(vi) the amount of the investment which qualifies for relief under section 502(2)(b), after any reduction required by section 497 or section 508R, and (vii) such other information as the Revenue Commissioners may reasonably require, (b) be in such form as the Revenue Commissioners may direct, and (c) contain a declaration that it is a ‘statement of qualification (second stage relief)’ made under this section.
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(4)A qualifying company may not issue a statement of qualification (second stage relief) in respect of a qualifying investment— (a) until the relevant period has ended and it has satisfied the condition set out in section 502(4), or (b) more than two years after the end of the year of assessment in which the conditions referred to in paragraph (a) were satisfied.
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Statement of qualification (SURE) by qualifying company 508C. (1) A qualifying company shall issue to a specified individual a statement of qualification (SURE) in respect of a relevant investment.
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(2)For the purposes of this Part a ‘statement of qualification (SURE)’ is a statement by the company to the effect that the company is a qualifying company.
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(3)The statement of qualification (SURE) shall also— (a) contain— (i) in respect of the company, the company’s name, address and tax reference number, (ii) in respect of the share issue, the date of share issue, the class of share issued, the amount subscribed and the number of shares issued, (iii) in respect of the individual, the individual’s name, address and PPS Number, (iv) the date on which 30 per cent of the amount raised has been expended on a qualifying purpose, (v) the amount of the investment which qualifies for relief under section 507, after any reduction required by section 497 or section 508R, and (vi) such other information as the Revenue Commissioners may reasonably require, (b) be in such form as the Revenue Commissioners may direct, and (c) contain a declaration that it is a ‘statement of qualification (SURE)’ made under this section.
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(4)A qualifying company may not issue a statement of qualification (SURE) in respect of a relevant investment— (a) until it has spent 30 per cent of the amount raised on a qualifying purpose, or (b) more than two years after the end of the year of assessment in which the shares were issued.
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Confirmation of compliance with certain conditions 508D. (1) Prior to issuing a statement of qualification a company may apply to the Revenue Commissioners for confirmation that the following conditions are satisfied in respect of an investment in eligible shares: (a) the condition set out in section 490(2)(a)(ii) ; and (b) the conditions set out in subsections (4) to (7), as appropriate, of section 496.
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(2)The application referred to in subsection (1) shall be a statement made by the company to the Revenue Commissioners and that statement shall— (a) contain all relevant facts and circumstances, and (b) be in such form as the Revenue Commissioners direct.
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Reporting of relief by qualifying companies 508E. (1) A qualifying company shall include details of the qualifying investment in a return required under Part 41A for the accounting period in which the eligible shares were issued, and the company shall, notwithstanding anything to the contrary in Part 41A or section 1084, be deemed for that accounting period to be a chargeable person for the purposes of Chapter 3 of Part 41A.
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(2)A qualifying company shall, within 60 days of the date referred to in section 508A(3)(a)(v) for a qualifying investment, provide to the Revenue Commissioners, through such electronic means as they make available, such information— (a) as they may require for the purposes of the annual reports required in accordance with Article 11 of the General Block Exemption Regulation, including— (i) the name of the company, (ii) the address of the company, (iii) the Companies Registration Office number of the company, (iv) the amount of finance raised, and (v) the date of the share issue and type of relief, and (b) as they may require for the administration of relief under this Part, including— (i) the investor’s name, address and PPS Number, and (ii) the amount of the relevant investment per investor.
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(3)Notwithstanding section 851A, the Revenue Commissioners— (a) may furnish the information obtained in accordance with subsection (2)(a) to the person submitting the annual reports referred to in that subsection, and (b) shall publish the following information in relation to all qualifying companies: (i) the name of the company; (ii) the address of the company; (iii) the Companies Registration Office number of the company; (iv) the amount of finance raised; (v) the date of the share issue and type of relief.
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(4)Where a company fails to comply with a requirement to furnish information in accordance with this section, that company shall be liable to a penalty of €2,000 and, if that failure continues after the date on which the return shall be filed under Part 41A, or 30 days, as appropriate, a further penalty of €50 for each day on which the failure so continues.
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Claims for relief by qualifying investors 508F.(1) An individual who is a qualifying investor shall not claim relief in respect of a qualifying investment— (a) under 502(2)(a) until a statement of qualification, or (b) under 502(2)(b) until a statement of qualification (follow-on relief), has been received from the company.
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(2)A claim for relief under this Part shall include: (a) the name and tax reference number of the company in which the qualifying investment was made; (b) the date the qualifying investment was made; (c) the amount of the qualifying investment; (d) the date referred to in section 508A(3)(a)(v), or the date the conditions set out in section 508B(4)(a) are satisfied, as the case may be.
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Claims for relief by specified individuals 508G. (1) An individual who is a specified individual shall not claim relief in respect of a relevant investment under section 507 until a statement of qualification (SURE) has been received from the company.
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(2)A claim for relief under this Part shall include: (a) the name and tax reference number of the company in which the relevant investment was made; (b) the date the relevant investment was made; (c) the amount of the relevant investment; (d) the date referred to in section 508C(3)(iv).
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Chapter 7
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Designated funds Authorised officers 508H.The Revenue Commissioners may nominate in writing a Revenue officer to perform any acts and discharge any functions authorised by this Chapter and section 508D to be performed or discharged by the Revenue Commissioners.
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Designated investment funds 508I.(1) The Revenue Commissioners may, if they think fit, having regard to the facts of the particular case and after such consultation, if any, as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them, and subject to such conditions, if any, as they think proper to attach to the designation, designate an investment fund for the purposes of this Part and a fund that for the time being stands so designated is referred to in this Part as a ‘designated fund’.
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(2)(a) The Revenue Commissioners may, by notice in writing given to the managers of a designated investment fund, withdraw the designation given for the purposes of this section to the fund in accordance with subsection (1) and, on the giving of the notice, the fund ceases to be a designated fund as respects any subscriptions made after the date of the notice referred to in paragraph (b). (b) Where the Revenue Commissioners withdraw the designation of any fund for the purposes of this section, notice of the withdrawal shall be published as soon as may be in Iris Oifigiúil.
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(3)Without prejudice to the generality of subsection (1), the Revenue Commissioners shall designate a fund for the purposes of this Part only if they are satisfied that— (a) the fund is established under irrevocable trusts for the sole purpose of investing in qualifying companies, and (b) under the terms of the trusts it is provided that— (i) the entire fund is to be invested without undue delay in eligible shares, (ii) pending investment in eligible shares, any moneys subscribed for the purchase of shares are to be placed on deposit in a separate account with a bank licensed to transact business in the State, (iii) any amounts received by means of dividends or interest are, subject to a commission in respect of management expenses at a rate not exceeding a rate which shall be specified in the deed of trust under which the fund has been established, to be paid without undue delay to the participants, (iv) any charges to be made by means of management or other expenses in connection with the establishment, the running, the winding down or the termination of the fund shall be at a rate not exceeding a rate which shall be specified in the deed of trust under which the fund is established, (v) audited accounts of the fund are submitted annually to the Revenue Commissioners as soon as may be after the end of each period for which accounts of the fund are made up, (vi) the managers, the trustees of the fund and any of their associates are not for the time being connected either directly or indirectly with any company whose shares comprise part of the fund, (vii) any discounts on eligible shares received by the trustees or managers of the fund are accepted solely for the benefit of the participants, (viii) if a limit is placed on the size of the fund or a minimum amount for investment is stipulated, any subscriptions not accepted are to be returned without undue delay, and (ix) no participant is allowed to have any shares in any company in which the fund has invested transferred into his or her name until 4 years have elapsed from the date of the issue of the shares to the fund.
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Relief for investment through designated investment funds 508J. (1) (a) Relief under section 502 shall be given, and section 498(1) shall not apply, in respect of an amount subscribed as nominee for an individual by a person or persons having the management of an investment fund designated by the Revenue Commissioners for the purposes of this Chapter (in this Part referred to as the ‘managers of a designated fund’) where the amount so subscribed forms part of the fund. (b) Except where provided by paragraph (a), relief shall not be given in respect of an amount subscribed as nominee for an individual by a person or persons having the management of an investment fund where the amount so subscribed forms part of the fund.
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(2)The managers of a designated fund shall, by 30 June in each year, deliver to the Revenue Commissioners a return of the holdings of eligible shares shown on statements of qualification received by them in the previous year of assessment.
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(3)Where an individual claims relief in respect of eligible shares in a company which have been issued to the managers of a designated fund as nominee for the individual, then section 508F(1) applies as if it required the claim for relief to be accompanied by a certificate issued by the managers, in such form as the Revenue Commissioners may authorise, furnishing such information as the Revenue Commissioners may require and certifying that the managers hold statements issued to them by the companies concerned, for the purposes of section 508F(1) in respect of the holdings of eligible shares shown on the managers’ certificate.
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(4)Where— (a) relief is due in respect of an amount subscribed as nominee for a qualifying individual by the managers of a designated fund, (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, and (c) the fund is a closed fund, the closing date for participation in which precedes the making of the first investment, then the individual may elect by notice in writing to the Revenue Commissioners to have the relief due under section 502(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 section 502(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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Chapter 8
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Capital gains tax implications Capital gains tax 508K. (1) The sums allowable as deductions from the consideration in the computation for the purposes of capital gains tax of the gain or loss accruing to an individual on the disposal of shares in respect of which any relief has been given and not withdrawn shall be determined without regard to that relief, except that where those sums exceed the consideration they shall be reduced by an amount equal to the lesser of— (a) the amount of that relief, and (b) the excess, but this subsection does not apply to a disposal to which section 1028(5) or 1031M(5) relates.
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(2)In relation to shares in respect of which relief has been given and not withdrawn, any question— (a) as to which of any such shares issued to a person at different times a disposal relates, or (b) whether a disposal relates to such shares or to other shares, shall for the purposes of capital gains tax be determined as for the purposes of section 508M.
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(3)Where an individual holds shares in a company and the relief has been given in respect of some of the shares but not others, then, if there is a reorganisation (within the meaning of section 584) affecting those shares, section 584(3) shall apply separately to the shares in respect of which the relief has been given and to the other shares (so that the shares of each kind shall be treated as a separate holding of original shares and identified with a separate new holding).
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(4)There shall be made all such adjustments of capital gains tax, whether by means of assessment or by means of discharge or repayment of tax, as may be required in consequence of the relief being given or withdrawn.
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(5)Subject to this section, 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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Chapter 9
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Anti-avoidance Prevention of misuse 508L.An individual shall not be entitled to relief in respect of any shares unless— (a) the raising of risk aid financing by the company, and (b) the subscription for shares by the individual, is for bona fide commercial purposes and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
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Chapter 10
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Clawback events Disposals of shares 508M. (1) Where an individual disposes of any eligible shares before the end of the compliance period, then— (a) where the disposal is otherwise than by means of a bargain made at arm’s length, the individual shall not be entitled to any relief in respect of those shares, and (b) in any other case, the amount of relief to which the individual is entitled in respect of those shares shall be reduced by the amount or value of the consideration which the individual receives for those shares.
