will contribute directly to the creation or maintenance of employment in the company.
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(2)Subject to subsection (3), relief in respect of— (a) thirty forty-firsts of the amount subscribed by an individual for any eligible shares shall be given as a deduction from his or her total income for the year of assessment in which the shares are issued, and (b) subject to subsection (10), eleven forty-firsts of the amount subscribed by an individual for any eligible shares shall be given as a deduction from his or her total income for the year of assessment following the date on which the relevant period ends.
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(3)Where— (a) in accordance with section 506, relief is due in respect of an amount subscribed as nominee for a qualifying individual by the managers of a designated fund, and (b) the eligible shares in respect of which the amount is subscribed are issued in the year of assessment following the year of assessment in which that amount was subscribed to the designated fund, then the individual may elect by notice in writing to the inspector to have the relief due under subsection (2)(a) given as a deduction from his or her total income for the year of assessment in which the amount was subscribed to the designated fund, instead of (as provided for in subsection (2)(a)) as a deduction from his or her total income for the year of assessment in which the shares are issued.
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(4)The relief under subsection (2)(a) shall be given on a claim and shall not be allowed— (a) in the case of a company which had commenced relevant trading activities at the time the eligible shares were issued, unless and until the company has carried on those activities for 4 months, or (b) in the case of a company which had not commenced relevant trading activities at the time the eligible shares were issued, unless the company— (i) begins to carry on relevant trading activities within 2 years after that time, or (ii) expends not less than 30 per cent of the money subscribed for the shares on research and development activities which are connected with and undertaken with a view to the carrying on of the relevant trading activities.
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(5)Subject to subsections (4) and (10) a claim for relief may be allowed at any time if the conditions for the relief are then satisfied.
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(6)In the case of a claim allowed before the end of the relevant period, the relief shall be withdrawn if by reason of any subsequent event it appears that the claimant was not entitled to the relief allowed.
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(7)Where by reason of its being wound up, or dissolved without winding up, the company carries on relevant trading activities for a period shorter than 4 months, then subsection (4)(a) shall apply as if it referred to that shorter period but only if it is shown that the winding up or dissolution was for bona fide commercial reasons and not as part of a scheme or arrangement the main purpose or one of the main purposes of which was the avoidance of tax.
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(8)Subject to section 504, no account shall be taken of the relief, in so far as it is not withdrawn, in determining whether any sums are excluded by virtue of section 554 from the sums allowable as a deduction in the computation of gains and losses for the purposes of the Capital Gains Tax Acts.
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(9)(a) In this subsection ‘distribution’ has the same meaning as in the Corporation Tax Acts. (b) For the purposes of this subsection, an amount specified or implied shall include an amount specified or implied in a foreign currency. (c) This subsection applies to shares in a company where any agreement, arrangement or understanding exists which could reasonably be considered to eliminate the risk that the person beneficially owning those shares— (i) might, at or after a time specified in or implied by that agreement, arrangement or understanding, be unable to realise directly or indirectly in money or money’s worth an amount so specified or implied, other than a distribution, in respect of those shares, or (ii) might not receive an amount so specified or implied of distributions in respect of those shares. (d) The reference in this subsection to the person beneficially owning shares shall be deemed to be a reference to both that person and any person connected with that person. (e) Relief from income tax shall not be allowed under this Part in respect of the amount subscribed for any shares to which this subsection applies.
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(10)An amount shall not be given as a deduction by virtue of subsection (2)(b) unless in relation to a qualifying company— (a) (i) the employment relevant number exceeds the employment threshold number, and (ii) the average relevant amount is not less than the average threshold amount except to the extent that such difference corresponds with a general reduction in the basic pay rate of qualifying employees in the same period, or (b) the amount of expenditure on research and development incurred by the qualifying company in the specified relevant period ending in the year of assessment preceding the year of assessment in which, in relation to the subscription for eligible shares, a relevant period ends, exceeds the amount of expenditure on research and development incurred by the qualifying company in the specified relevant period ending in the year of assessment preceding the year of assessment in which the subscription for eligible shares was made.
