Charges

TAXES CONSOLIDATION ACT

 

Part 8

Annual Payments, Charges and Interest (ss. 237-267M)

Chapter 1

Annual payments (ss. 237-242A)

237.

Annual payments payable wholly out of taxed income.

(1)Where any annuity or any other annual payment apart from yearly interest of money (whether payable in or outside the State, either as a charge on any property of the person paying the same by virtue of any deed or will or otherwise, or as a reservation thereout, or as a personal debt or obligation by virtue of any contract, or whether payable half-yearly or at any shorter or more distant periods), is payable wholly out of profits or gains brought into charge to income tax –

(a)the whole of those profits or gains shall be assessed and charged with income tax on the person liable to the annuity or annual payment, without distinguishing the same,

(b)the person liable to make such payment, whether out of the profits or gains charged with tax or out of any annual payment liable to deduction, or from which a deduction has been made, shall be entitled on making such payment to deduct and retain out of such payment a sum representing the amount of the income tax on such payment at the standard rate of income tax for the year in which the amount payable becomes due,

(c)the person to whom such payment is made shall allow such deduction on the receipt of the residue of such payment, and

(d)the person making such deduction shall be acquitted and discharged of so much money as is represented by the deduction as if that sum had been actually paid.

(2)Where any royalty or other sum is paid in respect of the user of a patent wholly out of profits or gains brought into charge to income tax, the person paying the royalty or other sum shall be entitled on making the payment to deduct and retain out of the payment a sum representing the amount of income tax on the payment at the standard rate of income tax for the year in which the royalty or other sum payable becomes due.

(3)This section shall not apply to any rents or other sums in respect of which the person entitled to them is chargeable to tax under Case V of Schedule D or would be so chargeable but for any exemption from tax.

238.

Annual payments not payable out of taxed income.

(1)In this section, “the inspector” means such inspector as the Revenue Commissioners may direct.

(2)On payment of any annuity or other annual payment (apart from yearly interest of money) charged with tax under Schedule D, or of any royalty or other sum paid in respect of the user of a patent, not payable or not wholly payable out of profits or gains brought into charge, the person by or through whom any such payment is made shall deduct out of such payment a sum representing the amount of the income tax on such payment at the standard rate of tax in force at the time of the payment.

(3)Where any such payment is made by or through any person, that person shall forthwith deliver to the Revenue Commissioners an account of the payment, or of so much of the payment as is not made out of profits or gains brought into charge, and of the income tax deducted out of the payment or out of that part of the payment, and the inspector shall assess and charge the payment of which an account is so delivered on that person.

(4)The inspector may, where any person has made default in delivering an account required by this section, or where he or she is not satisfied with the account so delivered, make an assessment according to the best of his or her judgment.

(5)The provisions of the Income Tax Acts relating to –

(a)persons who are to be chargeable with income tax,

(b)income tax assessments, and

(c)the collection and recovery of income tax,

shall, in so far as they are applicable, apply to the charge, assessment, collection and recovery of income tax under this section.

(6)Subsections (3) to (5) shall apply subject to sections 239 and 241 with respect to the time and manner in which certain companies are to account for and pay income tax in respect of –

(a)payments from which tax is deductible, and

(b)any amount deemed to be an annual payment.

(7)Except where provided by subsections (1) and (1B) of section 1041, this section shall not apply to any rents or other sums in respect of which the person entitled to them is chargeable to tax under Case V of Schedule D or would be so chargeable but for any exemption from tax.

(8)

(a)Subject to paragraph (b), a person aggrieved by an assessment made on that person under this section may appeal the assessment to the Appeal Commissioners, in accordance with section 949I, within the period of 30 days after the date of the notice of assessment.

(b)Where, in accordance with this section, a person is required to submit an account of a payment and account for income tax to the Revenue Commissioners, no appeal lies against an assessment until such time as the person submits the account and pays or has paid the amount of the income tax payable on the basis of that account.

239.

Income tax on payments by resident companies.

(1)In this section, “relevant payment” means –

(a)any payment from which income tax is deductible and to which subsections (3) to (5) of section 238 apply, and

(b)any amount which under section 438 is deemed to be an annual payment.

(2)This section shall apply for the purpose of regulating the time and manner in which companies resident in the State –

(a)are to account for and pay income tax in respect of relevant payments, and

(b)are to be repaid income tax in respect of payments received by them.

(3)A company shall make for each of its accounting periods in accordance with this section a return to the inspector of the relevant payments made by it in that period and of the income tax for which the company is accountable in respect of those payments.