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(2)Subsection (1) shall not apply— (a) to a disposal made by a married person to his or her spouse at a time when he or she is treated as living with his or her spouse for income tax purposes in accordance with section 1015, or (b) to a disposal by a civil partner to the other civil partner at a time when he or she is treated as living with his or her civil partner for income tax purposes in accordance with section 1031A, but where shares issued to one of them have been transferred to the other by a transaction inter vivos— (i) that subsection shall apply on the disposal of the shares by the transferee to a third person, and (ii) if at any time the married person ceases to be treated as living with his or her spouse for income tax purposes in accordance with section 1015, or the civil partner ceases to be treated as living with his or her civil partner for income tax purposes in accordance with section 1031A, and any of those shares have not been disposed of by the transferee before that time, any assessment for withdrawing relief in respect of those shares shall be made on the transferee.
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(3)Where an individual holds shares of any class in a company and relief has been given in respect of some shares of that class but not others, then any disposal by the individual of shares of that class in the company, not being a disposal to which section 512(2) applies, shall be treated for the purposes of this section and section 508N as relating to those in respect of which relief has been given under this Part rather than to others.
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(4)Where relief has been given to an individual in respect of shares of any class in a company which have been issued to the individual at different times, then any disposal by the individual of shares of that class shall be treated for the purposes of this section and section 508N as relating to those issued earlier rather than to those issued later.
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(5)Where shares in respect of which relief was given have by virtue of any such allotment mentioned in subsection (1) of section 584 (not being an allotment for payment) been treated under subsection (3) of that section as the same asset as a new holding, then— (a) the new holding shall be treated for the purposes of subsection (4) as shares in respect of which the relief has been given, and (b) a disposal of the whole or part of the new holding shall be treated for the purposes of this section and section 508N as a disposal of the whole or a corresponding part of those shares.
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(6)Shares in a company shall not be treated for the purposes of this section and section 508N as being of the same class unless they would be so treated if dealt in on a stock exchange in the State.
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Anti-avoidance: disposal of shares 508N. (1) For the purposes of this section, references to an option or an agreement includes references to a right or obligation to acquire or grant an option or enter into an agreement, and references to the exercise of an option includes references to the exercise of an option which may be acquired or granted by the exercise of such a right or under such an obligation.
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(2)Where in the compliance period any of the acts described in subsection (3) is, either directly or indirectly, done by an individual, then the individual is not entitled to any relief in respect of the shares to which the relevant option or agreement referred to in that subsection relates.
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(3)Each of the following is an act mentioned in subsection (2), namely the individual— (a) (i) acquires an option where the exercise of the option, either under the terms of the option or under the terms of any arrangement or undertaking subject to which or otherwise in connection with which the option is acquired, would— (I) bind the person from whom the option was acquired or any other person, or (II) cause that person or such other person, to purchase or otherwise acquire any eligible shares for a price which, having regard to the terms of the option or the terms of such arrangement or undertaking and the net effect of those terms considered as a whole, is other than the market value of the eligible shares at the time the purchase or acquisition is made, or (ii) enters into an agreement where, either under the terms of the agreement or under the terms of any arrangement or understanding subject to which or otherwise in connection with which the agreement is made, it would— (I) bind the person with whom the agreement is made or any other person, or (II) cause that person or such other person, to purchase or otherwise acquire any eligible shares in the manner described in subparagraph (i), or (b) (i) grants to any person an option where the exercise of the option, either under the terms of the option or under the terms of any arrangement or understanding subject to which or otherwise in connection with which the option is granted, would bind the individual to dispose, or cause the individual to dispose, of any eligible shares to the person to whom the individual granted the option or any other person for a price which, having regard to the terms of the option or the terms of such arrangement or understanding and the net effect of those terms considered as a whole, is other than the market value of the eligible shares at the time the disposal is made, or (ii) enters into an agreement where, either under the terms of the agreement or under the terms of any arrangement or understanding subject to which or otherwise in connection with which the agreement is made, it would bind the individual to dispose, or cause the individual to dispose, of any eligible shares to the person with whom the agreement is made or any other person in the manner described in subparagraph (i).
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Anti-avoidance: disposal of a qualifying subsidiary 508O. (1) This section applies where before the end of the relevant period for a qualifying investment, a qualifying company disposes of a qualifying subsidiary (including on a winding up or dissolution referred to in section 492(3)), where the amounts raised from the qualifying investment were, in accordance with section 490(4)(b), invested in eligible shares of that qualifying subsidiary, and the amounts raised from that disposal were not returned to the qualifying investors without undue delay.
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(2)For the purposes of section 508M, the qualifying investors who made the qualifying investment that was so employed, shall be treated as if, on the date of that disposal, they partially disposed of the shares that they hold in the qualifying company for an amount equal to the portion (attributable to their shareholding in respect of their eligible shares) of the market value of the qualifying subsidiary on the date it is disposed of, or the amount for which it was disposed if higher.
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Anti-avoidance: qualifying investor receiving value from the company 508P. (1) In this section ‘ordinary trade debt’ means any debt for goods or services supplied in the ordinary course of a trade or business where the credit period given is not longer than that normally given to the customers of the person carrying on the trade or business, and in any event does not exceed 6 months.
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(2)In this section— (a) any reference to a payment or transfer to an individual includes a reference to a payment or transfer made to the individual indirectly or to his or her order or for his or her benefit, and (b) any reference to an individual includes a reference to an associate of the individual and any reference to the company includes a reference to the RICT group and any person connected with the RICT group.
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(3)An individual receives value from a qualifying company where the company— (a) repays, redeems or purchases any of its share capital or securities which belong to the individual or makes any payment to the individual for giving up his or her right to any of the company’s share capital or any security on its cancellation or extinguishment, (b) repays any debt owed to the individual other than— (i) an ordinary trade debt incurred by the company, or (ii) any other debt incurred by the company— (I) on or after the earliest date on which the individual subscribed for the shares in respect of which the relief is claimed, and (II) otherwise than in consideration of the extinguishment of a debt incurred before that date, (c) makes to the individual any payment for giving up his or her right to any debt on its extinguishment other than— (i) a debt in respect of a payment of the kind mentioned in paragraph (d) or (e) of section 500(3), or (ii) a debt of the kind mentioned in subparagraph (i) or (ii) of paragraph (b), (d) releases or waives any liability of the individual to the company or discharges, or undertakes to discharge, any liability of the individual to a third person, and a company shall be treated as having released or waived a liability where the liability is not discharged by payment within 12 months of the time when it ought to have been discharged by payment, (e) makes a loan or advance to the individual, and there shall be treated as if it were a loan made by the company to the individual— (i) the amount of any debt (other than an ordinary trade debt) incurred by the individual to the company, and (ii) the amount of any debt due from the individual to a third person which has been assigned to the company, (f) provides a benefit or facility for the individual, (g) transfers an asset to the individual for no consideration or for consideration less than its market value or acquires an asset from the individual for consideration exceeding its market value, or (h) makes to the individual any other payment except a payment of the kind mentioned in paragraph (a), (b), (c), (d) or (e) of section 500 (3) or a payment in discharge of an ordinary trade debt.
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(4)For the purposes of this section, an individual receives value from the company where the individual receives any payment or asset in a winding up or in connection with a dissolution of the company, being a winding up or dissolution within section 490(6), in respect of shares held by the individual.
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(5)For the purposes of this section, an individual receives value from the company where any person, who is treated as connected with the company for the purposes of section 500— (a) purchases any of its share capital or securities which belong to the individual, or (b) makes any payment to the individual for giving up any right in relation to any of the company’s share capital or securities.
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(6)The value received by an individual shall be— (a) in a case within paragraph (a), (b) or (c) of subsection (3), the amount receivable by the individual or, if greater, the market value of the shares, securities or debt in question, (b) in a case within subsection (3)(d), the amount of the liability, (c) in a case within subsection (3)(e), the amount of the loan or advance, (d) in a case within subsection (3)(f), the cost to the company of providing the benefit or facility less any consideration given for it by the individual, (e) in a case within subsection (3)(g), the difference between the market value of the asset and the consideration (if any) given for it, (f) in a case within subsection (3)(h), the amount of the payment, (g) in a case within subsection (4), the amount of the payment or, as the case may be, the market value of the asset, and (h) in a case within subsection (5), the amount receivable by the individual or, if greater, the market value of the shares or securities in question.
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(7)Where an individual receives value from a company during a compliance period, then the amount of the relief to which that individual is entitled shall be reduced by the value so received.
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(8)Where by virtue of this section any relief is withheld or withdrawn in the case of an individual to whom shares in a company have been issued at different times, the relief shall be withheld or withdrawn in respect of shares issued earlier rather than in respect of shares issued later.
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Qualification to section 508P for specified persons 508Q. (1) A specified individual shall not have received value from a company by virtue of section 508P(3)(b) where— (a) the specified individual has made an investment in the company by way of a loan, (a) the specified individual has made an investment in the company by way of a loan, (b) the loan is converted into eligible shares within one year of the making of the loan, and (c) the specified individual provides a statement by a statutory auditor, within the meaning of section 2 of the Companies Act 2014 , certifying that, in his or her opinion, the money raised by the company by way of the loan was used, and only used, by it for a qualifying purpose.
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(2)Where subsection (1) applies, the conversion of the loan into eligible shares shall, notwithstanding any other provision of this Part, be treated as the making of a relevant investment by the specified individual on the date of the making of the loan.
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Value received by persons other than qualifying investors 508R. (1) The relief to which an individual is entitled in respect of any shares in a company shall be reduced in accordance with subsection (2) if at any time in the compliance period— (a) the company repays, redeems or purchases any of its share capital which belongs to any member other than— (i) that individual, or (ii) another individual whose relief is thereby reduced by virtue of section 508P(3), or makes any payment to any such member for giving up such member’s right to any of the company’s share capital on its cancellation or extinguishment, or (b) a company in the RICT group acquires any of the share capital in the qualifying company from any member other than— (i) that individual, or (ii) another individual whose relief is thereby reduced by virtue of section 508P(3), or makes any payment to any such member for giving up such member’s right to any of the qualifying company’s share capital on its cancellation or extinguishment.
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(2)Where subsection (1) applies, the amount of relief to which an individual is entitled shall be reduced by the amount receivable by the member or, if greater, the nominal value of the share capital in question and, where apart from this subsection, 2 or more individuals would be entitled to relief, the reduction shall be made in proportion to the amounts of relief to which those individuals would have been entitled apart from this subsection.
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(3)Where at any time in the compliance period a member of a company receives or is entitled to receive any value from the company within the meaning of this subsection, then, for the purposes of section 500(5) in its application to any subsequent time— (a) the amount of the company’s issued share capital, and (b) the amount of the part of that capital which consists of the shares relevant to section 500(5) and the amount of the part consisting of the remainder, shall each be treated as reduced in accordance with subsection (6).
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(4)The amount of each of the parts mentioned in subsection (3)(b) shall be treated as equal to such proportion of that amount as the amount subscribed for that part less the relevant value bears to the amount subscribed, and the amount of the issued share capital shall be treated as equal to the sum of the amounts treated under this subsection as the amount of those parts respectively.
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(5)In subsection (3)(b), the reference to the part of the capital which consists of the shares relevant to section 500(5) is a reference to the part consisting of shares which (within the meaning of that section) the individual directly or indirectly possesses or is entitled to acquire, and in subsection (4) the ‘relevant value’, in relation to each of the parts mentioned in that subsection, means the value received by the member or members entitled to the shares of which that part consists.