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(11)A company carrying on green energy activities shall be deemed to have commenced relevant trading activities when it has made an application for a grid connection agreement.
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(12)The Revenue Commissioners may require the qualifying company to provide to them such evidence as they consider necessary and may consult with such persons or body of persons as in their opinion may be of assistance to them, to enable them to verify that the conditions necessary for the claiming and granting of the relief have been satisfied.
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(13)This section shall apply only where the eligible shares are issued on or before 31 December 2013.
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Limits on the relief.
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490.— (1) (a) Subject to section 506 and paragraph (b), the relief shall not be given in respect of any amount subscribed by an individual for eligible shares issued to the individual by a qualifying company in any year of assessment unless the amount or total amount subscribed by the individual for the eligible shares issued to the individual by the company in that year is €250 or more. (b) In the case of an individual who is a married person assessed to tax for a year of assessment in accordance with section 1017, any amount subscribed by the individual’s spouse for eligible shares issued to that spouse in that year of assessment by the company shall be deemed to have been subscribed by the individual for eligible shares issued to the individual by the company.
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(2)The relief shall not be given to the extent to which the amount or total amount subscribed by an individual for eligible shares issued to the individual in any year of assessment (whether or not by the same company) exceeds €100,000 in the case of a relevant investment, or €150,000 in any other case.
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(3)(a) Where in any year of assessment a greater amount of relief would be given to an individual in respect of the amount or the total amount subscribed by the individual for eligible shares (in this subsection referred to as the ‘relevant subscription’) issued to the individual in that year or, where subsection (3) of section 489 applies, in the following year of assessment but for either or both of the following reasons— (i) an insufficiency of total income, or (ii) the operation of subsection (2), then the amount of the relief which would be given but for those reasons less the amount or the aggregate amount of any relief in respect of the relevant subscription which is given in that year of assessment shall be carried forward to the next year of assessment, and shall be treated for the purposes of the relief as an amount of relief under section 489(2)(a) in respect of an amount subscribed directly by the individual for eligible shares issued to the individual in that next year. (b) This subsection and subsection (4) shall not apply for any year of assessment subsequent to the year of assessment 2013.
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(4)If and in so far as an amount once carried forward to a year of assessment under subsection (3) (and treated as an amount of relief under section 489(2)(a) in respect of an amount subscribed directly by an individual for eligible shares issued to the individual in that year of assessment) is not deducted from his or her total income for that year of assessment, it shall be carried forward again to the next year of assessment (and treated as an amount of relief under section 489(2)(a) in respect of an amount subscribed directly by the individual for eligible shares issued to the individual in that next year), and so on for succeeding years of assessment.
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(5)The relief shall be given to an individual for any year of assessment in the following order— (a) in the first instance, in respect of an amount carried forward from an earlier year of assessment in accordance with subsection (3) or (4) and, in respect of such an amount so carried forward, for an earlier year of assessment in priority to a later year of assessment, and (b) only thereafter, in respect of any other amount for which relief is to be given in that year of assessment.
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Restriction on relief where amounts raised exceed permitted maximum.
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491.— (1) In this section ‘qualifying subsidiary’, in relation to a company, means a subsidiary of that company of a kind which a company may have by virtue of section 505.
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(2)Subject to this section, where a company raises any amount through the issue of eligible shares (in this section referred to as the ‘relevant issue’), relief shall not be given in respect of the excess of the amount so raised over the amount determined by the formula— A — B where— A is €10,000,000, and B is the lesser of— (a) the amount represented by A in the formula, and (b) an amount equal to the aggregate of all amounts raised by the company through the issue of eligible shares at any time on or after 6 April 1984 and before the relevant issue.
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(3)Where, a company raises any amount through a relevant issue and that company is associated (within the meaning of this section) with one or more other companies, then, as respects that company, relief shall not be given in respect of the excess of the amount so raised over the amount determined by the formula— A — B where— A is €10,000,000, and B is the lesser of— (a) the amount represented by A in the formula, and (b) the aggregate of all amounts raised through the issue of eligible shares, at any time before or on the date of the relevant issue, by all of the companies (including that company) which are associated within the meaning of this section.
