LegalizeFinance Act 2004
(a)(i) a planning application (not being an application for outline permission within the meaning of section 36 of the Planning and Development Act 2000), in so far as planning permission is required, in respect of the construction, conversion or refurbishment work on the building or structure represented by that expenditure, is made in accordance with the Planning and Development Regulations 2001 to 2003,
(ii) an acknowledgement of the application, which confirms that the application was received on or before 31 December 2004, is issued by the planning authority in accordance with article 26(2) of the Planning and Development Regulations 2001 (S.I. No. 600 of 2001), and
(iii) the application is not an invalid application in respect of which a notice is issued by the planning authority in accordance with article 26(5) of those regulations,
(b)(i) a planning application, in so far as planning permission was required, in respect of the construction, conversion or refurbishment work on the building or structure represented by that expenditure, was made in accordance with the Local Government (Planning and Development) Regulations 1994 (S.I. No. 86 of 1994), not being an application for outline permission within the meaning of article 3 of those regulations,
(ii) an acknowledgement of the application, which confirms that the application was received on or before 10 March 2002, was issued by the planning authority in accordance with article 29(2)(a) of the regulations referred to in subparagraph (i), and
(iii) the application was not an invalid application in respect of which a notice was issued by the planning authority in accordance with article 29(2)(b)(i) of those regulations,
or
(c) where the construction, conversion or refurbishment work on the building or structure represented by that expenditure is exempted development for the purposes of the Planning and Development Act 2000 by virtue of section 4 of that Act or by virtue of Part 2 of the Planning and Development Regulations 2001 (S.I. No. 600 of 2001) and—
(i) a detailed plan in relation to the development work is prepared,
(ii) a binding contract in writing, under which the expenditure on the development is incurred, is in existence, and
(iii) work to the value of 5 per cent of the development costs is carried out,
not later than 31 December 2004.”,
(2) (a) Paragraphs (b)(i)(I), (b)(i)(II), (b)(ii), (c)(i), (d)(ii) and (e) of subsection (1) shall come into operation on the making of an order to that effect by the Minister for Finance.
(b) Paragraphs (d)(i), (g) and (i)(i) of subsection (1) are deemed to have applied as on and from 1 January 2002.
27 Amendment of section 843 (capital allowances for buildings used for third level education purposes) of Principal Act.
27.—Section 843 of the Principal Act is amended—
(a) in subsection (1), by inserting the following after the definition of “qualifying expenditure”:
“ ‘qualifying period’ means the period commencing on 1 July 1997 and ending on 31 July 2006;”,
(b) in subsection (2), by substituting “Subject to subsections (2A) to (7)” for “Subject to subsections (3) to (7)”,
(c) by inserting the following subsection after subsection (2):
“(2A) An allowance shall be given by virtue of subsection (2) in relation to any qualifying expenditure on a qualifying premises only in so far as that expenditure is incurred in the qualifying period.”,
(d) in subsection (3), by inserting “incurred in the qualifying period” after “qualifying expenditure”, and
(e) by inserting the following subsection after subsection (8):
“(9) For the purposes only of determining, in relation to a claim for an allowance by virtue of subsection (2), whether and to what extent capital expenditure incurred on the construction of a qualifying premises is incurred or not incurred in the qualifying period, only such an amount of that capital expenditure as is properly attributable to work on the construction of the premises actually carried out during the qualifying period shall (notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is or is to be treated as incurred) be treated as having been incurred in that period.”.
28 Amendment of section 481 (relief for investment in films) of Principal Act.
28.—(1) Section 481 of the Principal Act is amended—
(a) in subsection (1)—
(i) by inserting the following after the definition of “authorised officer”:
“ ‘eligible individual’ means an individual who is a citizen of Ireland or of another Member State of the European Communities, or an individual domiciled, resident or ordinarily resident in the State or in another Member State of the European Communities;”,
(ii) in the definition of “film”, by substituting the following for paragraph (a):
“(a) a film of a kind which is included within the categories of films eligible for certification by the Revenue Commissioners under subsection (2A), as specified in regulations made under subsection (2E), and”,
(iii) in the definition of “Minister” by substituting “Arts, Sport and Tourism” for “Arts, Heritage, Gaeltacht and the Islands”,
(iv) by substituting the following for the definition of “qualifying film”:
“ ‘qualifying film’ means a film in respect of which the Revenue Commissioners have issued a certificate under subsection (2A), which has not been revoked under subsection (2D);”,
(v) in the definition of “qualifying period” by substituting “31 December 2008” for “31 December 2004”, and
(vi) in the definition of “relevant investment”—
(I) by substituting the following for paragraph (b):
“(b) paid by the allowable investor company or the qualifying individual, as the case may be, for the purpose of enabling the qualifying company to produce a film in respect of which, at the time such sum of money is paid, the authorised officer has given notice in writing to the qualifying company that the Revenue Commissioners are satisfied for the time being that an application in writing, in the form prescribed by the Revenue Commissioners and containing such information as may be specified in regulations made under subsection (2E), has been made to enable the Revenue Commissioners to consider whether a certificate should be issued to that company under subsection (2A), and”,
and
(II) by substituting “other than a provision for its repayment in the event of the Revenue Commissioners not giving a certificate under subsection (2A)” for “other than a provision for its repayment in the event of the Minister not giving a certificate under subsection (2)”,
(b) in subsection (2)—
(i) by substituting the following for paragraphs (a) and (b):
“(a) The Minister, on request from the Revenue Commissioners following an application to them by a qualifying company for a certificate under subsection (2A) in relation to a film to be produced by the company, may subject to paragraph (b) and in accordance with regulations made under subsection (2E), give authorisation to the Revenue Commissioners that they may, subject to subsection (2A), issue a certificate under that subsection to the qualifying company in relation to that film.
(b) In considering whether to give the authorisation referred to in paragraph (a), the Minister, in accordance with regulations made under subsection (2E), shall have regard to—
(i) the categories of films eligible for certification by the Revenue Commissioners under subsection (2A), as specified in those regulations, and
(ii) any contribution which the production of the film is expected to make to either or both the development of the film industry in the State and the promotion and expression of Irish culture,
and where such authorisation is given, the Minister, having regard to those matters, shall specify in the authorisation such conditions, as the Minister may consider proper, including a condition—
(I) that not less than—
(A) 75 per cent, or
(B) in the case of a co-production (as specified in regulations made under subsection (2E)), such lower percentage, not being less than 10 per cent, which, the Minister specifies in the authorisation,
of the work on the production of the film shall be carried out in the State,
(II) in relation to—
(A) the employment and responsibilities of the producer, and the producer company, of a film for the production of that film, and
(B) the employment of personnel, including trainees, (other than the producer) for the production of that film.”,
(ii) in paragraph (c), by substituting “€15,000,000” for “€10,480,000”, and
(iii) by deleting paragraphs (d) and (e),
(c) by inserting the following after subsection (2):
“(2A)(a) Subject to the provisions of this subsection, the Revenue Commissioners, on the making of an application by a qualifying company, may, in accordance with regulations made under subsection (2E), issue a certificate to a qualifying company stating, in relation to a film to be produced by the company, that the film may be treated as a qualifying film for the purpose of this section.
(b) The Revenue Commissioners shall not issue a certificate under paragraph (a) unless given authorisation that they may do so by the Minister under subsection (2)(a).
(c) Nothing in this section shall be construed as obliging the Revenue Commissioners to issue a certificate under paragraph (a) and in any case where, in relation to a film, the principal photography has commenced, the first animation drawings have commenced or the first model movement has commenced, as the case may be, before application is made by a qualifying company, the Revenue Commissioners shall not issue a certificate under that paragraph.
(d) An application for a certificate under paragraph (a) shall be in the form prescribed by the Revenue Commissioners and shall contain such information as may be specified in regulations made under subsection (2E).
(e) In considering whether to issue a certificate under paragraph (a) the Revenue Commissioners shall, in respect of the proposed production of the film, examine all aspects of the qualifying company's proposal.
(f) The Revenue Commissioners may refuse to issue a certificate under paragraph (a) if they are not satisfied with any aspect of the qualifying company's application and, in particular, the Revenue Commissioners may refuse to issue a certificate—
(i) if they have reason to believe that the budget or any particular item of proposed expenditure in the budget is inflated, or
(ii) where—
(I) they are not satisfied that there is a commercial rationale for the corporate structure proposed—
(A) for the production, financing, distribution or sale of the film, or
(B) for all of those purposes,
or
(II) they are of the opinion that the corporate structure proposed would hinder the Revenue Commissioners in verifying compliance with any of the provisions governing the relief.