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(6)For the purposes of subsection (3), a member of a company receives or is entitled to receive value from the company within the meaning of that subsection in any case in which an individual would receive value from the company by virtue of paragraph (d), (e), (f), (g) or (h) of section 508P(3) (but treating as excepted from that paragraph (h) all payments made for full consideration), and the value received shall be determined as for the purposes of that section.
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(7)For the purposes of subsection (6), a person shall be treated as entitled to receive anything which the person is entitled to receive at a future date or will at a future date be entitled to receive.
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(8)Where by virtue of this section any relief is withheld or withdrawn in the case of an individual to whom shares in the company have been issued at different times, the relief shall be withheld or withdrawn in respect of shares issued earlier rather than in respect of shares issued later.
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(9)Where during a compliance period in respect of a qualifying investor’s investment in a qualifying company, that company redeems shares of any member other than that individual or purchases shares from any member other than that individual (either of which is referred to in this subsection as the ‘redemption’) then, notwithstanding subsection (1)(a), the relief that individual is entitled to, other than pursuant to section 503 or 507, shall not be reduced where— (a) the most recent relevant investment, in respect of which a claim for relief under this Part is made, in a company in the RICT group was more than 18 months prior to the date of the redemption, and (b) there is no relevant investment, in respect of which a claim for relief under this Part is made, in a company in the RICT group within the period of 12 months after the date of the redemption.
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Failure to commence a relevant employment (relief under section 508G) 508S. In the case of a claim under 508G 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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Chapter 11
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Withdrawing relief Withdrawing relief - general 508T. (1) Subject to this section and without prejudice to section 959AD, any assessment for withdrawing relief which is made by reason of an event occurring after the date of the claim may be made within 4 years after the end of the year of assessment in which that event occurs, and any additional tax arising shall be due and payable as set out in this Chapter.
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(2)No assessment for withdrawing relief in respect of shares issued to any person shall be made by reason of any event occurring after his or her death.
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(3)Where a person has, by a disposal or disposals to which section 508M(1)(b) applies, disposed of all the shares issued to the person by a company, no assessment for withdrawing relief in respect of any of those shares shall be made by reason of any subsequent event unless it occurs at a time when the person is connected with the company within the meaning of section 500.
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Assessments for withdrawing relief claimed under Chapter 4 - company 508U. (1) Where a statement of qualification issued by a company is incorrect, any relief claimed by an individual in excess of the relief which would have been claimed had a correct statement of qualification been furnished shall be withdrawn by the making of an assessment on the qualifying company to corporation tax under Case IV of Schedule D for the year of assessment for which the relief was given, in an amount equal to 1.2 times the amount in section 508A(3)(a)(vi), or such part of that amount as does not qualify for relief.
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(2)(a) This subsection applies where any relief claimed under Chapter 4 is no longer due because within the relevant period— (i) the company has ceased to be a qualifying company, (ii) an investment has ceased, or partially ceased, to be a qualifying investment (within the meaning of section 496), or (iii) the amount of relief available is to be reduced by section 508R. (b) Where this subsection applies, any relief that has been given which is subsequently found not to have been due, shall be withdrawn by the making of an assessment to corporation tax under Case IV of Schedule D for the year of assessment for which the relief was given, in an amount equal to 1.2 times the amount in section 508A(3)(a)(vi), or such part of that amount as no longer qualifies for relief.
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(3)Where a statement of qualification (second stage relief) issued by a company is incorrect, any relief claimed by an individual in excess of the relief which would have been claimed had a correct statement of qualification (second stage relief) been furnished shall be withdrawn by the making of an assessment on the qualifying company to corporation tax under Case IV of Schedule D for the year of assessment for which the relief was given, in an amount equal to 0.4 times the amount in section 508B(3)(a)(vi), or such part of that amount as does not qualify for relief.
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(4)In its application to an assessment made by virtue of this section, section 1080 applies as if the date on which the corporation tax charged by the assessment becomes due and payable were— (a) in the case of relief withdrawn in accordance with subsection (1), the date referred to in section 508A(3)(a)(ii), (b) in the case of relief withdrawn in accordance with subsection (2), the date of the event the happening of which causes the relief to be withdrawn, or (c) in the case of relief withdrawn in accordance with subsection (3), the year of assessment following the year of assessment in which the subsequent period ends.
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(5)An amount chargeable to tax under this section shall be treated— (a) as income against which no loss, deficit, expense or allowance may be set off, and (b) as not forming part of the income of the company for the purposes of calculating a surcharge under section 440.
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Assessments for withdrawing relief under Chapter 4 - investor 508V. (1) This section applies where any relief is claimed under Chapter 4 and the relief— (a) is subsequently found not to have been due other than in circumstances to which section 508U applies, or (b) is no longer due because within the relevant period— (i) the relief is to be withdrawn by virtue of section 495, (ii) the investment ceases to be a qualifying investment by virtue of section 499, (iii) the amount of relief is subject to a reduction under Chapter 10 (other than section 508R), (iv) the relief is withdrawn because of section 508L, or (v) the investor ceases to be a qualifying investor.
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(2)Where any relief is to be withdrawn under this section that relief shall be withdrawn by the making of an assessment on the investor to income tax under Case IV of Schedule D for the year of assessment for which the relief was given.
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(3)In its application to an assessment made by virtue of this section, section 1080 applies as if the date on which the income tax charged by the assessment becomes due and payable were— (a) in the case of relief withdrawn in accordance with subsection (1)(a), the date on which the relief was claimed, (b) in the case of relief withdrawn in accordance with subsection (1)(b)(i), the date the agreements, arrangements or understandings were entered into, (c) in the case of relief withdrawn in accordance with subsection (1)(b)(ii), the date of the event the happening of which causes the relief to be withdrawn, (d) in the case of relief withdrawn in accordance with subsection (1)(b)(iii), the date of disposal, or the date on which the value was received, as the case may be, or (e) in the case of relief withdrawn in accordance with subsection (1)(b)(iv) — (i) in so far as effect has been given to the relief in accordance with regulations under section 986, the 31st day of December in the year of assessment in which effect was so given, and (ii) in so far as effect has not been so given, the date on which the relief was claimed.
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(4)For the purposes of subsection (3), the date on which the relief is claimed is the date on which a repayment of tax for giving effect to the relief was made or, if there was no such repayment, the date on which the claim was made to the Revenue Commissioners.
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(5)(a) Where any relief given in respect of shares for which either a married person or his or her spouse has subscribed, and which were issued while the married person was assessed in accordance with section 1017, is to be withdrawn by virtue of a subsequent disposal of those shares by the person who subscribed for them and at the time of the disposal the married person is not so assessable, any assessment for withdrawing that relief shall be made on the person making the disposal and shall be made by reference to the reduction of tax flowing from the amount of the relief regardless of any allocation of that reduction under subsections (2) and (3) of section 1024 or of any allocation of a repayment of income tax under section 1020. (b) Where any relief given in respect of shares for which either a nominated civil partner or the other civil partner has subscribed, and which were issued while the nominated civil partner was assessed in accordance with section 1031C, is to be withdrawn by virtue of a subsequent disposal of those shares by the person who subscribed for them and at the time of the disposal the nominated civil partner is not so assessable, any assessment for withdrawing that relief shall be made on the person making the disposal and shall be made by reference to the reduction of tax flowing from the amount of the relief regardless of any allocation of that reduction under subsections (2) and (3) of section 1031I or of any allocation of a repayment of income tax under section 1031E.
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(6)Where an individual claimed relief pursuant to section 503 and— (a) an assessment is made on the company pursuant to section 508U, (b) the tax payable under that assessment remains unpaid, and (c) it is reasonable to consider that there were arrangements in place the main purpose, or one of the main purposes, of which was to avoid paying any tax arising on such an assessment, then, notwithstanding subsection (1)(a) and section 508U, that relief may be withdrawn in accordance with subsection (2).
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Assessments for withdrawing relief under Chapter 5 508W. (1)This section applies where any relief claimed under Chapter 5— (a) is subsequently found not to have been due because— (i) the company was not a qualifying company, (ii) the investment was not a relevant investment, or (iii) the individual was not a specified person, or (b) is no longer due because— (i) the relief is to be withdrawn by virtue of section 495, (ii) the investment ceases to be a qualifying investment by virtue of section 499, (iii) the amount of relief is subject to a reduction under Chapter 10, (iv) the relief is withdrawn because of section 508L, (v) a specified individual failed or ceased to hold a relevant employment, or (vi) an individual ceased to be a specified individual.
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(2)Where any relief is to be withdrawn under this section that relief shall be withdrawn by the making of an assessment on the investor to income tax under Case IV of Schedule D for the year of assessment for which the relief was given.
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(3)In its application to an assessment made by virtue of this section, section 1080 applies as if the date on which the income tax charged by the assessment becomes due and payable were— (a) in the case of relief withdrawn in accordance with subsection (1)(a), the date on which the relief was claimed, (b) in the case of relief withdrawn in accordance with subsection (1)(b)(i), the date the agreements, arrangements or understandings were entered into, (c) in the case of relief withdrawn in accordance with subsection (1)(b)(ii), the date of the event the happening of which causes the relief to be withdrawn, (d) in the case of relief withdrawn in accordance with subsection (1)(b)(iii), the date of disposal, or the date on which the value was received, as the case may be, (e) in the case of relief withdrawn in accordance with subsection (1)(b)(iv) — (i) in so far as effect has been given to the relief in accordance with regulations made under section 986, the 31st day of December in the year of assessment in which effect was so given, and (ii) in so far as effect has not been so given, the date on which the relief was claimed, or (f) in the case of relief withdrawn in accordance with subparagraph (v) or (vi) of subsection (1)(b), the date of the failure or the cessation, as the case may be.
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(4)For the purposes of subsection (3), the date on which the relief is claimed is the date on which a repayment of tax for giving effect to the relief was made or, if there was no such repayment, the date on which the claim was made to the Revenue Commissioners.
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Treatment of statement of qualification as a return 508X. (1) Section 1077E shall apply to statements made under Chapter 6, and the following provisions shall apply: (a) in subsections (2) and (5) of section 1077E, the provision to an investor of— (i) a statement of qualification, (ii) a statement of qualification (follow-on relief), or (iii) a statement of qualification (SURE), shall be treated as the making or delivery of a return by the company; (b) for the purposes of subsections (4) and (7) of section 1077E— (i) 25 per cent of the amount referred to in subsections (1) and (3) of section 508U shall be treated as an amount calculated under section 1077E(11) ; (ii) where an assessment is made pursuant to section 508W(1)(a)(i), the amount calculated in accordance with section 1077E(11) shall be treated as a tax liability of the company which provided the statement to the specified individual; and (c) subsection (11) of section 1077E shall have effect as if— (i) references to ‘the person concerned’ were references to ‘the qualifying investor’ or ‘specified individual’, as the case may be, and (ii) references to ‘that person’ were references to ‘the company which provided the statement to the investor’.
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(2)For the purposes of section 1086, where an assessment is made pursuant to section 508W(1)(a)(i) — (a) any interest arising under section 1080 shall be treated as interest payable by, and (b) the amount calculated under subsection (1)(b)(ii) shall be treated as a tax liability of, the company which provided the statement to the specified individual.