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(4)Notwithstanding anything in subsections (2) and (3), relief shall not be given in respect of a relevant issue to the extent that— (a) the amount raised by the relevant issue, or (b) the aggregate of— (i) the amount to be raised through the relevant issue, and (ii) the amount or amounts, if any, raised through the issue of eligible shares other than the relevant issue, within the period of 12 months ending with the date of that relevant issue, by the company or by all of the companies (including the company making the relevant issue) which are associated within the meaning of this section, as the case may be, exceeds €2,500,000.
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(5)For the purposes of this section, a company shall be associated with another company where— (a) in the case of that company, or a company which is, or was at any time, its qualifying subsidiary, and (b) that other company, or a company which is, or was at any time, its qualifying subsidiary, it could reasonably be considered that— (i) both companies act in pursuit of a common purpose, (ii) any person or any group of persons or groups of persons having a reasonable commonality of identity have or had the means or power, either directly or indirectly, to determine the trading activities carried on or to be carried on by both companies, or (iii) both companies are under the control of any person or group of persons or groups of persons having a reasonable commonality of identity; but for the purposes of this section a company shall not be considered as associated with another company by reason only of the fact that a subscription for eligible shares in both companies is made by a person or persons having the management of an investment fund designated under section 506 as nominee for any person or group or groups of persons.
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(6)In determining for the purposes of the formula in subsection (2) or (3), as the case may be, the amount to which paragraph (b) of the definition of ‘B’ in those formulas relates, account shall not be taken of any amount— (a) which is subscribed by a person other than an individual who qualifies for relief, or (b) in respect of which relief is precluded by virtue of section 490.
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(7)Where as a consequence of subsection (2) or (3) the giving of relief would be precluded on claims in respect of shares issued to 2 or more individuals, the available relief shall be divided between them respectively in proportion to the amounts which have been subscribed by them for the shares to which their claims relate and which apart from this section would be eligible for relief.
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Individuals qualifying for relief.
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492.— (1) (a) An individual shall qualify for relief if he or she subscribes on his or her own behalf for eligible shares in a qualifying company and is not at any time in the specified period connected with the company. (b) For the purposes of this section and paragraph 2 of Schedule 10, any question whether an individual is connected with a company shall be determined in accordance with this section.
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(2)An individual shall be connected with a company if the individual or an associate of the individual is— (a) a partner of the company, or (b) subject to subsection (3), a director or employee of the company or of another company which is a partner of that company.
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(3)An individual shall not be connected with a company by reason only that the individual or an associate of the individual is a director or employee of the company or of another company which is a partner of that company unless the individual or the individual’s associate (or a partnership of which the individual or the individual’s associate is a member) receives a payment from either company during the period of 3 years beginning on the date on which the shares are issued or is entitled to receive such a payment in respect of that period or any part of it; but for that purpose there shall be disregarded— (a) any payment or reimbursement of travelling or other expenses wholly, exclusively and necessarily incurred by the individual or the individual’s associate in the performance of the duties of the individual or of the associate, as the case may be, as such director or employee, (b) any interest which represents no more than a reasonable commercial return on money lent to either company, (c) any dividend or other distribution paid or made by either company which does not exceed a normal return on the investment, (d) any payment for the supply of goods to either company in the course of a trade or business, which does not exceed their market value, and (e) any reasonable and necessary remuneration which— (i) (I) is paid for services rendered to either company in the course of a trade or profession, not being secretarial or managerial services or services of a kind provided by the company itself, and (II) is taken into account in computing the profits or gains of the trade or profession under Case I or II of Schedule D or would be so taken into account if it fell in a period on the basis of which those profits or gains are assessed under that Schedule, or (ii) in a case where the individual is a director or an employee of either company and is not otherwise connected with either company, is paid for service, rendered to the company of which the individual is a director or an employee, in the course of the directorship or the employment.
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(4)An individual shall be connected with a company if he or she directly or indirectly possesses or is entitled to acquire more than 30 per cent of— (a) the issued ordinary share capital of the company, (b) the loan capital and issued share capital of the company, or (c) the voting power in the company.