(g) A certificate issued by the Revenue Commissioners under paragraph (a) shall be subject to such conditions specified in the certificate as the Revenue Commissioners may consider proper, having regard, in particular, to the examination referred to in paragraph (e) and any conditions specified in the authorisation given by the Minister under subsection (2)(a), and in particular the Revenue Commissioners shall specify in the certificate a condition—
(i) in relation to the percentage of the work on the production of the film which shall be carried out in the State, as specified by the Minister in the authorisation,
(ii) in relation to the matters specified by the Minister in the authorisation by virtue of subsection (2)(b)(II),
(iii) subject to subsection (2)(c), that the amount per cent of the total cost of production of the film which may be met by relevant investments shall not exceed the specified percentage, as referred to in that subsection,
(iv) in relation to the minimum amount of money to be expended directly—
(I) on the employment of eligible individuals, and
(II) on the provision of certain goods, services and facilities, as set out in regulations made under subsection (2E),
on the production of the qualifying film.
(h) The Revenue Commissioners, having consulted with the Minister as appropriate, 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 qualifying company concerned of the amendment, revocation or addition, and this section shall apply as if—
(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.
(2B) In carrying out their functions under this section the Revenue Commissioners may—
(a) consult with any person, agency or body of persons, as in their opinion may be of assistance to them, and
(b) notwithstanding any obligation as to secrecy or other restriction on the disclosure of information imposed by, or under, the Tax Acts or any other statute or otherwise, disclose any detail in a qualifying company's application which they consider necessary for the purposes of such consultation.
(2C) A company shall not be regarded as a qualifying company for the purposes of this section—
(a) unless the company, in relation to a qualifying film, notifies the Revenue Commissioners in writing immediately when the principal photography has commenced, the first animation drawings have commenced or the first model movement has commenced, as appropriate,
(b) if the financial arrangements which the company enters into in relation to the qualifying film are—
(i) financial arrangements of any type with a person resident, registered or operating in a territory other than—
(I) a Member State of the European Communities, or
(II) a territory with the government of which, arrangements having the force of law by virtue of section 826(1)(a), have been made,
or
(ii) financial arrangements under which funds are channelled, directly or indirectly, to, or through, a territory other than a territory referred to in clause (I) or (II) of subparagraph (i),
(c) unless the company provides, when requested to do so by the Revenue Commissioners, for the purpose of verifying compliance with the provisions governing the relief or with any condition specified in a certificate issued by them under subsection (2A)(a), evidence to vouch each item of expenditure in the State or elsewhere on the production and distribution of the qualifying film, whether expended by the qualifying company or by any other person engaged, directly or indirectly, by the qualifying company to provide goods, services or facilities in relation to such production or distribution and, in particular, such evidence shall include—
(i) records required to be kept or retained by the company by virtue of section 886, and
(ii) records, in relation to the production and distribution of the qualifying film, required to be kept or retained by that other person by virtue of section 886, or which would be so required if that other person were subject to the provisions of that section,
and
(d) unless the company, within such time as is specified in the regulations made under subsection (2E)—
(i) notifies the Revenue Commissioners in writing of the date of completion of the production of the qualifying film,
(ii) provides to the Revenue Commissioners and to the Minister, such number of copies of the film in such format and manner as may be specified in those regulations, and
(iii) provides to the Revenue Commissioners, a compliance report, in such format and manner specified in those regulations, which proves to the satisfaction of the Revenue Commissioners that—
(I) the provisions of this section in so far as they apply in relation to the company and a qualifying film have been met, and
(II) any conditions attaching to a certificate issued to the company in relation to a qualifying film under subsection (2A)(a) have been fulfilled.
(2D) Where a company fails—
(a) to comply with any of the provisions of subsection (2C) or any other provision governing the relief, or
(b) to fulfil any of the conditions to which a certificate issued to it under paragraph (a) of subsection (2A) is subject, by virtue of paragraph (g) or (h) of that subsection,
that failure shall constitute the failure of an event to happen by reason of which relief may be withdrawn under subsection (11) and the Revenue Commissioners may, by notice in writing served by registered post on the company, revoke the certificate.
(2E) The Revenue Commissioners with the consent of the Minister for Finance, and with the consent of the Minister in relation to the matters to be considered regarding the issue of an authorisation under subsection (2), shall make regulations with respect to the administration by them of the relief under this section and with respect to the matters to be considered by the Minister for the purposes of that subsection and, without prejudice to the generality of the foregoing, regulations under this subsection may include provision—
(a) governing the application for certification pursuant to subsection (2A) and the information and documents to be provided in or with such application,
(b) specifying the categories of films eligible for certification by the Revenue Commissioners under subsection (2A),
(c) prescribing the form of such application,
(d) governing the records that a qualifying company shall maintain or provide to the Revenue Commissioners,
(e) governing the period for which, and the place at which, such records shall be maintained,
(f) specifying the time within which a qualifying company shall notify the Revenue Commissioners of the completion of the production of a qualifying film,
(g) specifying the time within which, and the format, number and manner in which, copies of a qualifying film shall be provided to the Revenue Commissioners and to the Minister,
(h) specifying the form and content of the compliance report to be provided to the Revenue Commissioners, the manner in which such report shall be made and verified, the documents to accompany the report and the time within which such report shall be provided,
(i) governing the type of expenditure which may be accepted by the Revenue Commissioners as expenditure on the production of a qualifying film,
(j) governing the provision of the goods, services and facilities referred to in subsection (2A)(g)(iv)(II), including the place of origin of those goods, services and facilities, the place in which they are provided and the location of the supplier,
(k) specifying the currency exchange rate to be applied to expenditure on the production of a qualifying film, and
(l) specifying the criteria to be considered by the Minister, in relation to the matters referred to in subsections (2)(b)(i) and (ii)—
(i) in deciding whether to give authorisation to the Revenue Commissioners under subsection (2)(a), and
(ii) in specifying conditions in such authorisation, as provided for in subsection (2)(b),
and the information required for those purposes to be included in the application made to the Revenue Commissioners under subsection (2A) by a qualifying company.”,
(d) in subsection (8), by substituting “the year of assessment 2008” for “the year of assessment 2004”,
(e) in subsection (9), by substituting “the year of assessment 2008” for “the year of assessment 2004”,
(f) in subsection (11)(a), by substituting “the revocation, under subsection (2D), by the Revenue Commissioners of a certificate issued by them under subsection (2A)” for “the revocation by the Minister of a certificate under subsection (2)”,
(g) in subsection (13), by deleting paragraphs (b) and (c), and
(h) by inserting the following subsection after subsection (21):
“(22) The Revenue Commissioners shall be responsible for verifying compliance with conditions specified in any certificate issued by the Minister prior to the day appointed by order made by the Minister for Finance for the coming into operation of this subsection, where the qualifying company has not, prior to the day so appointed, submitted the items, statements, reports or other matters required to be submitted to the Minister under the terms of such certificate to enable the Minister to verify such compliance.
(23) Every regulation made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.”.
(2) This section 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.
29 Amendment of Chapter 1A (investment undertakings) of Part 27 of Principal Act.
29.—(1) Chapter 1A (inserted by the Finance Act 2000) of Part 27 of the Principal Act is amended—
(a) in the definition of “chargeable event” in section 739B(1)—
(i) by deleting “and” in paragraph (c), and
(ii) by inserting the following after paragraph (c):
“(cc) the appropriation or cancellation of units of a unit holder by an investment undertaking for the purposes of meeting the amount of appropriate tax payable on any gain arising by virtue of paragraph (c), and”,
(b) in section 739D—
(i) by deleting “and” after “unit holder,” in subsection (2)(d)(ii),
(ii) by inserting the following after subsection (2)(d):
“(dd) where the chargeable event is the appropriation or cancellation of units by an investment undertaking as a consequence of the transfer by a unit holder of entitlement to a unit, the amount determined under subsection (5A), and”,
and
(iii) by inserting the following after subsection (5):
“(5A) The amount referred to in subsection (2)(dd) is the amount determined by the formula—
| A G | 100 __ 100 (G (S + 3)) |
|---|---|
where—
Ais the appropriate tax payable on the transfer by a unit holder of entitlement to a unit in accordance with subsection (2)(d),
Gis the amount of the gain on that transfer of that unit divided by the value of that unit, and
Sis the standard rate per cent (within the meaning of section 4).”,
and
(c) in section 739E—
(i) in subsection (1)(b) by substituting “paragraph (b), (c), (d) or (dd)” for “paragraph (b), (c) or (d)”, and
(ii) in subsection (3)—
(I) by deleting “or” in paragraph (b)(i), and
(II) by inserting the following after paragraph (b)(i):
“(ia) the appropriation or cancellation of units as a consequence of the transfer by a unit holder of entitlement to a unit, or”.
(2) This section applies as respects the appropriation or cancellation of a unit (within the meaning of section 739B of the Principal Act) on or after 4 February 2004.