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Information 508Y. (1) 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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(2)Where an event occurs by reason of which any relief in respect of any shares in a company is to be withdrawn— (a) the company, (b) any person connected with the company who has knowledge of that matter, and (c) where the investment was made through a designated fund, the managers of the designated fund who have knowledge of the matter, shall within 60 days of the event or, in the case of a person falling within paragraph (b), of that person coming to know of the matter, give a notice in writing to a Revenue officer containing particulars of the event.
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(3)Where relief is claimed in respect of shares in a company and a Revenue officer has reason to believe that it may not be due by reason of any arrangement or scheme mentioned in section 490(6), 492, 495, 501 or 508L, the officer may by notice in writing require any person concerned to furnish him or her within such time (not being less than 60 days) as may be specified in the notice with— (a) a declaration in writing stating whether or not, according to the information which that person has or can reasonably obtain, any such arrangement or scheme exists or has existed, and (b) such other information as the officer may reasonably require for the purposes of the provision in question and as that person has or can reasonably obtain.
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(4)References in subsection (3) to the person concerned are, in relation to sections 501 and 508L, references to the claimant and, in relation to sections 490(6), 492, 501 and 508L, references to the company and any person controlling the company.
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(5)Where relief has been given in respect of shares in a company— (a) any person who receives from the company any payment or asset which may constitute value received (by that person or another) for the purposes of section 508P or 508R(3), and (b) any person on whose behalf such a payment or asset is received, shall, if so required by a Revenue officer, state whether the payment or asset received by that person or on that person’s behalf is received on behalf of any person other than that person and, if so, the name and address of that other person.
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(6)Where relief has been claimed in respect of shares in a company, any person who holds or has held shares in the company and any person on whose behalf any such shares are or were held shall, if so required by a Revenue officer, state whether the shares which are or were held by that person or on that person’s behalf are or were held on behalf of any person other than that person and, if so, the name and address of that other person.
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(7)No obligation as to secrecy imposed by statute or otherwise shall preclude a Revenue officer from disclosing to a company that relief has been given or claimed in respect of a particular number or proportion of its shares.
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Chapter 12
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Application of this Part Application of this Part 508Z. (1) Relief under this Part shall apply only to eligible shares which are issued on or before 31 December 2021.
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(2)Relief cannot be carried forward, under section 508, into any year of assessment subsequent to the year of assessment 2021.”.
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(2)The Principal Act is amended— (a) in section 128F(1), in the definition of “financial activities”, by substituting “section 489” for “section 488”, (b) in section 479(5) by substituting “section 508M” for “section 498 but without regard to the reference in subsection (4) (as amended by the Finance Act 1998 ) of that section to subsection (3) of this section”, (c) in section 591(1) by deleting “ ‘eligible shares’ and ‘ordinary shares’ have the same meanings respectively as in section 488;” and inserting the following definitions: “ ‘eligible shares’ means new ordinary shares which 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; ‘ordinary shares’ means shares forming part of a company’s ordinary share capital;”, (d) in section 597A(1), in the definition of “relevant trading activities”, by substituting “section 489” for “section 488”, (e) in section 458, in Part 1 of the Table— (i) by substituting “section 502” for “section 489”, and (ii) by substituting “section 507” for “section 493”, (f) in section 737(9)(c) by substituting “section 508I” for “section 508”, (i) by substituting “section 591(1) ” for “section 488”, and (ii) by substituting “section 490” for “section 495”, (h) by deleting Schedule 10, and (i) in Schedule 29— (i) in Column 1, by inserting the following after “section 531AF”: “Section 508A Section 508B Section 508C”, and (ii) in Column 2, by deleting— “section 503(3) and (4) (as substituted by section 33 of the Finance Act 2011 ) section 505(3) and (4) (before the coming into operation of section 33 of the Finance Act 2011 )”.
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(3)Subsection (1) and paragraphs (h) and (i) of subsection (2) shall have effect as respects shares issued on or after 1 January 2019.
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Chapter 5
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Corporation Tax Amendments relating to relief for investment in films 26. (1) Section 481 of the Principal Act is amended— (a) in subsection (1)— (i) by inserting the following definitions— “ ‘assisted region’ means an area specified in paragraph (1) of the Annex to the Commission Decision C(2014) 3153; ‘certificate’ means a certificate issued by the Minister under subsection (2); ‘eligible expenditure’ means the portion of the total cost of production of a qualifying film that is expended on the production of the film in the State— (a) directly by the qualifying company concerned on the employment of eligible individuals, in so far as those individuals exercise their employment in the production of the film, and (b) directly or indirectly by the qualifying company concerned, on the provision of certain goods, services and facilities, as set out in regulations made under subsection (2E); ‘Rescuing & Restructuring Guidelines’ means the Communication of the Commission on Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty6 ; ‘total cost of production’, in relation to a qualifying company, means the qualifying expenditure, as determined in accordance with regulations made under subsection (2E), that was wholly, exclusively and necessarily incurred to produce the film; ‘undertaking’ means the relevant economic unit that would be regarded as an undertaking for the purposes of the Rescuing & Restructuring Guidelines; ‘undertaking in difficulty’ has the meaning assigned to it by the Rescuing & Restructuring Guidelines.”, (ii) by deleting the definition of “authorised officer”, (iii) in the definition of “film” by substituting “Minister under subsection (2)” for “Revenue Commissioners under subsection (2A), as specified in regulations made under subsection (2E)”, (iv) in the definition of “film corporation tax credit” by substituting “qualifying film, subject to subsection (1B), means” for “qualifying film, means”, (v) in the definition of “producer company”— (I) by deleting “in relation to a film corporation tax credit specified in a film certificate,”, (II) in paragraph (b) by deleting “commencing not later than the time the qualifying period commences,”, (III) in paragraph (d) by deleting “and”, (IV) in paragraph (e)— (A) by deleting “, on or before the specified return date,”, (B) by substituting “as the case may be, and” for “as the case may be,”, and (V) by inserting the following after paragraph (e): “(f) is not part of an undertaking which would be regarded as an undertaking in difficulty;”,
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(vi) in the definition of “qualifying film” by substituting “Minister has issued a certificate under subsection (2)” for “Revenue Commissioners have issued a certificate under subsection (2A), which has not been revoked under subsection (2D)”, (vii) in the definition of “qualifying period”— (I) by deleting “specified in a film certificate,”, and (II) in paragraph (a) by substituting “the claim referred to in subsection (2G) was made” for “the application referred to in subsection (2A)(a) was made”, and (viii) in the definition of “specified relevant person” by substituting “date referred to in subsection (2C)(d).” for “date the compliance report referred to in subparagraph (iii) of subsection (2C)(d)(iii) is provided to the Revenue Commissioners;”, (b) by inserting the following after subsection (1)— “(1A) (a) Subject to the provisions of this section, a producer company, that is not an undertaking in difficulty, may make an application to the Minister, in relation to a film to be produced by the company, for the issue by the Minister of a certificate stating that the film is to be treated as a qualifying film for the purpose of this section. (b) An application for a certificate under paragraph (a) shall be in the form approved by the Minister and shall contain such information as may be specified in regulations made under subsection (2E). (1B) (a) (i) Where the production of a qualifying film will take place in an assisted region, the producer company, in making its application under subsection (1A) on or after 1 January 2019, may apply for the certificate mentioned in that subsection to specify, in addition to that mentioned in that subsection, that an increased film corporation tax credit (in this section referred to as ‘the regional film development uplift’) shall apply as provided for in paragraph (b). (ii) In considering whether, in the certification applied for, he or she should specify that the regional film development uplift shall apply, the Minister, in accordance with regulations made under subsection (2E), shall have regard to the following criteria: (I) whether the production of the film will substantially be undertaken in an assisted region; (II) whether there is limited availability of individuals with suitable experience or training who habitually reside within a 45 kilometre radius of the place of production to provide services, amounts expended upon which would form part of the eligible expenditure on the qualifying film; and (III) in respect of the areas of expertise where there is limited availability, whether the company will provide training for individuals that habitually reside within that 45 kilometre radius.