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(5)For the purposes of subsection (4)(b), the loan capital of a company shall be treated as including any debt incurred by the company— (a) for any money borrowed or capital assets acquired by the company, (b) for any right to receive income created in favour of the company, or (c) for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the amount of the debt (including any premium on the debt).
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(6)(a) Subject to paragraph (b) an individual is connected with a company if he or she directly or indirectly possesses or is entitled to acquire such rights as would, in the event of the winding up of the company or in other circumstances, entitle the individual to receive more than 30 per cent of the assets of the company which would at that time be available for distribution to equity holders of the company, and for the purposes of this subsection— (i) the persons who are equity holders of the company, and (ii) the percentage of the assets of the company to which the individual would be entitled, shall be determined in accordance with sections 413 and 415, with references in section 415 to the first company being construed as references to an equity holder and references to a winding up being construed as including references to any other circumstances in which assets of the company are available for distribution to its equity holders. (b) A determination in accordance with paragraph (a) shall be made without regard to section 411(1)(c) in so far as it relates to sections 413 and 415, with any necessary modifications, to such determination of the percentage of share capital or other amount which a shareholder beneficially owns or is beneficially entitled to, as they apply to the determination for the purposes of Chapter 5 of Part 12 of the percentage of any such amount which a company so owns or is so entitled to.
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(7)An individual is connected with a company if he or she has control of it within the meaning of section 11.
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(8)(a) An individual is not connected with a company by reason only of subsection (4), (6) or (7)— (i) if throughout the specified period the aggregate of all amounts subscribed for the issued share capital and the loan capital (within the meaning of subsection (5)) of the company does not exceed €500,000, or (ii) in the case of a specified individual, by virtue only of a relevant investment in respect of which he or she has been given relief in accordance with section 493(2) or (3). (b) Notwithstanding paragraph (a), relief granted to an individual in respect of a subscription for eligible shares at a time when by virtue of this subsection the individual was not connected with the company shall not be withdrawn by reason only that the individual subsequently becomes connected with the company by virtue of subsection (4), (6) or (7).
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(9)For the purposes of this section, an individual shall be treated as entitled to acquire anything which he or she is entitled to acquire at a future date or will at a future date be entitled to acquire, and there shall be attributed to any person any rights or powers of any other person who is an associate of that person.
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(10)In determining for the purposes of this section whether an individual is connected with a company, a debt incurred by the company by overdrawing an account with a person carrying on a business of banking shall not be treated as loan capital of the company if the debt arose in the ordinary course of that business.
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(11)Where an individual subscribes for shares in a company with which the individual is not connected (either within the meaning of this section or by virtue of paragraph 2(2)(b) of Schedule 10), then he or she shall nevertheless be treated as connected with it if he or she subscribes for the shares as part of any arrangement which provides for another person to subscribe for shares in another company with which the individual or any other individual who is a party to the arrangement is connected (within the meaning of this section or by virtue of that paragraph).
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Seed capital relief.
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493.— (1) Notwithstanding section 489, this section shall apply for affording relief from income tax where— (a) a specified individual makes a relevant investment, (b) the shares issued to the specified individual are issued for the purposes of raising money by a qualifying company for the benefit of its activities referred to in paragraph (d), (c) the activities carried on by the qualifying company constitute a qualifying new venture, (d) the money was used, is being used or is intended to be used for the benefit of a qualifying new venture for the purposes of— (i) carrying on of relevant trading activities, or (ii) in the case of a company which has not commenced the carrying on of relevant trading activities, incurring expenditure on research and development within the meaning of section 766, and (e) the use of the money as set out in paragraph (d) will contribute directly to the creation or maintenance of employment in the company.
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(2)Subject to subsection (3), relief in respect of a relevant investment made by a specified individual shall be given as a deduction of that amount from his or her total income for the year of assessment in which the shares are issued.