30 Amendment of Chapter 4 (certain offshore funds — taxation and returns) of Part 27 of Principal Act.
30.—Chapter 4 of Part 27 of the Principal Act is amended—
(a) in section 747E(4)(b) by substituting “section 396, 396B” for “section 396”, and
(b) by inserting the following after section 747E:
| “Reconstructions and amalgamations in offshore funds. | 747F.—(1) In this section ‘scheme of reconstruction or amalgamation’ means an arrangement under which each person who has a material interest in an offshore fund (in this section referred to as an ‘old interest’) receives in place of that old interest a material interest in another offshore fund (in this section referred to as the ‘new interest’) in respect of or in proportion to, or as nearly as may be in proportion to, the value of the old interest and as a result of which the value of that old interest becomes negligible. (2) Where, in connection with a scheme of reconstruction or amalgamation, a person disposes of an old interest and receives in place of that old interest a new interest, the disposal of the old interest shall not give rise to a gain but the new interest shall for the purposes of section 747E(2) be treated as acquired at the same time and at the same cost as the old interest.”. |
|---|---|
31 Amendment of Schedule 24 (relief from income tax and corporation tax by means of credit in respect of foreign tax) to Principal Act.
31.—(1) Schedule 24 of the Principal Act is amended—
(a) in paragraph 9A—
(i) in subparagraph (4)(b) by substituting “5 per cent” for “25 per cent”, and
(ii) in subparagraph (5)(a) by deleting “, in respect of taxes covered by these arrangements,”,
(b) in paragraph 9B—
(i) in subparagraph (2) by substituting the following for “underlying tax to be taken into account.”:
“underlying tax to be taken into account: and for this purpose there shall, subject to Part 1, be taken into account as if it were tax payable under the law of the territory in which the third company is resident—
(i) any income tax or corporation tax payable in the State by the foreign company in respect of its profits, and
(ii) any tax which, under the law of any other territory, is payable by the foreign company in respect of its profits.”,
(ii) in subparagraph (5)—
(I) in clause (b)(i) by substituting “5 per cent” for “25 per cent”, and
(II) in clause (b)(iii) by substituting “5 per cent” for “10 per cent”,
and
(c) by adding the following after paragraph 9D—
“Treatment of unrelieved foreign tax
9E. (1) (a) In this paragraph—
‘the aggregate amount of corporation tax payable by a company for an accounting period in respect of relevant dividends received by the company in the accounting period from foreign companies’ means so much of the corporation tax which, apart from this paragraph, would be payable by the company for that accounting period as would not have been payable had those dividends not been received by the company;
‘foreign company’ means a company resident outside the State;
‘unrelieved foreign tax’ has the meaning assigned to it in subparagraph (2).
(b) For the purposes of this paragraph, a dividend is a relevant dividend if it is received by a company (in this clause referred to as the ‘receiving company’) from a company which is not resident in the State (in this clause referred to as the ‘paying company’) and the paying company is related to the receiving company (within the meaning of paragraph 9B(5)(b)).
(2) Where as respects a relevant dividend received in an accounting period by a company any part of the foreign tax cannot, apart from this paragraph, be allowed as a credit against any of the Irish taxes and, accordingly, the amount of income representing the dividend is treated under paragraph 7(3)(c) as reduced by that part of the foreign tax, then an amount determined by the formula—
| 100 R ______ 100 | D |
|---|---|
where—
R is the rate per cent specified in section 21A(3), and
D is the amount of the part of the foreign tax by which the income is to be treated under paragraph 7(3)(c) as reduced,
shall be treated for the purposes of subparagraph (3) as unrelieved foreign tax of that accounting period.
(3) The aggregate amount of corporation tax payable by a company for an accounting period in respect of relevant dividends received by the company in that accounting period from foreign companies shall be reduced by the unrelieved foreign tax of that accounting period.
(4) Where the unrelieved foreign tax in relation to an accounting period of a company exceeds the aggregate amount of corporation tax payable by the company for the accounting period in respect of relevant dividends received by the company in that accounting period from foreign companies, the excess shall be carried forward and treated as unrelieved foreign tax of the next succeeding accounting period, and so on for succeeding accounting periods.”.
(2) This section comes into operation on such day or days as the Minister for Finance by order appoints, either generally or with reference to any particular purpose or provision, and different days may be so appointed for different purposes or different provisions.
32 Amendment of section 817C (restriction on deductibility of certain interest) of Principal Act.
32.—(1) Section 817C (inserted by the Finance Act 2003) of the Principal Act is amended—
(a) in subsection (2) by substituting “Subject to subsection (2A), this section applies where” for “This section applies where”, and
(b) by inserting the following after subsection (2):
“(2A) (a) This section does not apply where the connected person referred to in subsection (2) is a company which—
(i) is not resident in the State, and
(ii) is not under the control, whether directly or indirectly, of a person who is, or persons who are, resident in the State.
(b) For the purposes of this subsection—
(i) ‘control’ shall be construed in accordance with subsections (2) to (6) of section 432 as if in subsection (6) of that section for ‘5 or fewer participators’ there were substituted ‘persons resident in the State’, and
(ii) a company shall not be treated as under the control whether directly or indirectly, of a person or persons if that person is or those persons are, in turn under the control of another person or other persons.”.
(2) This section is deemed to have applied as respects any chargeable period ending on or after 6 February 2003.
Chapter 4 Corporation Tax
33 Tax credit for research and development expenditure, etc.
33.—(1) The Principal Act is amended—
(a) by substituting the following for section 766:
| “Tax credit for research and development expenditure. | 766.—(1) (a) In this section— ‘appropriate inspector’ has the same meaning as in section 950; ‘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; ‘expenditure on research and development’, in relation to a company, means expenditure, other than expenditure on a building or structure, incurred by the company in the carrying on by it of research and development activities in a relevant Member State, being expenditure— (i) which is allowable for the purposes of tax in the State as a deduction in computing the income from a trade (otherwise than by virtue of section 307) or is relieved under Part 8, (ii) on machinery or plant which qualifies for any allowance under Part 9 or this Chapter, or (iii) which qualifies for an allowance under section 764, but— (I) expenditure on research and development shall not include a royalty or other sum paid by a company in respect of the user of an invention— (A) if the royalty or other sum is paid to a person who is connected with the company within the meaning of section 10 and is income from a qualifying patent within the meaning of section 234, or (B) to the extent to which the royalty or other sum exceeds the royalty or other sum which would have been paid if the payer of the royalty or other sum and the beneficial recipient of the royalty or other sum were independent persons acting at arm's length, and (II) expenditure incurred by a company which is resident in the State shall not be expenditure on research and development if it— (A) may be taken into account as an expense in computing income of the company, (B) is expenditure in respect of which an allowance for capital expenditure may be made to the company, or (C) may otherwise be allowed or relieved in relation to the company, for the purposes of tax in a territory other than the State; ‘group expenditure on research and development’, in relation to a relevant period of a group of companies, means the aggregate of the amounts of expenditure on research and development incurred in the relevant period by qualified companies which for the relevant period are members of the group: but— (i) expenditure incurred by a company which is a member of a group for a part of a relevant period shall only be included in group expenditure on research and development if the expenditure is incurred at a time when the company is a member of the group, and (ii) expenditure on research and development incurred by a company which has been included in group expenditure on research and development in relation to a group shall not be included in group expenditure on research and development in relation to any other group; ‘qualified company’, in relation to a relevant period, means a company which— (i) throughout the relevant period— (I) carries on a trade, (II) is a 51 per cent subsidiary of a company which carries on a trade, or (III) is a 51 per cent subsidiary of a company whose business consists wholly or mainly of the holding of stocks, shares or securities of a company which carries on a trade or more than one such company, (ii) carries out research and development activities in the relevant period, and (iii) maintains a record of expenditure incurred by it in the carrying out by it of those activities; ‘qualifying group expenditure on research and development’, in relation to a relevant period, means an amount equal to the excess of the amount of group expenditure on research and development in relation to the relevant period over the threshold amount in relation to the relevant period; ‘relevant Member State’ means a state which is a Member State of the European Communities or, not being such a Member State, a state which is a contracting party to the EEA Agreement; ‘relevant period’ means— (i) in the case of companies which are members of a group the respective ends of the accounting periods of the members of which coincide, the period of 12 months throughout which one or more members of the group carries on a trade and ending at the end of the first accounting period which commences on or after 1 January 2004, and (ii) in the case of companies which are members of a group the respective ends of the accounting periods of which do not coincide, the period specified in a notice in writing made jointly by companies which are members of the group and given to the appropriate inspector within a period of 9 months after the end of the period so specified, being a period of 12 months throughout which one or more members of the group carries on a trade and ending at the end of the first accounting period of a company which is a member of the group which accounting period commences on or after 1 January 2004, and each subsequent period of 12 months commencing immediately after the end of the preceding relevant period; ‘research and development activities’ means systematic, investigative or experimental activities in a field of science or technology, being one or more of the following— (i) basic research, namely, experimental or theoretical work undertaken primarily to acquire new scientific or technical knowledge without a specific practical application in view, (ii) applied research, namely, work undertaken in order to gain scientific or technical knowledge and directed towards a specific practical application, or (iii) experimental development, namely, work undertaken which draws on scientific or technical knowledge or practical experience for the purpose of achieving technological advancement and which is directed at producing new, or improving existing, materials, products, devices, processes, systems or services including incremental improvements thereto: but activities will not be research and development activities unless they— (I) seek to achieve scientific or technological advancement, and (II) involve the resolution of scientific or technological uncertainty; ‘threshold amount’, in relation to a relevant period of a group of companies, means— (i) where the relevant period is a period commencing at any time after 31 December 2003 and before 1 January 2007, the aggregate of the amounts of expenditure on research and development incurred in the period of one year ending on a date in the year 2003 which corresponds with the date on which the relevant period ends, (ii) in any other case, the aggregate of the amounts of expenditure on research and development incurred in the period of one year ending on a date which is 3 years before the end of the relevant period, by all companies which are members of the group in the threshold period in relation to the relevant period concerned: but expenditure incurred by a company which is a member of the group for a part of the threshold period shall only be included in the threshold amount if the expenditure is incurred at a time when the company is a member of the group; ‘threshold period’, in relation to a relevant period, means the period of one year referred to in the definition of ‘threshold amount’; ‘university or institute