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(b) Where the certificate issued specifies that the regional film development uplift is to apply, the percentage specified in the definition of ‘film corporation tax credit’ shall be— (i) as respects claims made on or before 31 December 2020, 37 per cent, (ii) as respects claims made after 31 December 2020 but on or before 31 December 2021, 35 per cent, (iii) as respects claims made after 31 December 2021 but on or before 31 December 2022, 34 per cent, or (iv) as respects claims made after 31 December 2022, 32 per cent, and, for the purposes of this paragraph, a reference to a claim is a reference to the first claim that a producer company makes in respect of a qualifying film under subsection (2G).”, (c) in subsection (2)— (i) by substituting the following for paragraph (a): “(a) The Minister may, following an application by a producer company under subsection (1A), subject to paragraph (b) and in accordance with regulations made under subsection (2E), issue a certificate to the producer company— (i) stating that the film is to be treated as a qualifying film for the purpose of this section, and (ii) specifying whether or not the regional film development uplift applies, if appropriate.”, and (ii) in paragraph (b)— (I) by substituting “issue the certificate” for “give the authorisation”, (II) by substituting the following for subparagraph (i): “(i) the categories of films eligible for certification under this section, as specified in those regulations,”, (III) by inserting the following after subparagraph (ii): “(iii) the timing of the application by reference to the commencement of production in the State, and (iv) the criteria specified in subsection (1B)(a)(ii) if appropriate,”, (IV) by substituting “a certificate is issued” for “such authorisation is given”, (V) by substituting “the certificate such conditions” for “the authorisation such conditions”, (VI) in clause (II)(B) by substituting “production of that film,” for “production of that film.”, and (VII) by inserting the following after clause (II): “(III) the nature and detail of acknowledgement in the opening titles or closing credits of the film, and (IV) in respect of the Communication from the Commission (2013/C 332/01)7 (A) the maximum aid intensity, and (B) whether the film may be regarded as a difficult audiovisual work. (c) Nothing in this section shall be construed as obliging the Minister to issue a certificate. (d) The Minister may amend or revoke any condition (including a condition added by virtue of this paragraph) specified in the certificate, or add to such conditions, by giving notice in writing to the producer company concerned of the amendment, revocation or addition, and this section shall apply as if—
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(i) a condition so amended or added by the notice was specified in the certificate, and (ii) a condition so revoked was not specified in the certificate.”, (d) in subsection (2A)— (i) by deleting paragraph (a), (ii) in paragraph (b)— (I) by substituting— “A producer company shall not make a claim for the film corporation tax credit under subsection (2G) if— (i) there has not been issued to the producer company a certificate by the Minister in respect of that film,” for “The Revenue Commissioners shall not issue a certificate under paragraph (a) if— (i) they have not been given authorisation to do so by the Minister under subsection (2)(a),”, (II) in subparagraph (iii) by substituting “€125,000,” for “€125,000, or”, (III) in subparagraph (iv) by substituting “€250,000,” for “€250,000.”, (IV) by inserting the following after subparagraph (iv): “(v) it is an undertaking in difficulty, (vi) any company in an undertaking of which the producer company is part is subject to an outstanding recovery order following a previous decision of the Commission that declared an aid illegal and incompatible with the internal market, or (vii) in relation to a claim under subsection (2G)(b)(i)— (I) the agreements pursuant to which the financing of the film will be made available have not been executed, or the conditions that are required to be satisfied in those agreements for funding to commence have not been fulfilled, and (II) an amount not less than 68 per cent of the amount on which the film corporation tax credit is based has not been lodged to an account held by the qualifying company with a financial institution on terms whereby such amount is to be expended by the qualifying company on the production of the film, but neither clause (I) nor (II) shall apply where such other confirmations of financing, as set out in regulations under subsection (2E) and specified by those regulations to be acceptable for this purpose, are available.”, (iii) by deleting paragraphs (c) to (e), (iv) by substituting the following for paragraph (f): “(f) A producer company shall not make a claim under subsection (2G) if it would be reasonable to consider that— (i) in respect of a claim under subsection (2G)(b)(i), the budget or any particular item of proposed expenditure in the budget is inflated, or (ii) (I) there is no commercial rationale for the corporate structure— (A) for the production, financing, distribution or sale of the film, or (B) for all of those purposes, or (II) the corporate structure would hinder the Revenue Commissioners in verifying compliance with any of the provisions governing the relief.”,
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(v) by deleting paragraph (g) and (h), and (vi) by inserting the following after paragraph (h): “(i) Before making a claim a producer company shall have such information and records as the Revenue Commissioners may reasonably require for the purposes of determining whether that claim complies with this section.”, (e) in subsection (2B)— (i) in paragraph (a) by substituting “them,” for “them, and”, (ii) in paragraph (b) by substituting “consultation, and” for “consultation.”, and (iii) by inserting the following after paragraph (b): “(c) where they have reason to believe that financial arrangements have been entered into in contravention of subsection (2C)(b), the Revenue Commissioners may seek any information they consider appropriate in relation to the arrangements or in relation to any person who is, directly or indirectly, a party to the arrangements.”, (f) in subsection (2C)— (i) by substituting “producer company in respect of a qualifying film for the purposes of this section” for “producer company for the purposes of this section”, (ii) by deleting paragraph (a), (iii) in paragraph (b)— (I) by deleting “subject to subsection (2CA),”, and (II) by inserting the following after subparagraph (ii): “other than where those arrangements— (A) relate to the filming of part of the qualifying film in a territory other than a territory referred to in clause (I) or (II) of subparagraph (i), (B) the producer company has sufficient records to enable the Revenue Commissioners to verify, in the case of filming in such a territory, the amount of each item of expenditure on the production of the qualifying film expended in the territory, whether expended by the producer company or by any other person, and (C) the producer company has such records in place to substantiate such expenditure in advance of making a claim under subsection (2G).”, (iv) in paragraph (c) by substituting “without prejudice to the generality of section 886, unless the company provides, when requested to do so by the Revenue Commissioners, for the purposes of verifying compliance with the provisions governing the relief or with any condition specified in a certificate issued by the Minister under subsection (2),” for “unless the company provides, when requested to do so by the Revenue Commissioners, for the purposes of verifying compliance with the provisions governing the relief or with any condition specified in a certificate issued by them under subsection (2A)(a),”, (v) by inserting the following after paragraph (c):
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“(ca) unless the company provides, when requested to do so by the Revenue Commissioners, for the purposes of verifying compliance with the provisions governing the relief or with any condition specified in a certificate issued by the Minister under subsection (2) a copy of the film in such format and manner required under paragraph (d)(ii).”, (vi) in paragraph (d) by substituting the following for subparagraphs (i) to (iii): “(i) notifies the Minister in writing of the date of completion of the production of the qualifying film, and (ii) provides to the Minister such number of copies of the film in such format and manner as may be specified in those regulations.”, (vii) by inserting the following after paragraph (d): “(da) makes a claim under subsection (2G)(b)(ii), within the time referred to in paragraph (d), and has available, prior to making that claim, a compliance report, in such format and manner specified in those regulations, which provides proof that— (i) the provisions of this section in so far as they apply in relation to the company and a qualifying company have been met, and (ii) any conditions attaching to the certificate issued to the company in relation to a qualifying film have been fulfilled,”, (viii) in paragraph (e) by substituting “date referred to in paragraph (d)” for “date the compliance report referred to in subsection (2C)(d)(iii) is provided to the Revenue Commissioners”, (ix) in paragraph (f) by substituting “date referred to in paragraph (d), and” for “date the compliance report referred to in subsection (2C)(d)(iii) is provided to the Revenue Commissioners”, (x) in paragraph (g)(ii) by substituting “qualifying company.” for “qualifying company, and”, and (xi) by deleting paragraph (h), (g) by deleting subsections (2CA) and (2D), (h) in subsection (2E)— (i) by substituting “the issue of a certificate under subsection (2)” for “the issue of an authorisation under subsection (2)”, (ii) in paragraph (a) by substituting “, the timing of such an application” for “pursuant to subsection (2A)”, (iii) in paragraph (b) by deleting “by the Revenue Commissioners under subsection (2A)”, (iv) by deleting paragraph (c), (v) in paragraph (f) by substituting “Minister” for “Revenue Commissioners”, (vi) in paragraph (g) by deleting “the Revenue Commissioners and to”, (vii) by substituting the following for paragraph (h): “(h) specifying the form and content of the compliance report that must be available in accordance with subsection (2C)(d)(iii), the manner in which such report shall be made and verified, and the documents to accompany the report,”,
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(viii) in paragraph (i) by substituting “treated as qualifying or eligible” for “accepted by the Revenue Commissioners as”, (ix) in paragraph (j) by substituting “in the definition of eligible expenditure” for “in subsection (2A)(g)(iv)(II)”, (x) in paragraph (l)— (I) by substituting “subsection (2)(b)” for “subsections (2)(b)(i) and (ii)”, (II) in subparagraph (i) by substituting “issue a certificate” for “give authorisation to the Revenue Commissioners”, (III) in subparagraph (ii) by substituting “certificate” for “authorisation”, and (IV) by substituting “Minister” for “Revenue Commissioners under subsection (2A)”, (xi) by inserting the following after paragraph (l): “(la) specifying the criteria to be considered by the Minister, in relation to the matters referred to in subsection (1B)(a)(ii)— (i) in deciding whether, in the certificate applied for under subsection (1A), he or she should specify that the regional film development uplift shall apply, and (ii) in specifying conditions in such a certificate, as provided for in subsection (2)(b), and the information required for those purposes to be included in the application made to the Minister by a producer company,”, (xii) in paragraph (m)— (I) by deleting “the approval of”, and (II) by substituting “subsection (2C)(b)” for “subsection (2CA)”, (xiii) by inserting the following after paragraph (m): “(ma) specifying the confirmations of financing that are acceptable for the purpose of subsection (2A)(b)(vii),”, (xiv) in paragraph (n) by deleting “, as referred to in subsection (2A)(g)(iv),”, (xv) by substituting the following for paragraph (o): “(o) governing the payment of the specified amount by the Revenue Commissioners to the producer company.”, (i) by deleting subsection (2F), (j) by inserting the following after subsection (2F): “(2G) (a) In this section the ‘budgeted film corporation tax credit’ means the amount of the film corporation tax credit that would be payable if the amounts set out in the budget in respect of a qualifying film to be produced were incurred on the production of that qualifying film. (b) Where the Minister has issued a certificate in relation to a qualifying film to a producer company and the provisions of this section have been complied with, a producer company may make a claim— (i) in advance of the date referred to in subsection (2C)(d), for an amount not exceeding 90 per cent, or such lower amount as set out in regulations under subsection (2E), of the budgeted film corporation tax credit, or (ii) in any other case, for the film corporation tax credit, less any amount already claimed pursuant to subparagraph (i).
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(c) A claim under paragraph (b) shall be made in the return required under Part 41A, the specified return date of which immediately precedes the making of the claim.”, (k) in subsection (3)— (i) by substituting the following for paragraph (a): “(a) Where a producer company makes a claim under subsection (2G), the corporation tax of the company, for the qualifying period, shall be reduced by so much of an amount equal to the film corporation tax credit as does not exceed that corporation tax and where the qualifying period is a period referred to in paragraph (b) of the definition of ‘qualifying period’, the corporation tax of an earlier accounting period shall be reduced in priority to the corporation tax of a later accounting period.”, (ii) in paragraph (b) by substituting “a producer company has made a claim under subsection (2G)” for “the Revenue Commissioners have specified a film corporation tax credit in a film certificate”, and (iii) by deleting paragraph (c), (l) in subsection (3A)— (i) in paragraph (d)— (I) by substituting “the amount was claimed under subsection (2G) or paid” for “the amount was paid”, (II) by substituting the following for subparagraph (i): “(i) the company made a claim contrary to subsection (2G),”, (III) in subparagraph (ii)— (A) in clause (II) by substituting “certificate” for “film certificate” in both places where it occurs, and (B) in clause (III) by substituting “subsection (2A)(b)(ii),” for “subsection (2A)(b)(ii).”, and (IV) by inserting the following after subparagraph (ii): “or (iii) where a claim is made under subsection (2G)(b)(i) and— (I) there has occurred a reduction in the expenditure, from the amount as stood budgeted, in respect of the qualifying film and the extent of that reduction is such that the amount claimed is in excess of 90 per cent of the revised budgeted film corporation tax credit (that is to say, that tax credit as it stands revised in consequence of that reduction), or (II) where an amount equal to the budgeted eligible expenditure upon which a claim was based is not expended by the qualifying company wholly and exclusively on the production of the qualifying film without unreasonable delay.”, and (ii) in paragraph (e) by substituting “an assessment is made or amended” for “an inspector makes an assessment”, (m) in subsection (3C) by substituting “a certificate issued after 31 December 2024” for “a film certificate issued after 31 December 2020”, (n) by deleting subsection (22A), and (o) by inserting the following after subsection (23):
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“(24) (a) This subsection applies to a qualifying film in respect of which the Minister provided the Revenue Commissioners with authorisation under subsection (2), as it stood enacted prior to the commencement of section 26 of the Finance Act 2018. (b) This section (that is to say, this section as it stands amended by section 26 of the Finance Act 2018) shall apply to a qualifying film to which this subsection applies as if the foregoing authorisation were a certificate issued by the Minister to the producer company under subsection (2) on the date the authorisation was issued.
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(25)(a) This subsection applies to a qualifying film in respect of which the Revenue Commissioners had issued a certificate under subsection (2A), as it stood enacted prior to the commencement of section 26 of the Finance Act 2018, but the compliance report required under subsection (2C)(d)(iii), as it stood enacted prior to the commencement of that section 26 , has not been provided to the Revenue Commissioners. (b) This section (that is to say, this section as it stands amended by section 26 of the Finance Act 2018) shall apply to any claim for relief made in respect of a qualifying film to which this subsection applies, and no regard shall be had to the foregoing certificate.
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(26)(a) This subsection applies to a payment made by the Revenue Commissioners under subsection (3)(b), as it stood enacted prior to the commencement of section 26 of the Finance Act 2018, but where the compliance report required under subsection (2C)(d)(iii), as it stood enacted prior to the commencement of that section 26 , has not been provided to the Revenue Commissioners. (b) Any amount, to which this subsection applies, paid to a producer company shall be treated as an amount paid on a claim made under subsection (2G)(b)(i) on 1 January 2019.