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(3)(a) Subject to this subsection, a specified individual may, in relation to a relevant investment made by such individual (being that individual’s first such investment), elect by notice in writing to the inspector to have the relief due given as a deduction from such individual’s total income for any one of the 6 years of assessment immediately before the year of assessment in which the eligible shares in respect of that investment are issued which such individual nominates for the purpose, instead of (as provided for in subsection (2)) as a deduction from the specified individual’s total income for the year of assessment in which the shares are issued, and accordingly, subject to section 490 and paragraphs (c) and (d), for the purpose of granting such relief (but for no other purpose of this Part) the shares shall be deemed to have been issued in the year of assessment so nominated. (b) Where the specified individual makes a subsequent relevant investment (being that individual’s second such investment)— (i) in the same company as such individual’s first such investment, and (ii) within either the year of assessment following the end of the year of assessment in which such individual’s first such investment was made or the year of assessment subsequent to that year, then, the specified individual may, in relation to such individual’s second such investment, elect by notice in writing to the inspector to have the relief due given as a deduction from such individual’s total income for any one of the 6 years of assessment immediately before the year of assessment in which the eligible shares in respect of such individual’s first such investment were issued which such individual nominates for the purpose, instead of (as provided for in subsection (2)) as a deduction from such individual’s total income for the year of assessment in which the eligible shares in respect of such individual’s second such investment are issued and, accordingly, subject to section 490 and paragraphs (c) and (d), for the purpose of granting such relief (but for no other purpose of this Part) the shares issued in respect of the second such investment shall be deemed to have been issued in the year of assessment so nominated. (c) Where any of the years of assessment following the year of assessment nominated under paragraph (a) or (b), as the case may be, precede the year of assessment in which the eligible shares in respect of the specified individual’s first relevant investment are in fact issued, subsections (3) to (5) of section 490 shall operate to give relief in such years of assessment as may be nominated by such individual for that purpose.
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(d) To the extent that the amount of the relief which would be due in respect of the specified individual’s first relevant investment or second relevant investment, as the case may be, has not been given in accordance with paragraphs (a) to (c) it shall, subject to subsections (3) to (5) of section 490, be given for the year of assessment in which the eligible shares in respect of the first such investment or the second such investment, as the case may be, are in fact issued or, if appropriate, a subsequent year of assessment. (e) This subsection applies in respect of not more than 2 relevant investments made by a specified individual on or after 2 June 1995. (f) This subsection applies notwithstanding any limitation in section 865(4) on the time within which a claim for a repayment of tax is required to be made. Section 865(6) shall not prevent the Revenue Commissioners from repaying an amount of tax as a consequence of an election made under paragraph (a) or (b) where the specified individual has made a timely claim for relief in accordance with section 501 and a valid claim for a repayment of tax within the meaning of section 865(1)(b).
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(4)Reference in this section to the amount of the relief are references to the amount of the deduction given under subsection (2) or (3), as may be appropriate.
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(5)Relief shall be given on a claim and shall not be allowed in the case of a relevant investment unless and until the qualifying new venture commences to carry on relevant trading activities or in the case of a company referred to in section 493(1)(d)(ii), has expended not less than 30 per cent of the relevant investment on research and development activities which are connected with and undertaken with a view to the carrying on of the relevant trading activities.
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(6)In the case of a claim allowed before the end of the relevant period, the relief shall be withdrawn if by reason of any subsequent event it appears that the claimant was not entitled to the relief allowed.
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(7)In the case of a claim allowed before a specified individual commences a relevant employment with the company in which that individual has made a relevant investment (being that individual’s first such investment), the relief shall be withdrawn if the specified individual fails to commence such employment— (a) within the year of assessment in which the investment is made, or (b) if later, within 6 months of the date of— (i) where the investment consists of the subscription of only one amount for eligible shares, that subscription, or (ii) where the investment consists of the subscription of more than one amount for eligible shares, the last such subscription.
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(8)Subject to section 504, no account shall be taken of the relief, in so far as it is not withdrawn, in determining whether any sums are excluded by virtue of section 554 from the sums allowable as a deduction in the computation of gains and losses for the purposes of the Capital Gains Tax Acts.