of higher education’ means— (i) a college or institution of higher education in the State which— (I) provides courses to which a scheme approved by the Minister for Education and Science under the Local Authorities (Higher Education Grants) Acts 1968 to 1992 applies, or (II) operates in accordance with a code of standards which from time to time may, with the consent of the Minister for Finance, be laid down by the Minister for Education and Science, and which the Minister for Education and Science approves for the purposes of section 473A; (ii) any university or similar institution of higher education in a relevant Member State (other than the State) which— (I) is maintained or assisted by recurrent grants from public funds of that or any other relevant Member State (including the State), or (II) is a duly accredited university or institution of higher education in the Member State in which it is situated. (b) For the purposes of this section— (i) 2 companies shall be deemed to be members of a group if one company is a 51 per cent subsidiary of the other company or both companies are 51 per cent subsidiaries of a third company: but in determining whether one company is a 51 per cent subsidiary of another company, the other company shall be treated as not being the owner of— (I) any share capital which it owns directly in a company if a profit on a sale of the shares would be treated as a trading receipt of its trade, or (II) any share capital which it owns indirectly, and which is owned directly by a company for which a profit on a sale of the shares would be a trading receipt; (ii) sections 412 to 418 shall apply for the purposes of this paragraph as they would apply for the purposes of Chapter 5 of Part 12 if— (I) ‘51 per cent subsidiary’ were substituted for ‘75 per cent subsidiary’ in each place where it occurs in that Chapter, and (II) paragraph (c) of section 411(1) were deleted; (iii) a company and all its 51 per cent subsidiaries shall form a group and, where that company is a member of a group as being itself a 51 per cent subsidiary, that group shall comprise all its 51 per cent subsidiaries and the first-mentioned group shall be deemed not to be a group: but a company which is not a member of a group shall be treated as if it were a member of a group which consists of that company; (iv) in determining whether a company was a member of a group of companies (in this subparagraph referred to as the ‘threshold group’) for the purposes of determining the threshold amount in relation to a relevant period of a group of companies (in this subparagraph referred to as the ‘relevant group’), the threshold group shall be treated as the same group as the relevant group notwithstanding that one or more of the companies in the threshold group is not in the relevant group, or vice versa, where any person or group of persons which controlled the threshold group is the same as, or has a reasonable commonality of identity with, the person or group of persons which controls the relevant group; (v) expenditure shall not be regarded as having been incurred by a company if it has been or is to be met directly or indirectly by grant assistance or any other assistance which is granted by or through the State, any board established by statute, any public or local authority or any other agency of the State; (vi) where a company— (I) incurs expenditure on research and development at a time when the company is not carrying on a trade, being expenditure which, apart from this subparagraph, is not included in group expenditure on research and development, and (II) the company begins to carry on a trade after that time, the expenditure shall be treated as it would if the company had commenced to carry on the trade at the time the expenditure was incurred; (vii) where in any period a company— (I) incurs expenditure on research and development, and (II) pays a sum to a university or institute of higher education in order for that university or institute to carry on research and development activities in a relevant Member State, so much of the sum so paid as does not exceed 5 per cent of that expenditure shall be treated as if it were expenditure incurred by the company on the carrying on by it of research and development activities. (2) Where for any accounting period a company makes a claim in that behalf to the appropriate inspector, the corporation tax of the company for that accounting period shall be reduced by an amount equal to 20 per cent of qualifying expenditure attributable to the company as is referable to the accounting period. (3) For the purposes of subsection (2)— (a) qualifying expenditure attributable to a company in relation to a relevant period shall be so much of the amount of qualifying group expenditure on research and development in the relevant period as is attributed to the company in the manner specified in a notice made jointly in writing to the appropriate inspector by the qualified companies that are members of the group: but where no such notice is given means an amount determined by the formula— |
|---|---|
| Q | C _ G |
| --- | --- |
| where— Q is the qualifying group expenditure on research and development in the relevant period, C is the amount of expenditure on research and development incurred by the company in the relevant period at a time when the company is a member of the group, and G is the group expenditure on research and development in the relevant period, (b) where a relevant period coincides with an accounting period of a company, the amount of qualifying expenditure on research and development attributable to the company as is referable to the accounting period of the company shall be the full amount of that expenditure, and (c) where the relevant period does not coincide with an accounting period of the company— (i) the qualifying expenditure on research and development attributable to the company shall be apportioned to the accounting periods which fall wholly or partly in the relevant period, and (ii) the amount so apportioned to an accounting period shall be treated as the amount of qualifying expenditure on research and development attributable to the company as is referable to the accounting period of the company. (4) Where as respects any accounting period of a company the amount by which the company is entitled to reduce corporation tax of the accounting period exceeds the corporation tax of the company for the accounting period, the excess shall be carried forward and treated as an amount by which corporation tax for the next succeeding accounting period may be reduced, and so on for succeeding accounting periods. (5) Where a company claims relief under this section in respect of any accounting period, it shall specify the amount of relief claimed in its return under section 951 for that accounting period. (6)(a) The Minister for Enterprise, Trade and Employment, in consultation with the Minister for Finance, may make regulations for the purposes of this section providing— (i) that such categories of activities as may be specified in the regulations are not research and development activities, and (ii) that such other categories of activities as may be specified in the regulations are research and development activities. (b) Where regulations are to be made under this subsection, a draft of the regulations shall be laid before Dáil Éireann and the regulations shall not be made until a resolution approving the draft has been passed by Dáil Éireann. | |
| --- | --- |
| Tax credit on expenditure on buildings or structures used for research and development. | 766A.—(1) (a) In this section— ‘qualified company’, ‘relevant member State’ and ‘research and development activities’ have the same meanings as in section 766; ‘refurbishment’, in relation to a building or structure, means any work of construction, reconstruction, repair or renewal including the provision of water, sewerage or heating facilities carried out in the course of the repair or restoration, or maintenance in the nature of repair or restoration, of the building or structure; ‘relevant expenditure’ on a building or structure, in relation to a company, means expenditure incurred by the company on the construction of a building or structure which is to be used wholly and exclusively for the purposes of the carrying on by the company of research and development activities in a relevant Member State, being expenditure which qualifies for an allowance under Part 9 or this Part: but expenditure incurred by a company which is resident in the State shall not be relevant expenditure if it— (i) may be taken into account as an expense in computing income of the company, (ii) is expenditure in respect of which an allowance for capital expenditure may be made to the company, or (iii) may otherwise be allowed or relieved in relation to the company, for the purposes of tax in a territory other than the State. (b) For the purposes of this section— (i) expenditure shall not be regarded as having been incurred by a company if it has been or is to be met directly or indirectly by the State; (ii) a reference to expenditure incurred on the construction of a building or structure includes expenditure on the refurbishment of the building or structure, but does not include— (I) any expenditure incurred on the acquisition of, or of rights in or over, any land, (II) any expenditure on the provision of machinery or plant or on any asset treated for any chargeable period as machinery or plant, or (III) any expenditure on research and development within the meaning of section 766; (iii) where a building or structure which is to be used for the purposes of the carrying on of research and development activities forms part of a building or is one of a number of buildings in a single development, or forms a part of a building which is itself one of a number of buildings in a single development, there shall be made such apportionment as is necessary of the expenditure incurred on the construction of the whole building or number of buildings, as the case may be, for the purpose of determining the expenditure incurred on the construction of the building or structure which is to be used for the purposes of carrying on of research and development activities, (iv) paragraphs (i) to (iii) of section 766(1)(b) shall apply. (2) Where in an accounting period a qualified company incurs relevant expenditure on a building or structure, the corporation tax of the company for each accounting period falling wholly or partly into the period of 4 years commencing at the beginning of that accounting period shall be reduced by an amount determined by the formula— |
| E | M ____ 1460 |
| --- | --- |
| where— E is an amount equal to 20 per cent of the amount of the relevant expenditure on the building or structure, and M is the number of days in the accounting period which fall into that period of 4 years. (3) Where— (i) in an accounting period a company incurs relevant expenditure on a building or structure, (ii) in relation to that expenditure the corporation tax of the company is reduced under subsection (2), and (iii) at any time in the period of 10 years commencing at the beginning of that accounting period the building or structure is sold or commences to be used for purposes other than the carrying on by the company of research and development activities, then the company— (I) shall not be entitled to reduce corporation tax under subsection (2) for any accounting period ending after the time specified in paragraph (iii), and (II) shall be charged to tax under Case IV of Schedule D for the accounting period in which the building or structure is sold, or as the case may be commences to be used for purposes other than the carrying on by the company of research and development activities, in an amount equal to 4 times the aggregate amount by which corporation tax of the company or another company was reduced under subsection (2) or (4) in relation to that expenditure. (4)(a) Subject to paragraphs (b) and (c) where as respects any accounting period of a company the amount by which the company is entitled under this section to reduce corporation tax of the accounting period exceeds the relevant corporation tax of the company for the accounting period, the excess shall be carried forward and treated as an amount by which corporation tax for the next succeeding accounting period may be reduced, and so on for succeeding accounting periods. (b) Where the company referred to in paragraph (a) is a member of a group of companies, the company may specify that the excess specified in paragraph (a), or any part of that excess, is to be treated as an amount by which corporation tax payable by another company which is a member of that group for that other company's corresponding accounting period is to be reduced. (c) So much of the excess specified under paragraph (a) as is treated under paragraph (b) as an amount by which tax payable by another company is to be reduced shall not be carried forward under paragraph (a). (5) Where a company claims relief under this section in respect of any accounting period, it shall specify the amount of relief claimed in its return under section 951 for that accounting period.”, | |
| --- | --- |
and
(b) in section 141(5)(a), by substituting the following for the definition of “research and development activities”:
“‘research and development activities’ has the meaning that it would have in section 766 if section 33 of the Finance Act 2004 had not been enacted.”.