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(27)(a) This subsection applies to financial arrangements which were approved by the Revenue Commissioners under subsection (2CA), as it stood enacted prior to the commencement of section 26 of the Finance Act 2018. (b) Notwithstanding any such approval, a company shall not be a producer company if the financial arrangements to which this subsection applies contravene subsection (2C)(b).”.
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(2)Section 851A of the Principal Act is amended by inserting the following subsection after subsection (8A): “(8B) In relation to information provided to the Minister for Culture, Heritage and the Gaeltacht by a company for the purposes of obtaining a certificate under section 481, the Department of Culture, Heritage and the Gaeltacht, in processing such information, shall, for the purposes of this section, be deemed to be engaged as a service provider with respect to the administration of section 481.”.
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(3)Subsections (1) and (2) shall come 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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Controlled foreign companies 27. (1) The Principal Act is amended by inserting the following Part after Part 35A: “PART 35B Implementation of Articles 7 and 8 of Council Directive (EU) 2016/1164 of 12 July 2016 (Controlled Foreign Companies)
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Chapter 1
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Interpretation Interpretation 835I. (1) In this Part— ‘accounting profit’, in relation to an accounting period of a controlled foreign company, means the amount of profit, before taxation, shown in the profit and loss account, without regard to any— (a) capital gains or capital losses, or (b) dividends or other distributions which would be exempted from the charge to tax in determining the controlled foreign company’s corresponding chargeable profits in the State; ‘amount of foreign tax’ means the amount of any tax paid or borne by a controlled foreign company in respect of the controlled foreign company’s profits for the accounting period; ‘arrangement’ means— (a) any transaction, action, course of action, course of conduct, scheme, plan or proposal, (b) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable or intended to be enforceable by legal proceedings, and (c) any series of or combination of the circumstances referred to in paragraphs (a) and (b), whether entered into or arranged by one or two or more persons— (i) whether acting in concert or not, (ii) whether or not entered into or arranged wholly or partly outside the State, or (iii) whether or not entered into or arranged as part of a larger arrangement or in conjunction with any other arrangement or arrangements, but does not include an arrangement referred to in section 826; ‘chargeable company’ means a controlling company, or a company connected with the controlling company, which performs, either itself or through a branch or agency, relevant Irish activities on behalf of a controlled foreign company group; ‘chargeable income’ means the undistributed income of a controlled foreign company which is subject to a controlled foreign company charge; ‘company’ means a body corporate or an unincorporated association; ‘connected’ shall be construed in accordance with section 10; ‘controlled foreign company’ means a company which is— (a) not resident in the State, and (b) controlled by a company or companies resident in the State; ‘controlled foreign company charge’ means a charge made under section 835R(2); ‘controlled foreign company group’ means the controlled foreign companies, taken together, of a controlling company; ‘controlling company’ means a company resident in the State which controls a controlled foreign company; ‘corresponding chargeable profits in the State’ means those profits or gains of a controlled foreign company which would be the controlled foreign company’s profits or gains for corporation tax or capital gains tax purposes for an accounting period if the assumptions specified in section 835O were to apply to that company;
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‘corresponding corporation tax in the State’ means the amount of corporation tax and capital gains tax which would be chargeable in the State in respect of the controlled foreign company’s corresponding chargeable profits in the State for the accounting period in accordance with section 835P if the assumptions specified in section 835O were to apply to the company; ‘creditable tax’ shall be construed in accordance with section 835S; ‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993; ‘foreign chargeable profits’ means— (a) the profits of a controlled foreign company as determined for tax purposes under the laws of the controlled foreign company’s territory of residence, or (b) where the laws of the controlled foreign company’s territory of residence do not require profits to be determined for tax purposes, the profits of the controlled foreign company as determined in accordance with the generally accepted accounting practice applicable in the controlled foreign company’s territory of residence; ‘foreign company charge’ means a charge under the laws of a territory, other than the State, which is similar to the controlled foreign company charge; ‘key entrepreneurial risk-taking function’ shall be construed in a manner consistent with the use of that term in the OECD Report; ‘non-trading income’ means the income of a controlled foreign company which would be included in the controlled foreign company’s corresponding chargeable profits in the State if the assumptions specified in section 835O were to apply to the company, other than income which would be chargeable to tax under Case I or II of Schedule D, were those assumptions to apply; ‘OECD Report’ means the 2010 Report on the Attribution of Profits to Permanent Establishments of the Organisation for Economic Co-Operation and Development dated 22 July 2010; ‘profit and loss account’, in relation to a controlled foreign company, means the profit and loss account, income statement or equivalent as prepared in accordance with international accounting standards or in accordance with generally accepted accounting practice, but where— (a) accounts are not prepared in accordance with international accounting standards or generally accepted accounting practice, or (b) no accounts are prepared for the accounting period in question, that expression means the profit and loss account which would be prepared in accordance with generally accepted accounting practice;
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‘relevant assets and risks’ means the assets which a controlled foreign company has, or has had at any time, and the risks which a controlled foreign company bears, or has borne at any time, where those assets or risks would not have been employed or undertaken, as the case may be, but for relevant functions performed in the State on behalf of the controlled foreign company; ‘relevant function’ means a significant people function or a key entrepreneurial risk-taking function; ‘relevant Irish activities’ means relevant functions performed in the State on behalf of a controlled foreign company group, where such relevant functions are relevant to— (a) the legal or beneficial ownership of the assets included in the relevant assets and risks of the company or companies in the controlled foreign company group, or (b) the assumption and management of the risks included in the relevant assets and risks of the company or companies in the controlled foreign company group; ‘relevant Member State’ means a state, other than the State, which is a Member State of the European Union, or not being such a Member State, a state which is a contracting party to the EEA Agreement; ‘significant people function’ shall be construed in a manner consistent with the use of that term in the OECD Report; ‘tax advantage’ means— (a) a reduction, avoidance or deferral of any charge or assessment to tax, including any potential or prospective charge or assessment, or (b) a refund of or a payment of an amount of tax, or an increase in an amount of tax, refundable or otherwise payable to a person including any potential or prospective amount so refundable or payable, arising out of or by reason of an arrangement, including an arrangement where another arrangement would not have been undertaken or arranged to achieve the results or any part of the results, achieved or intended to be achieved by the arrangement; ‘undistributed income’ shall be construed in accordance with section 835Q.
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(2)For the purposes of this Part, a company shall be treated as an ‘associated company’ of another company where— (a) one of them, directly or indirectly, possesses or is beneficially entitled to, or is entitled to acquire, not less than 25 per cent of the share capital or issued share capital of the other company, (b) one of them, directly or indirectly, is entitled to exercise, or to acquire the rights to exercise, not less than 25 per cent of the voting power of the other company, (c) one of them is beneficially entitled to not less than 25 per cent of any profits available for distribution to equity holders of the other company, or (d) in respect of those companies, a third person— (i) directly or indirectly— (I) possesses or is beneficially entitled to, or is entitled to acquire, not less than 25 per cent of the share capital or issued share capital of each of them, or (II) is entitled to exercise, or to acquire the rights to exercise, not less than 25 per cent of the voting power of each of them, or (ii) in respect of each of them, is beneficially entitled to not less than 25 per cent of any profits available for distribution to equity holders in the company.
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Meaning of ‘control’ 835J. (1) For the purposes of this Part, a person shall be taken to have control of a company if such person exercises, or is able to exercise or is entitled to acquire, control, whether direct or indirect, over the company’s affairs, and in particular, but without prejudice to the generality of the foregoing, if such person possesses or is entitled to acquire— (a) the greater part of the share capital or issued share capital of the company or of the voting power in the company, (b) such part of the issued share capital of the company as would, if the whole of the income of the company were distributed among the participators (without regard to any rights which such person or any other person has as a loan creditor), entitle such person to receive the greater part of the amount so distributed, (c) such rights as would, in the event of the winding up of the company or in any other circumstances, entitle such person to receive the greater part of the assets of the company which would then be available for distribution among the participators, or (d) any part of the issued share capital of the company and thereby control the composition of its board of directors.
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(2)For the purposes of subsection (1), a person shall be treated as entitled to acquire anything which such person is entitled to acquire at a future date or will at a future date be entitled to acquire.
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(3)For the purposes of subsection (1), there shall be attributed to any person any rights or powers of a nominee for such person, that is, any rights or powers which another person possesses on such person’s behalf or may be required to exercise on such person’s direction or behalf.
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(4)For the purposes of subsection (1), there may also be attributed to any person all the rights and powers of— (a) any associated company, within the meaning of section 835I(2), of such person, (b) any company of which such person has, or such person and associates of such person have, control, (c) any 2 or more companies of which such person has, or such person and associates of such person have, control, (d) any associate of such person, or (e) any 2 or more associates of such person, including the rights and powers attributed to a company or associate under subsection (3), but excluding those attributed to an associate under this subsection, and such attributions shall be made under this subsection as will result in the company being treated as under the control of persons resident in the State if it can be so treated.
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(5)In this section, ‘participator’, ‘associate’, ‘director’ and ‘loan creditor’ have the same meanings as they have in Part 13.
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Accounting periods 835K. (1) For the purposes of this Part, an accounting period of a controlled foreign company shall begin— (a) where the company was not a controlled foreign company immediately prior to a date on which it became a controlled foreign company, on that date, and (b) where the company continues to be a controlled foreign company, immediately after the end of the previous accounting period, and references in this subsection and subsection (2) to an accounting period are references to such a period as determined by virtue of the application, by subsection (3), of certain provisions of section 27 for the purposes of this section.
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(2)An accounting period of a controlled foreign company shall end— (a) when the company ceases to be a controlled foreign company in accordance with this Chapter, (b) when the company becomes or ceases to be resident in a territory, or (c) when the company ceases to have any sources of income.
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(3)Without prejudice to subsections (1) and (2) of this section, subsections (3), (5) and (7) of section 27 shall apply for the purpose of this section as they apply for the purposes of corporation tax, except to the extent those provisions relate to a company becoming or ceasing to be within the charge to corporation tax.
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(4)Where it appears to a Revenue officer that the beginning or end of any accounting period of a controlled foreign company is uncertain, he or she may determine as an accounting period of the company such period, not exceeding 12 months, as appears to him or her appropriate, and that period shall be treated for all purposes as an accounting period of the company unless the officer on further facts coming to his or her knowledge sees fit to revise it.
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(5)Where the Revenue Commissioners make a determination under subsection (4), they shall issue a notice in writing of the determination to the controlling company of the controlled foreign company concerned.
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(6)A controlling company aggrieved by a determination made under subsection (4) may appeal such determination to the Appeal Commissioners, in accordance with section 949I, within the period of 30 days after the date of the notice issued under subsection (5) in respect of the determination.
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Application of Part to a controlled foreign company 835L. Where in any accounting period a company is a controlled foreign company, the provisions of this Part shall apply accordingly in relation to that accounting period, except as otherwise provided for in this Part.
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Determination of residence 835M. (1) Subject to subsection (6), for the purposes of this Part, a controlled foreign company shall be regarded as being resident for an accounting period in the territory in which, throughout that period, it is subject to tax by reason of domicile, residence or place of management.