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(9)(a) In this subsection ‘distribution’ has the same meaning as in the Corporation Tax Acts. (b) For the purposes of this subsection, an amount specified or implied shall include an amount specified or implied in a foreign currency. (c) This subsection applies to shares in a company where any agreement, arrangement or understanding exists which could reasonably be considered to eliminate the risk that the person beneficially owning those shares— (i) might, at or after a time specified in or implied by that agreement, arrangement or understanding, be unable to realise directly or indirectly in money or money’s worth an amount so specified or implied, other than a distribution, in respect of those shares, or (ii) might not receive an amount so specified or implied of distributions in respect of those shares. (d) The reference in this subsection to the person beneficially owning shares shall be deemed to be a reference to both that person and any person connected with that person. (e) Relief from income tax shall not be allowed under this Part in respect of the amount subscribed for any shares to which this subsection applies.
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(10)Where a specified individual claims relief under this section, no relief shall be granted to that individual under section 489 in respect of the same qualifying company.
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(11)The Revenue Commissioners may require the qualifying company to provide to them such evidence as they consider necessary and may consult with such persons or body of persons as in their opinion may be of assistance to them, to enable them to verify that the conditions necessary for the claiming and granting of the relief have been satisfied.
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Qualifying companies.
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494.— (1) In this section— ‘assisted area’ means an area specified in the National Regional State Aid Map for Ireland approved under Commission Decision No. N 374/2006 of 24 October 2006 1 ; ‘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; ‘qualifying subsidiary’, in relation to a company, means a subsidiary of that company of a kind which a company may have by virtue of section 505.
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(2)A company shall be a qualifying company if it is incorporated in the State or in an EEA State other than the State and complies with this section.
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(3)(a) The company shall throughout the relevant period be an unquoted company which is resident in the State, or is resident in an EEA State other than the State and carries on business in the State through a branch or agency, and be— (i) a company which exists wholly for the purpose of carrying on relevant trading activities where those activities are principally carried on in the State, or (ii) a company whose business consists wholly of— (I) the holding of shares or securities of, or the making of loans to, one or more qualifying subsidiaries of the company, or (II) both the holding of such shares or securities, or the making of such loans and the carrying on of relevant trading activities where those activities are principally carried on in the State. (b) Where a company raises any amount through the issue of eligible shares for the purposes of raising money for relevant trading activities which are being carried on by a qualifying subsidiary or which such a qualifying subsidiary intends to carry on, the amount so raised shall be used for the purpose of acquiring eligible shares in the qualifying subsidiary and for no other purpose. (c) In this section, relevant trading activities shall be regarded as carried on principally in the State only if not less than 75 per cent of the total amount expended in the course of such activities in the relevant period is expended in the State.
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(4)The company shall be— (a) a micro or small enterprise within the meaning of Annex 1 to Commission Regulation (EC) No. 364/2004 of 25 February 2004 2 , (b) a medium-sized enterprise within the meaning of Annex 1 to Commission Regulation (EC) No. 364/2004 of 25 February 2004 located in an assisted area, or (c) where it is not located in an assisted area, a medium-sized enterprise within the meaning of Annex 1 to Commission Regulation (EC) No. 364/2004 of 25 February 2004 which is at a stage of development not beyond start-up stage within the meaning of the Community Guidelines on State Aid to Promote Risk Capital Investments in Small and Medium-Sized Enterprises 3 .
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(5)For the purposes of subsection (4), the location of a company shall be determined by reference to the location at which the company or, as the case may be, the qualifying subsidiary, carries on relevant trading activities or, in the case of a company which is resident in an EEA State other than the State that carries on business in the State through a branch or agency, the location at which that branch or agency carries on relevant trading activities.