(2) This section comes into operation on such day as the Minister for Finance may appoint by order and has effect as respects expenditure incurred on or after that day.
34 Amendment of section 831 (implementation of Council Directive No. 90/435/EEC concerning the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States) of Principal Act.
34.—Section 831 of the Principal Act is amended—
(a) in subsection (1)—
(i) in the definition of “company” by deleting “, other than in the expression ‘unlimited company’ in subsection (5A),”,
(ii) in the definition of “the Directive” by inserting “, as amended by Council Directive No. 2003/123/EC of 22 December 2003[^1],” after “1990”,
(iii) in the definition of “parent company”—
(I) by substituting the following for paragraph (i):
“(i) a company which owns at least 5 per cent of the share capital of another company which is not resident in the State, or”,
and
(II) by substituting “5 per cent” for “25 per cent” in each place where it occurs in paragraphs (ii), (I) and (II),
(b) in subsection (2)—
(i) by deleting “which is resident in this State”, and
(ii) in paragraph (a)—
(I) by substituting the following for subparagraph (i):
“(i) any witholding tax charged on the distribution by a Member State pursuant to a derogation duly given from Article 5.1 of the Directive,”,
(II) in subparagraph (ii) by substituting “resident, and” for “resident,”, and
(III) by inserting the following after subparagraph (ii):
“(iii) any foreign tax borne by a company that would be allowed under paragraph 9B of Schedule 24 if in subparagraphs (2) and (3) ‘and is connected with the relevant company’ in each place where it occurs were deleted.”,
(c) by inserting the following after subsection (2):
“(2A) Subject to subsections (3) and (4), where by virtue of the legal characteristics of a subsidiary (being a company which is not resident in the State) of a parent company, the parent company is chargeable to tax in the State on its share of the profits of the subsidiary company as they arise credit shall be allowed for so much of—
(a) any foreign tax borne by the subsidiary, and
(b) any foreign tax that would be treated as tax paid by the subsidiary company under paragraph 9B of Schedule 24 if—
(i) the subsidiary company were the foreign company for the purposes of that paragraph, and
(ii) in subparagraphs (2) and (3) of that paragraph ‘and is connected with the relevant company’ in both places where it occurs were deleted,
as is properly attributable to the proportion of the subsidiary's profits which are chargeable on the parent company in the State against corporation tax in respect of the profits so chargeable on the parent company to the extent that credit for such foreign tax would not otherwise be so allowed.”,
(d) in subsection (3) by inserting “or (2A)” after “(2)(a)”, and
(e) by deleting subsection (5A).
35 Taxation of certain short-term leases plant and machinery.
35.—(1) Chapter 5 of Part 4 of the Principal Act is amended by inserting the following after section 80:
“80A.—(1) In this section—
‘asset’ means machinery or plant;
‘fair value’, in relation to a leased asset, means an amount equal to such consideration as might be expected to be paid for the asset at the inception of the lease on a sale negotiated on an arm's length basis, less any grants receivable by the lessor towards the purchase of the asset;
‘inception of the lease’ means the date on which the leased asset is brought into use by the lessee or the date from which lease payments under the lease first accrue, whichever is the earlier;
‘lease payments’ means the lease payments over the term of the lease to be paid to the lessor in relation to the leased asset, and includes any residual amount to be paid to the lessor at or after the end of the term of the lease and guaranteed by the lessee or by a person connected with the lessee or under the terms of any scheme or arrangement between the lessee and any other person;
‘lessee’ and ‘lessor’ have the same meanings, respectively, as in section 403;
‘normal accounting practice’ means normal accounting practice in relation to the accounts of companies incorporated in the State;
‘predictable useful life’, in relation to an asset, means the useful life of the asset estimated at the inception of the lease, having regard to the purpose for which the asset was acquired and on the assumption that—
(a) its life will end when it ceases to be useful for the purpose for which it was acquired, and
(b) it will be used in the normal manner and to the normal extent throughout its life;
‘relevant period’ means the period—
(a) beginning at the inception of the lease, and
(b) ending at the earliest time at which the aggregate of amounts of the discounted present value at the inception of the lease of lease payments under the terms of the lease which are payable at or before that time amounts to 90 per cent or more of the fair value of the leased asset, and, for the purposes of this definition, relevant lease payments shall be discounted at a rate which, when applied at the inception of the lease to the amount of the relevant lease payments, produces discounted present values the aggregate of which equals the amount of the fair value of the leased asset at the inception of the lease;
‘relevant short-term asset’ in relation to a company means an asset—
(a) the predictable useful life of which does not exceed 8 years, and
(b) the expenditure on which is incurred by the company on or after the date referred to in subsection (3);
‘relevant short-term lease’ means a lease—
(a) of a relevant short-term asset, and
(b) the relevant period in relation to which does not exceed 8 years.
(2) Where a company makes a claim under this section—
(a) the amount to be included in the trading income of the company in respect of all relevant short-term leases is the amount of income from such leases computed in accordance with normal accounting practice,
(b) the company will not be entitled to any allowance in respect of expenditure incurred on assets which are the subject of relevant short-term leases under Part 9, section 670, Part 29 or any other provision of the Tax Acts relating to the making of allowances in accordance with Part 9, and
(c) the income from relevant short-term leases will be treated for the purposes of section 403 as if it were not income from a trade of leasing.
(3) A claim by a company under this section shall be made by the time by which a return under section 951 falls to be made for an accounting period of the company and shall apply as respects expenditure incurred on or after the date on which the accounting period begins.”.
(2) This section applies as respects accounting periods ending on or after 4 February, 2004.
36 Amendment of section 434 (distributions to be taken into account and meaning of “distributable income”, “investment income”, “estate income”, etc.) of Principal Act.
36.—Section 434 of the Principal Act is amended in subsection (1) by substituting the following for the definition of “investment income”:
“‘investment income’ of a company means income other than estate income which, if the company were an individual, would not be earned income within the meaning of section 3, but, without prejudice to the meaning of ‘franked investment income’ in this section, does not include—
(a) any interest or dividends on investments which, having regard to the nature of the company's trade, would be taken into account as trading receipts in computing trading income but for the fact that they have been subjected to tax otherwise than as trading receipts, or but for the fact that by virtue of section 129 they are not to be taken into account in computing income for corporation tax, and
(b) any dividends or other distributions received by the company in respect of shares at a time when any gain on a disposal of the shares would not have been a chargeable gain by virtue of section 626B or would not have been a chargeable gain by virtue of section 626B if paragraphs (a) and (b) of subsection (3) of that section were deleted.”.