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(2)Where there are two or more territories falling within subsection (1) in any accounting period, the company shall in that accounting period be regarded as being resident— (a) where, throughout the accounting period, the company’s place of effective management is situated in one of the territories, in that territory, (b) where, throughout the accounting period, the company’s place of effective management is situated in two or more of the territories and immediately before the end of the accounting period more than 50 per cent of the company’s assets are situated in a territory, in the territory in which those assets are situated, or (c) where neither paragraph (a) nor (b) applies and immediately before the end of the accounting period more than 50 per cent of the company’s assets are situated in one of the territories, in that territory.
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(3)Where in an accounting period there is no territory falling within either of subsection (1) or (2), the company shall be regarded as being resident in the territory in which it is incorporated or formed.
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(4)For the purpose of subsection (2), the amount of the company’s assets are to be determined by reference to their market value immediately before the end of the accounting period.
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(5)In this section, ‘market value’ shall be construed in accordance with section 548.
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(6)Nothing in this section shall require a company to be regarded as being resident in a territory other than the territory in which it is regarded, for the purposes of any arrangements having the force of law by virtue of section 826(1), as being resident.
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Adjustment to amount of foreign tax 835N. (1) Where an amount of foreign tax is paid or borne by a company under the laws of the territory in which the controlled foreign company is resident in respect of the aggregate profits of that controlled foreign company and one or more other companies (in this subsection referred to as the ‘consolidated companies’), taken together as a single taxable entity, the amount of tax shall be apportioned between the consolidated companies on a just and reasonable basis for the purpose of calculating the amount of foreign tax paid or borne by the controlled foreign company.
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(2)This subsection applies where an amount of income of a controlled foreign company is taken into account in determining the foreign chargeable profits of the controlled foreign company for an accounting period, but such income is not taken into account in determining the corresponding chargeable profits in the State of the company for the accounting period.
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(3)Where subsection (2) applies, the income to which subsection (2) refers shall not be taken into account in determining the amount of foreign tax paid or borne by the controlled foreign company for the accounting period.
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(4)This subsection applies where an amount of expenditure of a controlled foreign company is not taken into account in determining foreign chargeable profits of a controlled foreign company for an accounting period, but such expenditure is taken into account in determining the corresponding chargeable profits in the State of the company for the accounting period.
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(5)Where subsection (4) applies, the expenditure to which subsection (4) refers shall be taken into account in determining the amount of foreign tax paid or borne by the controlled foreign company for the accounting period.
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Corresponding chargeable profits in the State 835O. (1) For the purpose of determining the corresponding chargeable profits in the State of a controlled foreign company for an accounting period, it shall be assumed— (a) (i) that the company is resident in the State at all times during the accounting period, (ii) if the accounting period is not the company’s first accounting period, that the company has been resident in the State since its first accounting period, (iii) except where the company ceases to be regarded as a controlled foreign company in accordance with this Chapter in the accounting period, that the company will continue to be resident in the State in subsequent accounting periods, and (iv) where the company was resident in the State in the accounting period immediately prior to its first accounting period, that the residence assumed in accordance with this paragraph is not continuous with its residence in the State immediately prior to its first accounting period, (b) that the company is, has been and will continue to be within the charge to corporation tax, (c) that the accounting periods of the company, as determined in accordance with section 835K, are accounting periods for corporation tax purposes, (d) that there is no change in the place or places at which the company carries on its activities, (e) that the company is not a close company within the meaning of section 430, (f) where any allowance, credit, deduction, relief or repayment under the Tax Acts is dependent upon the making of a claim or election, that the company has made that claim or election which would give the maximum amount of allowance, credit, deduction, relief or repayment and that the claim or election was made within any applicable time limit, (g) that the company is neither a member of a group of companies nor a member of a consortium for any purposes of the Tax Acts, and (h) that the company is not entitled to relief under Part 35 in respect of any amount of income, profits or gains for tax paid on such income, profits or gains under the laws of the company’s territory of residence.
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(2)In this section, references to the first accounting period of a controlled foreign company are references to the accounting period in which the company first falls to be regarded as a controlled foreign company in accordance with this Chapter.
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(3)Nothing in this section affects any liability to, or the computation of, corporation tax in respect of a trade which is carried on by a controlled foreign company through a branch or agency in the State.
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Corresponding corporation tax in the State 835P. The corresponding corporation tax in the State of a controlled foreign company for an accounting period shall be the sum of— (a) the corporation tax that would be charged at the rate specified in section 21(1)(f) on that part of the corresponding chargeable profits in the State for the accounting period which would consist of profits chargeable to tax under Case I or II of Schedule D, (b) the corporation tax that would be charged at the rate specified in section 21A(3) on that part of the corresponding chargeable profits in the State for the accounting period which would consist of profits which would be chargeable to tax under Case III, IV or V of Schedule D, and (c) the capital gains tax that would, in accordance with section 78 or otherwise, be charged on that part of the corresponding chargeable profits in the State for the accounting period which would consist of chargeable gains, if, for the purpose only of determining under which Case of Schedule D the corresponding chargeable profits would be chargeable to tax, the assumption in section 835O(1)(d) did not apply and the activities carried on by the controlled foreign company in its territory of residence were deemed to be carried on in the State.
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Chapter 2
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Controlled foreign company charge Undistributed income 835Q. (1) For the purposes of this Part, the undistributed income of a controlled foreign company for an accounting period shall be its distributable profits for the accounting period, less any relevant distributions made in respect of the accounting period.
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(2)For the purposes of subsections (1) and (3), the distributable profits of a controlled foreign company for an accounting period shall be the amount included in the accounting profits of the company which, notwithstanding any prohibition on the making of a distribution under the laws of the territory in which the controlled foreign company is resident or otherwise, are available for distribution to members of the company and which can reasonably be attributed to relevant Irish activities performed by a controlling company or a company connected with the controlling company for that accounting period.
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(3)For the purpose of subsection (1), a relevant distribution made in respect of an accounting period means an amount determined by the formula— A x (B/C) where— A is the amount of the distribution made in respect of the accounting period, B is the amount of the distributable profits for the accounting period, and C is the amount of the accounting profit of the controlled foreign company for the accounting period.
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(4)The reference in subsection (3) to the amount of the distribution made in respect of the accounting period is a reference to such an amount— (a) as is distributed to— (i) a person who is, by virtue of the laws of a relevant Member State, resident for the purposes of tax in a relevant Member State which imposes, without any reduction computed by reference to the amount of such distribution, a tax that generally applies to distributions receivable in that territory, by persons, from sources outside that territory, or (ii) a person resident in the State, (b) as is paid or payable— (i) during the accounting period, or (ii) within 9 months after the end of the accounting period, and (c) where subparagraph (i) of paragraph (a) applies, as has been subject to tax in the relevant Member State referred to in that subparagraph.
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(5)The reference in subsection (4)(c) to tax is a reference to tax that has been paid and has not been and does not fall to be repaid, in whole or in part, to the controlled foreign company or any other person on the making of a claim or otherwise.
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(6)For the purpose of this section, a distribution made in respect of an accounting period shall be regarded as being made out of the distributable profits of that period to the extent of that profit and, in relation to any excess of the distribution over that profit, out of the most recently accumulated distributable profits.
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Controlled foreign company charge 835R. (1) In this section, ‘participation’ means— (a) a, direct or indirect, possession of, or beneficial right to, or right to acquire, share capital or issued share capital of a company, (b) a, direct or indirect, right to exercise, or to acquire the rights to exercise the voting power of a company, or (c) a beneficial right to any profits available for distribution to equity holders of a company.
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(2)Subject to subsections (5), (9) and (10), where in an accounting period of a controlled foreign company— (a) a controlled foreign company group has undistributed income, and (b) relevant Irish activities in relation to the controlled foreign company group are performed by a chargeable company, a controlled foreign company charge shall be made on the chargeable company for the accounting period of the chargeable company, as determined in accordance with section 27, in which the accounting period of the controlled foreign company ends.
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(3)The controlled foreign company charge made under subsection (2) shall be of an amount equal to the undistributed income of the controlled foreign company group to the extent that such income can reasonably be attributed to relevant Irish activities performed by the chargeable company.
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(4)The undistributed income to be attributed to relevant Irish activities for the purpose of subsection (3) shall be determined by reference to the amount that would be payable by persons dealing at arm’s length in relation to those activities, but the amount so attributed shall, in respect of each of the controlled foreign companies in the controlled foreign company group, not exceed an amount determined by the formula— UI x AP where— UI is the undistributed income of the controlled foreign company, and AP is the aggregate of the controlling company and the chargeable company’s participation in that controlled foreign company, expressed as a percentage of the total participation in that company.
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(5)Subsection (2) shall not apply in relation to undistributed income— (a) attributable to relevant Irish activities performed by a chargeable company under arrangements where— (i) it is reasonable to consider that— (I) such arrangements would be entered into by persons dealing at arm’s length, or (II) the essential purpose of the arrangements is not to secure a tax advantage, or (ii) the arrangements are subject to the provisions of section 835C, or (b) which has previously been assessed to a controlled foreign company charge under this section.
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(6)Subject to subsection (7), corporation tax shall be charged in respect of the controlled foreign company charge at the rate specified in— (a) section 21(1)(f), in so far as the undistributed income attributable to the relevant Irish activities would be chargeable to tax under Case I of Schedule D, had it been income accruing to the chargeable company, and (b) section 21A(3), in so far as the undistributed income attributable to the relevant Irish activities would be chargeable to tax under Case III, IV or V of Schedule D, had it been income accruing to the chargeable company.
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(7)The amount of corporation tax chargeable in accordance with subsection (6) shall be reduced by the amount of any creditable tax, as determined under section 835S, in respect of the accounting period concerned.
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(8)Subject to subsection (7), no relief, deduction or set off of any description shall be allowed against a controlled foreign company charge.
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(9)This section shall not apply to undistributed income which is attributable to an asset or risk, whether on an individual basis or taken together as an aggregate, where the increase in the controlled foreign company’s undistributed income as against the undistributed income of the controlled foreign company where it— (a) did not hold, or had not held, the asset to any extent, or (b) did not bear, or had not borne, the risk to any extent, is negligible.
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(10)This section shall not apply in relation to an accounting period of a controlled foreign company where, in that accounting period— (a) the controlled foreign company did not at any time hold assets or bear risks under an arrangement where it would be reasonable to consider that the essential purpose of the arrangement was to secure a tax advantage, or (b) the controlled foreign company did not have any non-genuine arrangements in place.
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(11)For the purpose of subsection (10)(b), a controlled foreign company shall be regarded as having non-genuine arrangements where— (a) the controlled foreign company would not own the assets or would not have borne the risks which generate all, or part of, its undistributed income, but for relevant Irish activities performed relating to those assets and risks, and (b) it would be reasonable to consider that the relevant Irish activities were instrumental in generating that income.
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Creditable tax 835S. (1) In this section, ‘relevant tax’ means a tax chargeable and payable under the laws of a territory, other than the State, which corresponds to corporation tax.
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(2)For the purposes of this Part, the creditable tax for an accounting period shall be the aggregate of— (a) the amount of foreign tax paid or borne in respect of the chargeable income of the controlled foreign company for that accounting period, and (b) the amount of relevant tax paid on a foreign company charge in respect of the chargeable income of the controlled foreign company for that accounting period.
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(3)In subsection (2), references to an amount paid or borne does not include so much of any such amount as has been or falls to be repaid to the controlled foreign company or any other person on the making of a claim or otherwise.