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(6)(a) A company whose relevant trading activities includes one or more tourist traffic undertakings shall not be a qualifying company unless and until it has shown to the satisfaction of the Revenue Commissioners that it has submitted to, and has had approved of by, the National Tourism Development Authority a 3 year development and marketing plan in respect of that undertaking or those undertakings, as the case may be, being a plan primarily designed and formulated to increase tourist traffic and revenue from outside the State. (b) In considering whether to approve of such a plan, the National Tourism Development Authority shall have regard only to such guidelines in relation to such approval as may from time to time be agreed, with the consent of the Minister for Finance, between it and the Minister for Tourism, Culture and Sport, and those guidelines may, without prejudice to the generality of the foregoing, set out— (i) the extent to which the company’s interests in land and buildings may form part of its total assets, (ii) specific requirements which have to be met in order to comply with the objective mentioned in paragraph (a), and (iii) the extent to which the money raised through the issue of eligible shares should be used in promoting outside the State the undertaking or undertakings, as the case may be.
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(7)A company whose relevant trading activities includes green energy activities shall cease to be a qualifying company unless it has expended all of the money subscribed for eligible shares on such activities, within a period ending 1 month before the end of the relevant period.
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(8)A company referred to in section 489(1)(b)(ii) ceases to be a qualifying company unless it has— (a) expended all of the money subscribed for eligible shares on research and development activities, within a period ending 1 month before the end of the relevant period and disposed of a specified intangible asset within the meaning of section 291A, which is connected with and arises directly from those research and development activities, to a person for the purposes of a trade carried on by that person, or (b) commenced relevant trading activities within 2 years after the eligible shares were issued and expended all of the money subscribed for eligible shares on either of those activities or research and development activities before the end of the relevant period.
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(9)Without prejudice to the generality of subsection (3) but subject to subsection (10), a company ceases to comply with subsection (3) if before the end of the relevant period a resolution is passed, or an order is made, for the winding up of the company (or, in the case of a winding up otherwise than under the Companies Act 1963 , any other act is done for the like purpose) or the company is dissolved without winding up.
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(10)A company shall not be regarded as ceasing to comply with subsection (3) by reason only of the fact that it is wound up or dissolved without winding up if— (a) it is shown that the winding up or dissolution is for bona fide commercial reasons and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and (b) the company’s net assets, if any, are distributed to its members before the end of the relevant period or, in the case of a winding up, the end (if later) of 3 years from the commencement of the winding up.
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(11)The company’s share capital shall not at any time in the relevant period include any issued shares not fully paid up.
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(12)Subject to section 505, the company shall not at any time in the relevant period— (a) control (or together with any person connected with it control) another company or be under the control of another company (or of another company and any person connected with that other company), unless such control is exercised by the National Asset Management Agency, or by a company referred to in section 616(1)(g), or (b) be a 51 per cent subsidiary of any company other than the National Asset Management Agency or a company referred to in section 616(1)(g), or itself have a 51 per cent subsidiary, and no arrangements shall be in existence at any time in that period by virtue of which the company could fall within paragraph (a) or (b).
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(13)A company shall not be a qualifying company if, in the case of a company in which a relevant investment is made by a specified individual (being that individual’s first such investment in that company), any transaction in the relevant period between the company and another company (being the immediate former employer of the individual), or a company which controls or is under the control of that other company, is otherwise than by means of a transaction at arm’s length, or if— (a) (i) an individual has acquired a controlling interest in the company’s trade after 5 April 1984, and (ii) at any time in the period mentioned in subsection (16) the individual has or has had a controlling interest in another trade, and (b) the trade carried on by the company or a substantial part of that trade— (i) is concerned with the same or similar types of property or parts of property or provides the same or similar services or facilities as the other trade, or (ii) serves substantially the same or similar outlets or markets as the other trade.
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(14)For the purposes of this section, a person has a controlling interest in a trade— (a) in the case of a trade carried on by a company, if— (i) such person controls the company, (ii) the company is a close company for the purposes of the Corporation Tax Acts and such person or an associate of such person is a director of the company and the beneficial owner of, or able directly or through the medium of other companies or by any other indirect means to control, more than 30 per cent of the ordinary share capital of the company, or (iii) not less than 50 per cent of the trade could, in accordance with section 400(2), be regarded as belonging to such person, or (b) in any other case, if such person is entitled to not less than 50 per cent of the assets used for, or the income arising from, the trade.