37 Amendment of section 396B (relief for certain trading losses on a value basis) of Principal Act.
37.—(1) Section 396B of the Principal Act is amended, in subsection (1), by substituting the following for the definition of “relevant corporation tax”:
“‘relevant corporation tax’, in relation to an accounting period of a company, means the corporation tax which would be chargeable on the company for the accounting period apart from—
(a) this section and sections 239, 241, 420B, 440 and 441, and
(b) where the company carries on a life business (within the meaning of section 706 of the Principal Act), any corporation tax which would be attributable to policyholders' profits;”.
(2) This section shall apply as respects any claim for relief made on or after 4 February 2004.
38 Amendment of section 420B (group relief: relief for certain losses on a value basis) of Principal Act.
38.—(1) Section 420B of the Principal Act is amended, in subsection (1), by substituting the following for the definition of “relevant corporation tax”:
“‘relevant corporation tax’, in relation to an accounting period of a company, means the corporation tax which would be chargeable on the company for the accounting period apart from—
(a) this section and sections 239, 241, 440 and 441, and
(b) where the company carries on a life business (within the meaning of section 706 of the Principal Act), any corporation tax which would be attributable to policyholders' profits;”.
(2) This section shall apply as respects any claim for relief made on or after 4 February 2004.
39 Amendment of section 486B (relief for investment in renewable energy generation) of Principal Act.
39.—(1) Section 486B of the Principal Act is amended in subsection (1) by substituting “31 December 2006” for “31 December 2004” in the definition of “qualifying period”.
(2) Subsection (1) comes into operation on such day as the Minister for Finance may appoint by order.
40 Amendment of Schedule 4 (exemption of specified non-commercial State sponsored bodies from certain tax provisions) to Principal Act.
40.—Schedule 4 to the Principal Act is amended by inserting “83A. The Personal Injuries Assessment Board.” after “83. The Pensions Board.”.
41 Exemption from tax for certain interest and royalties payments.
41.—(1) Part 8 of the Principal Act is amended by substituting the provisions set out in Schedule 1 for Chapter 6 (inserted by the European Communities (Abolition of Withholding Tax on Certain Interest and Royalties) Regulations 2003 (S.I. No. 721 of 2003)).
(2) The European Communities (Abolition of Withholding Tax on Certain Interest and Royalties) Regulations 2003 are revoked.
42 Exemption from tax in the case of gains on certain disposals of shares.
42.—(1) The Principal Act is amended—
(a) in Chapter 1 of Part 20 by inserting the following after section 626A:
| “Exemption from tax in the case of gains on certain disposals of shares. | 626B.—(1) (a) In this section, section 626C and Schedule 25A— ‘investor company’ and ‘investee company’ have the meanings assigned by subsection (2); ‘relevant territory’ means— (i) a Member State of the European Communities, or (ii) not being such a Member State, a territory with the government of which arrangements having the force of law by virtue of section 826(1)(a) have been made; ‘relevant time’, in relation to a disposal by an investor company of shares in an investee company, means— (i) for the purposes of subsection (2)(a)(i)(II), the time immediately before— (I) that disposal, or (II) any previous disposal— (A) at a time within the period, or if there was more than one such period the most recent period, during which the investor company was a parent company of the investee company, or (B) within the 2 year period beginning on the most recent day on which the investor company was a parent company of the investee company, and (ii) for the purposes of subsection (2)(a)(ii)(II), the time immediately before— (I) that disposal, or (II) any previous disposal— (A) at a time within the period, or if there was more than one such period the most recent period, during which the investor company would have been a parent company of the investee company, or (B) within the 2 year period beginning on the most recent day on which the investor company would have been a parent company of the investee company, if in subsection (1)(b)(i) ‘5 per cent’ were substituted for ‘10 per cent’ in each place where it occurs; ‘tax’ in relation to a relevant territory other than the State means any tax imposed in that territory which corresponds to income tax or corporation tax in the State; ‘2 year period’ means a period ending on the day before the second anniversary of the day on which the period began. (b) For the purposes of this section, section 626C and Schedule 25A— (i) a company shall only be a parent company in relation to another company at any time if that time falls within an uninterrupted period of not less than 12 months throughout which it directly or indirectly holds shares in that company by virtue of which— (I) it holds not less than 10 per cent of the company's ordinary share capital, (II) it is beneficially entitled to not less than 10 per cent of the profits available for distribution to equity holders of the company, and (III) it would be beneficially entitled on a winding up to not less than 10 per cent of the assets of the company available for distribution to equity holders, and for the purposes of this subparagraph— (A) subsections (2) to (10) of section 9 shall apply with any necessary modifications, and (B) sections 413 to 419 shall apply as they apply for the purposes of Chapter 5 of Part 12 but as if ‘in a relevant territory’ were substituted for ‘in the State’ in subparagraph (iii) of section 413(3)(a) and as if paragraph (c) of section 411(1), other than that paragraph as it applies by virtue of subparagraphs (i) and (ii), were disregarded, (ii) in determining whether the conditions in paragraph (a) of subsection (2) are satisfied, a company that is a member of a group shall be treated as holding so much of any shares held by any other company in the group and as having so much of the entitlement of any such company to any rights enjoyed by virtue of holding shares— (I) as the company would not, apart from this paragraph, hold or have, and (II) as are not part of a life business fund within the meaning of section 719, and, for the purposes of this subparagraph, ‘group’ means a company which has one or more 51 per cent subsidiaries together with those subsidiaries, (iii) in determining whether the treatment provided for in subsection (2) applies, the question of whether there is a disposal shall be determined without regard to section 584 or that section as applied by any other section: and, to the extent to which an exemption under subsection (2) does apply in relation to a disposal, section 584 shall not apply in relation to the disposal, (iv) where assets of a company are vested in a liquidator under section 230 of the Companies Act 1963 or otherwise, the assets shall be deemed to be vested in, and the acts of liquidation in relation to the assets shall be deemed to be the acts of, the company (and acquisitions from, and disposals to, the liquidator shall be disregarded accordingly), (v) section 616 shall not apply. (2) A gain accruing to a company (in this section referred to as the ‘investor company’) on a disposal of shares in another company (in this section referred to as the ‘investee company’) is not a chargeable gain if— (a)(i)(I) the disposal by the investor company is at a time— (A) when the investor company is a parent company of the investee company, or (B) within the 2 year period beginning on the most recent day on which the investor company was a parent company of the investee company, and (II) the aggregate market value of shares held at a time which is a relevant time by the investor company in the investee company is not less than €15,000,000, or (ii)(I) the disposal by the investor company is at a time— (A) when the investor company would have been a parent company of the investee company, or (B) within the 2 year period beginning on the most recent day on which the investor company would have been a parent company of the investee company, if in subsection (1)(b)(i) ‘5 per cent’ were substituted for ‘10 per cent’ in each place where it occurs, and (II) the aggregate market value of shares held at a time which is a relevant time by the investor company in the investee company is not less than €50,000,000, (b) the investee company is, by virtue of the law of a relevant territory, resident for the purposes of tax in the relevant territory at the time of the disposal, and (c) at the time of the disposal— (i) the investee company is a company whose business consists wholly or mainly of the carrying on of a trade or trades, or (ii) the business of— (I) the investor company, (II) each company of which the investor company is the parent company, and (III) the investee company, if it is not a company referred to in clause (II), and any company of which the investee company is the parent company, taken together consists wholly or mainly of the carrying on of a trade or trades. (3) The treatment of a gain, as not being a chargeable gain, provided by this section and section 626C shall not apply— (a) to a disposal that by virtue of any provision relating to chargeable gains is deemed to be for a consideration such that no gain or loss accrues to the person making the disposal, (b) to a disposal a gain on which would, by virtue of any provision other than this section or section 626C, not be a chargeable gain, (c) to disposals, including deemed disposals, of shares which are part of a life business fund within the meaning of section 719, (d) to a disposal of shares deriving their value or the greater part of this value directly or indirectly from assets specified in paragraphs (a) and (b) of section 29(3). (4) Schedule 25A shall have effect for the purposes of supplementing this section and section 626C. |
|---|---|