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(4)The amount of the creditable tax to be allowed against corporation tax in respect of any controlled foreign company charge for an accounting period shall not exceed the corporation tax attributable to that charge under section 835R for that period.
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Chapter 3
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Exemptions Effective tax rate exemption 835T. (1) Section 835R shall not apply in relation to an accounting period of a controlled foreign company where subsection (2) applies.
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(2)This subsection applies where the amount of foreign tax which is paid or borne by a controlled foreign company for an accounting period is not less than the difference between— (a) the corresponding corporation tax in the State for that accounting period, and (b) the amount of such foreign tax paid or borne for the accounting period.
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(3)The amount of foreign tax which is paid or borne by a controlled foreign company for an accounting period shall be determined in accordance with section 835N.
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Low profit margin exemption 835U. (1) In this section, ‘relevant operating costs’ means the operating costs, as construed in accordance with international accounting standards or generally accepted accounting practice, incurred by a controlled foreign company for an accounting period, but excluding— (a) the costs of goods purchased by the controlled foreign company, other than goods used by the company in the territory in which it is resident for the accounting period, and (b) any amounts incurred on behalf of, or paid to, an associated company.
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(2)Subject to subsection (3), where in an accounting period the accounting profits of a controlled foreign company are less than 10 per cent of its relevant operating costs, section 835R shall not apply.
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(3)Subsection (2) shall not apply where— (a) any arrangements are entered into, (b) as a consequence of such arrangements subsection (2) would, apart from this subsection, apply, and (c) it would be reasonable to consider that the main purpose, or one of the main purposes, of the arrangements is to secure that subsection (2) applies.
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Low accounting profit exemption 835V. (1) Subject to subsections (2) and (3), where in an accounting period— (a) the accounting profits of a controlled foreign company are less than €750,000 and the amount of those profits representing non-trading income is less than €75,000, or (b) the accounting profits are less than €75,000, section 835R shall not apply.
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(2)Where an accounting period is less than 12 months, the amounts referred to in subsection (1) shall be reduced proportionately.
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(3)This section shall not apply where— (a) any arrangements are entered into, (b) as a consequence of such arrangements subsection (1) would, apart from this subsection, apply, and (c) it would be reasonable to consider that the main purpose, or one of the main purposes, of the arrangements is to secure that subsection (1) applies.
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(4)A reference in subsection (3) to the application of subsection (1) includes a reference to the application of that subsection as modified in accordance with subsection (2).
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Exempt period exemption 835W. (1) In this section— ‘exempt period’ shall be construed in accordance with subsection (3); ‘subsequent period condition’ means the condition which is satisfied where the circumstances specified in subsection (4) apply.
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(2)Section 835R shall not apply in relation to an accounting period of a controlled foreign company where— (a) the accounting period ends during an exempt period, and (b) the subsequent period condition is satisfied by the controlled foreign company.
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(3)An exempt period shall begin when a company first becomes a controlling company in relation to the controlled foreign company concerned (in this section referred to as the ‘relevant time’) and shall end 12 months from the relevant time.
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(4)The subsequent period condition shall be satisfied by a controlled foreign company where— (a) the company ceases to be regarded as a controlled foreign company in accordance with Chapter 1, or (b) the controlled foreign company charge does not apply, in the first accounting period of the company beginning immediately after the exempt period.
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(5)Where the accounting period of a controlled foreign company begins during an exempt period, but does not end during that period, the undistributed income of the controlled foreign company, as determined on a just and reasonable basis, which— (a) arises during the exempt period, and (b) would otherwise be subject to the controlled foreign company charge under section 835R, shall be exempt from such charge.
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(6)This section shall not apply in relation to a controlled foreign company where— (a) immediately before the relevant time the controlled foreign company was not carrying on a business, unless subsection (7) applies to that company, or (b) the controlling company in respect of the controlled foreign company was subject to this Part (as respects the controlled foreign company) on 1 January 2019.
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(7)This subsection shall apply to a controlled foreign company where— (a) the controlled foreign company is incorporated or formed immediately before the relevant time for the purpose of controlling one or more other companies, and (b) an exempt period begins in relation to one or more of the companies, referred to in paragraph (a), controlled by the controlled foreign company at that relevant time.
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(8)This section shall not apply in relation to a controlled foreign company where— (a) any arrangements are entered into, and (b) it would be reasonable to consider that the main purpose, or one of the main purposes, of the arrangements is to secure— (i) a tax advantage for any person, or (ii) that subsection (2), would, apart from this subsection, apply.
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Relief for certain distributions 835X. (1) Where a distribution made in respect of an accounting period is made by a controlled foreign company out of chargeable income in respect of a previous accounting period, the corporation tax paid on the controlled foreign company charge attributable to that income shall be allowed as a credit against the tax chargeable in respect of the distribution.
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(2)Where a distribution made in respect of an accounting period is made by a controlled foreign company in part out of chargeable income in respect of a previous accounting period and in part out of other income or profits, the distribution shall be treated as if it consisted of two distributions made out of chargeable income and out of other income or profits respectively, and subsection (1) shall apply to such part of the distribution as is made out of chargeable income as it applies to a distribution made wholly out of chargeable income.
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Relief on certain disposals of shares or securities in a controlled foreign company 835Y. (1) In this section, ‘chargeable gain’ shall be construed in accordance with section 545.
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(2)This section shall apply where a controlling company or a company connected with the controlling company (either of which is in this section referred to as a ‘disposing company’), disposes of shares or securities in a controlled foreign company or in a company connected with the controlled foreign company (either of which is in this section referred to as the ‘disposed company’) and a controlled foreign company charge has been made on a disposing company by reference to its interest in the disposed company.
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(3)This subsection applies where— (a) the disposing company is the only chargeable company in relation to the disposed company, (b) the disposing company is not a chargeable company in relation to the disposed company and the chargeable company does not have any interest in the disposed company, or (c) the disposing company is a chargeable company in relation to the disposed company and, in relation to that disposed company, there exists another chargeable company which does not have an interest in the disposed company.
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(4)For the purpose of computing the chargeable gain accruing to the disposing company on a disposal of shares or securities referred to in subsection (2)— (a) where subsection (3) applies, an amount shall be allowable as a deduction under section 552(1)(a) from the consideration for the disposal, being an amount determined by the formula— A x (B/C) where— A is the amount of the controlled foreign company charge relating to the controlled foreign company, B is the number of shares or securities in the disposed company disposed of by the disposing company, and C is the total number of shares or securities in the disposed company owned by the disposing company immediately before the disposal, or (b) where subsection (3) does not apply, an amount shall be allowable as a deduction under section 552(1)(a) from the consideration for the disposal, being an amount determined by the formula— D x (E/F) where— D is the amount of the controlled foreign company charge relating to the controlled foreign company, E is the number of shares or securities in the controlled foreign company disposed of by the disposing company, and F is the total number of shares or securities in the controlled foreign company.
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(5)Where, before a disposal referred to in subsection (2)— (a) a distribution is made by the controlled foreign company, (b) the distribution is made out of the chargeable income which has been subject to the controlled foreign company charge referred to in subsection (2), and (c) section 835X applies in relation to that distribution, paragraphs (a) and (b) of subsection (4) shall apply as if the references to A and D, respectively, in the formulae in those paragraphs were a reference to the amount of the controlled foreign company charge relating to the controlled foreign company as reduced by the amount of the controlled foreign company charge which corresponds to the chargeable income represented by the distribution.
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(6)Where an amount, representing all or part of a controlled foreign company charge, has been allowed as a deduction under subsection (4), no further deduction shall be given under this section in respect of— (a) where the amount represents all of a controlled foreign company charge, the controlled foreign company charge, or (b) where the amount represents part of a controlled foreign company charge, that part of the controlled foreign company charge.
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(7)For the purposes of identifying the shares or securities disposed of, in so far as the shares or securities are of the same class, shares or securities acquired at an earlier time shall, for the purposes of this section, be deemed to have been disposed of before shares or securities acquired at a later time.”.
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(2)(a) In this subsection— (i) “controlling company” has the same meaning as it has in Chapter 1 of Part 35B of the Principal Act, as inserted by subsection (1), and (ii) “accounting period” has the same meaning as it has in section 27 of the Principal Act. (b) Subsection (1) applies as respects an accounting period of a controlling company commencing on or after 1 January 2019.
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Amendment of section 291A of Principal Act (intangible assets) 28. (1) Section 291A of the Principal Act is amended— (a) in subsection (6)(a) by substituting “paragraphs (b), (ba) and (c)” for “paragraphs (b) and (c)”, (b) in subsection (6)(b)— (i) by substituting “paragraph (a) and, where applicable, paragraph (ba)” for “paragraph (a)” where it first occurs in each of subparagraphs (i) and (ii), and (ii) by substituting “paragraphs (a) and (ba)” for “paragraph (a)” in each other place where it occurs in each of subparagraphs (i) and (ii), and (c) by inserting the following after paragraph (b) of subsection (6): “(ba) Where the relevant trade (referred to in paragraph (a)) carried on by the company for an accounting period comprises relevant activities relating to a specified intangible asset or specified intangible assets the capital expenditure on which asset or assets includes— (i) capital expenditure incurred by the company before 11 October 2017 (referred to in this paragraph as ‘the earlier period’), and (ii) capital expenditure incurred by the company on or after 11 October 2017 (referred to in this paragraph as ‘the later period’), then, the trading income from the relevant trade for the accounting period shall, for the purposes of paragraphs (a) and (b), be deemed to consist of two separate income streams, the first income stream consisting of so much of the trading income from the relevant trade for the accounting period as relates to capital expenditure incurred in the earlier period (referred to in this paragraph and the following paragraph as the ‘first income stream’), and the second income stream consisting of so much of the trading income from the relevant trade for the accounting period as relates to capital expenditure incurred in the later period (referred to in this paragraph and the following paragraph as the ‘second income stream’). The amount of income to be attributed to each separate income stream shall be determined in accordance with paragraph (bb)(i), and paragraph (a) shall apply with any necessary modifications such that— (I) the aggregate of the amounts referred to in subparagraphs (i) and (ii) of paragraph (a) which relate to capital expenditure incurred in the earlier period shall not exceed the amount of the first income stream, and (II) the aggregate of the amounts referred to in subparagraphs (i) and (ii) of paragraph (a) which relate to capital expenditure incurred in the later period shall not exceed 80 per cent of the amount of the second income stream.
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(bb) (i) For the purposes of paragraph (ba) the trading income from the relevant trade for the accounting period shall, as necessary, be apportioned between the first income stream and the second income stream on a just and reasonable basis, and any amount to be attributed to the first income stream shall not exceed an arm’s length amount. (ii) The company shall maintain and have available such records as may reasonably be required for the purposes of determining whether any such apportionment referred to in subparagraph (i) is made on a just and reasonable basis and whether any amount attributed to the first income stream exceeds an arm’s length amount.”.
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(2)This section shall be deemed to have applied in respect of capital expenditure incurred by a company on or after 11 October 2017.
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Chapter 6
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Capital Gains Tax Amendment of section 579B of Principal Act (trustees ceasing to be resident in the State) 29. Section 579B of the Principal Act is amended by inserting the following after subsection (8):