| Treatment of assets related to shares. | 626C.—(1) For the purposes of this section— (a) an asset is related to shares in a company if it is— (i) an option to acquire or dispose of shares in that company, (ii) a security to which are attached rights by virtue of which the holder is or may become entitled, whether by conversion or exchange or otherwise, to acquire or dispose of— (I) shares in that company, (II) an option to acquire or dispose of shares in that company, or (III) another security falling within this paragraph, or (iii) an option to acquire or dispose of any security within subparagraph (ii) or an interest in any such security, (b) in determining whether a security is within paragraph (a)(ii), no account shall be taken— (i) of any rights attached to the security other than rights relating, directly or indirectly, to shares of the company in question, or (ii) of rights as regards which, at the time the security came into existence, there was no more than a negligible likelihood that they would in due course be exercised to a significant extent. (2) A gain accruing to a company (in this subsection referred to as the ‘first-mentioned company’) on the disposal of an asset related to shares in another company is not a chargeable gain if— (a)(i) immediately before the disposal the first-mentioned company holds shares in the other company, and (ii) any gain accruing to the first-mentioned company on a disposal at that time of the shares would, by virtue of section 626B, not be a chargeable gain, or (b)(i) immediately before the disposal the first-mentioned company does not hold shares in the other company but is a member of a group and another member of that group does hold shares in the other company, and (ii) if the first-mentioned company, rather than the other member of the group, held the shares, any gain accruing to the first-mentioned company on a disposal at that time of the shares would, by virtue of section 626B, not be a chargeable gain; and for the purposes of this paragraph ‘group’ means a company which has one or more 51 per cent subsidiaries together with those subsidiaries.”, |
| --- | --- |
and
(b) by inserting the following after Schedule 25:
| “Section 626B Section 626C | SCHEDULE 25A Exemption from Tax in the Case of Gains on Certain Disposals of Shares Effect of earlier no-gain/no-loss transfer 1. (1) For the purposes of this paragraph shares are ‘derived’ from other shares only where— (a) one holding of shares is treated by virtue of section 584 as the same asset as another, or (b) there is a sequence of 2 or more of the occurrences mentioned in paragraph (a). (2) The period for which a company has held shares is treated as extended by any earlier period during which the shares concerned, or shares from which they are derived, were held— (a) by a company from which the shares concerned were transferred to the company on a no-gain/no-loss transfer, or (b) by a company from which the shares concerned, or shares from which they are derived, were transferred on a previous no-gain/no-loss transfer— (i) to a company within clause (a), or (ii) to another company within this clause. (3) For the purposes of subparagraph (2) a ‘no-gain/no-loss transfer’ means a disposal and corresponding acquisition that, by virtue of the Capital Gains Tax Acts, are deemed to be for a consideration such that no gain or loss accrues to the person making the disposal. (4) Where subparagraph (2) applies to extend the period for which a company (in this paragraph referred to as the ‘first-mentioned company’) is treated as having held any shares, the first-mentioned company shall be treated for the purposes of section 626B(2)(a) as having had at any time the same entitlement— (a) to shares, and (b) to any rights enjoyed by virtue of holding shares, as the company (in this paragraph referred to as the ‘other company’) that at that time held the shares concerned or, as the case may be, the shares from which they are derived. (5) The shares and rights to be attributed to the first-mentioned company include any holding or entitlement attributed to the other company under section 626B(1)(b)(ii). Effect of deemed disposal and reacquisition 2. (1) In this paragraph— ‘deemed disposal and reacquisition’ means a disposal and immediate reacquisition treated as taking place under the Capital Gains Tax Acts; ‘derived’ has the same meaning as in paragraph 1. (2) A company is not regarded as having held shares throughout a period if, at any time during that period, there is a deemed disposal and reacquisition of— (a) the shares concerned, or (b) shares from which those shares are derived. Effect of repurchase agreement 3. (1) In this paragraph a ‘repurchase agreement’ means an agreement under which— (a) a person (in this paragraph referred to as the ‘original owner’) transfers shares to another person (in this paragraph referred to as the ‘interim holder’) under an agreement to sell them, and (b) the original owner or a person connected with him is required to buy them back either— (i) in pursuance of an obligation to do so imposed by that agreement or by any related agreement, or (ii) in consequence of the exercise of an option acquired under that agreement or any related agreement, and for the purposes of paragraph (b) agreements are related if they are entered into in pursuance of the same arrangements (regardless of the date on which either agreement is entered into). (2) Any reference in this paragraph to the period of a repurchase agreement is a reference to the period beginning with the transfer of the shares by the original owner to the interim holder and ending with the repurchase of the shares in pursuance of the agreement. (3) This paragraph applies where a company that holds shares in another company transfers the shares under a repurchase agreement. (4) In determining whether the conditions in paragraph (a) of section 626B(2) are satisfied but subject to subparagraph (5)— (a) the original owner shall be treated as continuing to hold the shares transferred and accordingly as retaining entitlement to any rights attached to them, and (b) the interim holder shall be treated as not holding the shares transferred and as not becoming entitled to any such rights, during the period of the repurchase agreement. (5) If at any time before the end of the period of the repurchase agreement the original owner, or another member of the same group as the original owner, becomes the holder— (a) of any of the shares transferred, or (b) of any shares directly or indirectly representing any of the shares transferred, subparagraph (4) does not apply after that time in relation to those shares or, as the case may be, in relation to the shares represented by those shares; and for the purposes of this subparagraph ‘group’ means a company which has one or more 51 per cent subsidiaries together with those subsidiaries. Effect of stock lending arrangements 4. (1) In this paragraph a ‘stock lending arrangement’ means arrangements between two persons (in this paragraph referred to as the ‘borrower’ and the ‘lender’) under which— (a) the lender transfers shares to the borrower otherwise than by way of sale, and (b) a requirement is imposed on the borrower to transfer those shares back to the lender otherwise than by way of sale. (2) Any reference in this paragraph to the period of a stock lending arrangement is a reference to the period beginning with the transfer of the shares by the lender to the borrower and ending— (a) with the transfer of the shares back to the lender in pursuance of the arrangement, or (b) when it becomes apparent that the requirement for the borrower to make a transfer back to the lender will not be complied with. (3) This paragraph applies where a company that holds shares in another company transfers the shares under a stock lending arrangement. (4) In determining whether the conditions in paragraph (a) of section 626B(2) are satisfied but subject to subparagraph (5)— (a) the lender shall be treated as continuing to hold the shares transferred and accordingly as retaining entitlement to any rights attached to them, and (b) the borrower shall be treated for those purposes as not holding the shares transferred and as not becoming entitled to any such rights, during the period of the stock lending arrangement. (5) (a) If at any time before the end of the period of the stock lending arrangement the lender, or another member of the same group as the lender, becomes the holder— (i) of any of the shares transferred, or (ii) of any shares directly or indirectly representing any of the shares transferred, subparagraph (4) does not apply after that time in relation to those shares or, as the case may be, in relation to the shares represented by those shares. (b) For the purposes of this subparagraph ‘group’ means a company which has one or more 51 per cent subsidiaries together with those subsidiaries. Effect in relation to investee company of earlier company reconstruction etc. 5. (1) In this paragraph ‘original shares’ and ‘new holding’ shall be construed in accordance with sections 584, 586 and 587. (2) This paragraph applies where shares in one company (in this paragraph referred to as the ‘first company’)— (a) are exchanged (or deemed to be exchanged) for shares in another company (in this paragraph referred to as the ‘second company’), or (b) are deemed to be exchanged by virtue of section 587 for shares in the first company and shares in the second company, in circumstances such that, under section 584 as that section applies by virtue of section 586 or 587, the original shares and the new holding are treated as the same asset. (3) Where the second company— (a) is an investee company, and is accordingly the company by reference to which the shareholding requirement under section 626B(2)(a) falls to be met, or (b) is a company by reference to which, by virtue of this paragraph, that requirement may be met, that requirement may instead be met, in relation to times before the exchange, or deemed exchange, by reference to the first company. (4) If in any case that requirement can be met by virtue of this paragraph, it shall be treated as met. Negligible value 6. A claim under section 538(2) may not be made in relation to shares held by a company if by virtue of section 626B any loss accruing to the company on a disposal of the shares at the time of the claim, or at any earlier time at or after which the value of the shares becomes negligible, would not be an allowable loss. Degrouping: time when deemed sale and reacquisition treated as taking place 7. Where— (a) a company, as a result of ceasing at any time (in this paragraph referred to as the ‘time of degrouping’) to be a member of a group, is treated by section 623(4) as having sold and immediately reacquired an asset, and (b) if the company owning the asset at the time of degrouping had disposed of it immediately before that time, any gain accruing on the disposal would by virtue of section 626B not have been a chargeable gain, then section 623(4) shall have effect as if it provided for the deemed sale and reacquisition to be treated as taking place immediately before the time of degrouping. Appropriations to trading stock 8. (1) Where— (a) an asset acquired by a company otherwise than as trading stock of a trade carried on by it is appropriated by the company for the purposes of the trade as trading stock (whether on the commencement of the trade or otherwise), and (b) if the company had then sold the asset for its market value, a chargeable gain or allowable loss would have accrued to the company but for the provisions of section 626B, then the company shall be treated for the purposes of the Capital Gains Tax Acts as if it had thereby disposed of the asset for its market value. (2) Section 618 applies in relation to this paragraph as it applies in relation to section 596.”. |
|---|---|
(2) This section comes into operation on such day as the Minister for Finance may appoint by order.
PART 2 Excise
43 Amendment of Chapter 1 (alcohol products tax) of Part 2 of Finance Act 2003, etc.
43.—(1) Chapter 1 of Part 2 of the Finance Act 2003 is amended—
(a) in subsection (1) of section 73 by substituting the following for the definition of “spirits”:
“ ‘spirits’ means any product which exceeds 1.2% vol and which is—
(a) distilled ethyl alcohol,
(b) an alcoholic beverage the full alcohol content of which is the result of a process of distillation,
(c) any other product falling within CN Code 2207 or 2208, even when such product forms part of a product which is not an alcohol product, or
(d) any beverage exceeding 22% vol,
and includes any such product which contains a nonalcoholic product, whether in solution or not;”,
(b) in section 75 by substituting the following for subsection (2):
“(2) In the case of spirits produced in the State by a process of distillation, where the quantity of spirits produced is less than the quantity capable of being produced from the wort or wash used in such process, the Commissioners may require that, instead of a charge on the quantity of spirits produced, alcohol products tax be charged on the quantity capable of being produced from such wort or wash on the assumption that one litre of alcohol is produced for every 8.8 degrees of attenuation, that is to say, for every 8.8 degrees of difference between the highest gravity of the wort and the lowest gravity of the wash before distillation.
(3) In calculating the quantity of spirits to be charged under subsection (2), allowance may be made for losses covered by section 106 of the Finance Act 2001.”,
and
(c) in section 77 by substituting the following for paragraph (f):
“(f) in the case of wine, beer, or other fermented beverage the alcoholic content of which is entirely of fermented origin, to have been produced solely by a private individual in a private premises for consumption by the producer or by the family or guests of such producer, and not to have been produced or supplied for consideration,
(g) to be intended for use or to have been used for medical purposes in hospitals and pharmacies,
(h) to be intended for use or to have been used in an industrial process provided that the final product does not contain alcohol,
(i) to be intended for use or to have been used in the manufacture of a component which is not subject to alcohol products tax, or
(j) to be intended for use or to have been used in the manufacture of an oral hygiene product.”.
(2) Schedule 2 to the Finance Act 2003 is amended by substituting “Intermediate Beverages” for “Intermediate Products”.
44 Amendment of section 93 (offences in relation to keeping, selling or delivering of unexcised spirits) of Finance Act 2003.
44.—(1) Section 93 of the Finance Act 2003 is amended in subsection (1) by substituting the following for the definition of “spirits”:
“ ‘spirits’ has the same meaning as it has in section 73(1) (as amended by the Finance Act 2004) of the Finance Act 2003;”.
(2) Subsection (1) comes into operation on such day as the definition of “spirits” in section 73 (1) of the Finance Act 2003 comes into operation by virtue of an order under section 86 of that Act and to the extent provided for in such order.
45 Tobacco products.
45.—(1) In this section and in Schedule 2—
“Act of 1977” means the Finance (Excise Duty on Tobacco Products) Act 1977;
“cigarettes”, “cigars”, “fine-cut tobacco for the rolling of cigarettes” and “smoking tobacco” have the same meaning as they have in the Act of 1977, as amended by section 86 of the Finance Act 1997 and by section 94 of the Finance Act 2002.
(2) The duty of excise on tobacco products imposed by section 2 of the Act of 1977 shall, in lieu of the several rates specified in Schedule 3 to the Finance Act 2003, be charged, levied and paid, as on and from 4 December 2003 at the several rates specified in Schedule 2.
46 Amendment of section 104 (reliefs) of Finance Act 2001.
46.—Section 104 of the Finance Act 2001 is amended by inserting the following after subsection (3):
“(4) (a) Where, as allowed under the terms of the treaty of accession which applies to a Member State, such Member State applies to any tobacco product a rate of excise duty which is less than the minimum rate stipulated for that product in either Council Directive 92/79/EEC of 19 October 1992[^1] or Council Directive 92/80/EEC of 19 October 1992[^2], the Minister for Finance may by order provide that—
(i) subsection (2)(a) shall not apply, and
(ii) the quantitative limits set down in such order shall apply,
to such tobacco products which, in the circumstances outlined in that subsection, have been acquired in such Member State and transported into the State.
(b) The Minister may by order amend or revoke an order made under paragraph (a).
(c) An order under this subsection shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the order is passed by Dáil Éireann within the next 21 sitting days on which Dáil Éireann has sat after the order is laid before it, the order shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.”.
47 Amendment of section 124A (administrative penalties) of Finance Act 2001.
47.—Section 124A (inserted by the Finance Act 2003) of the Finance Act 2001 is amended by substituting the following for subsection (1):
“(1) An authorised warehousekeeper who contravenes or fails to comply with—
(a) any condition imposed on him or her under section 109(5), or
(b) any requirement imposed on him or her under—
(i) this Part,
(ii) the Finance (Excise Duty on Tobacco Products) Act 1977,
(iii) Chapter 1 of Part 2 of the Finance Act 1999,
(iv) Chapter 1 of Part 2 of the Finance Act 2003, or
(v) any regulation made under the provisions referred to in subparagraphs (i) to (iv),
is liable to a penalty of €1,500 for each such contravention or failure.”.
48 Rates of mineral oil tax.
48.—The Finance Act 1999 is amended by substituting the following for Schedule 2 to that Act, as amended by section 91 of the Finance Act 2003:
“SCHEDULE 2
Rates of Mineral Oil Tax
(With effect as on and from 4 December 2003)
| Description of Mineral Oil | Rate of Duty |
|---|---|
| Light Oil: | |
| Leaded petrol | €553.04 per 1,000 litres |
| Unleaded petrol | €442.68 per 1,000 litres |
| Super unleaded petrol | €547.79 per 1,000 litres |
| Aviation gasoline | €276.52 per 1,000 litres |
| Heavy Oil: | |
| Used as a propellant with a maximum sulphur content of 50 milligrammes per kilogramme | €368.05 per 1,000 litres |
| Other heavy oil used as a propellant | €420.44 per 1,000 litres |
| Kerosene used other than as a propellant | €31.74 per 1,000 litres |
| Fuel oil | €13.45 per 1,000 litres |
| Other heavy oil | €47.36 per 1,000 litres |
| Liquefied Petroleum Gas: | |
| Used as a propellant | €53.01 per 1,000 litres |
| Other liquefied petroleum gas | €18.15 per 1,000 litres |
| Substitute Fuel: | |
| Used as a propellant | €368.05 per 1,000 litres |
| Other substitute fuel | €47.36 per 1,000 litres |
”.
49 Amendment of section 94 (interpretation) of Finance Act 1999.
49.—Section 94 of the Finance Act 1999 is amended in subsection (1)—
(a) by substituting the following for the definition of “biofuel”:
“ ‘biofuel’ means any mineral oil which is produced from biomass;”,
and
(b) by inserting the following definition after the definition of “biofuel”;
“ ‘biomass’ means the biodegradable fraction of products, waste and residues from agriculture (including vegetal and animal substances), forestry and related industries, as well as the biodegradable fraction of industrial and municipal waste;”.
50 Biofuel pilot projects.
50.—Chapter 1 of Part 2 of the Finance Act 1999 is amended by inserting the following after section 98:
“98A.—(1) Where the Minister, after consultation with the Minister for Communications, Marine and Natural Resources, is satisfied that any biofuel is essential to a pilot project undertaken in the State which is designed either—
(a) to produce biofuel, or
(b) to test the technical viability of biofuel for use as motor fuel,
a relief from mineral oil tax shall, subject to such conditions as the Commissioners may impose, apply to such biofuel.
(2) An application for relief under subsection (1) shall be made in writing to the Minister on or before 31 December 2007 and the applicant shall—
(a) furnish such information as the Minister may reasonably require,
(b) show to the satisfaction of the Minister that such applicant can provide a suitable premises and the equipment necessary for the project concerned.
(3) Relief under subsection (1) may, as determined by the Minister, be restricted to—
(a) a specified quantity of biofuel, and
(b) a specified period in which such biofuel may be produced or tested,
and such quantity or period may be increased or extended by the Minister following consultation with the Minister for Communications, Marine and Natural Resources.
(4) Relief under subsection (1) may be withdrawn where any condition referred to in that subsection has not been complied with and where the Minister so thinks fit. The Commissioners may transmit to the Minister any information relevant to such non-compliance.
(5) Relief under subsection (1) may be granted by the Commissioners by means of remission or repayment.
(6)(a) Claims for repayment under subsection (5) shall be in such form as the Commissioners may direct and shall be in respect of biofuel produced or tested, as the case may be, within a period of not less than one and not more than 6 calendar months.
(b) A repayment under subsection (5) may not be made unless the claim is made within 4 months following the end of each such period or within such longer period as the Commissioners may, in any particular case, allow.
(7) This section comes into operation on such day as the Minister may appoint by order.”.
51 Amendment of section 100 (reliefs from mineral oil tax for certain mineral oils) of Finance Act 1999.
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