(4)A return for any period for which a return is required to be made under this section shall be made within 9 months from the end of that period, but in any event not later than day 21 of the month in which that period of 9 months ends.

(4A)Where a return referred to in subsection (4) is made by electronic means and in accordance with Chapter 6 of Part 38, then subsection (4) shall apply and have effect as if ‘day 23 of the month’ were substituted for ‘day 21 of the month’; but where that return is made after the day provided for in this subsection the Tax Acts shall apply and have effect without regard to the provisions of this subsection.

(5)Income tax in respect of any payment required to be included in a return under this section shall be due at the time by which corporation tax (if any) for the accounting period for which the return is required to be made under subsection (3) is due and payable, and income tax so due shall be payable by the company in accordance with Chapter 7 of Part 41A and without the making of any assessment; but income tax which has become so due may be assessed on the company (whether or not it has been paid when the assessment is made).

(6)Where it appears to the inspector that there is a relevant payment which ought to have been but has not been included in a return, or where the inspector is dissatisfied with any return, the inspector may make an assessment on the company to the best of his or her judgment, and any income tax due under an assessment made by virtue of this subsection shall be treated for the purposes of interest on unpaid tax as having been payable at the time when it would have been payable if a correct return had been made.

(7)Where in any accounting period a company receives any payment on which it bears income tax by deduction, the company may claim to have the income tax on that payment set against any income tax which it is liable to pay under this section in respect of payments made by it in that period, and any such claim shall be included in the return made under subsection (3) for the accounting period in question, and (where necessary) income tax paid by the company under this section for that accounting period and before the claim is allowed shall be repaid accordingly.

(8)

(a)Where a claim has been made under subsection (7), no proceedings for collecting tax which would be discharged if the claim were allowed shall be instituted pending the final determination of the claim, but this subsection shall not affect the date when the tax is due, and when the claim is finally determined any tax underpaid in consequence of this subsection shall be paid.

(b)Where proceedings are instituted for collecting tax assessed, or interest on tax assessed, under subsection (5) or (6), effect shall not be given to any claim under subsection (7) made after the institution of the proceedings so as to affect or delay the collection or recovery of the tax charged by the assessment or of interest on that tax.

(9)Income tax set against other tax under subsection (7) shall be treated as paid or repaid, as the case may be, and the same tax shall not be taken into account both under this subsection and under section 24(2).

(10)

(a)Where a company makes a relevant payment on a date which does not fall within an accounting period, the company shall make a return of that payment within 6 months from that date, and the income tax for which the company is accountable in respect of that payment shall be due at the time by which the return is to be made.

(b)Any assessment in respect of tax payable under this subsection shall be treated as relating to the year of assessment in which the payment is made.

(c)Subsection (11) shall not apply to an assessment under this subsection.

(11)

(a)Subject to subsection (10)(b), income tax payable (after income tax borne by the company by deduction has been set, by virtue of any claim under subsection (7), against income tax which it is liable to pay under subsection (5)) in respect of relevant payments in an accounting period shall, for the purposes of the charge, assessment, collection and recovery from the company making the payments of that tax and of any interest or penalties on that tax, be treated and described as corporation tax payable by that company for that accounting period, notwithstanding that for all other purposes of the Tax Acts it is income tax.

(b)Tax paid by a company which is treated as corporation tax by virtue of this subsection shall be repaid to the company if it would have been so repaid under subsection (7) had it been treated as income tax paid by the company.

(c)Any tax assessable under one or more of the provisions of this section may be included in one assessment if the tax so included is all due on the same date.

(12)Nothing in this section shall be taken to prejudice any powers conferred by the Tax Acts for the recovery of tax by means of an assessment or otherwise.

(13)

(a)The Revenue Commissioners may, by regulations made for the purposes mentioned in subsection (2), modify, supplement or replace any of the provisions of this section, and references in the Corporation Tax Acts and in any other enactment to this section shall be construed as including references to any such regulations and, without prejudice to the generality of the foregoing, such regulations may, in relation to tax charged by this section, modify any provision of the Tax Acts relating to returns, assessments, claims or appeals, or may apply any such provision with or without modification.

(b)Regulations under this subsection may –

(i)make different provision for different descriptions of companies and for different circumstances, and may authorise the Revenue Commissioners, where in their opinion there are special circumstances justifying it, to make special arrangements as respects income tax for which a company is liable to account or the repayment of income tax borne by a company;

(ii)include such transitional and other supplemental provisions as appear to the Revenue Commissioners to be expedient or necessary.

(c)Every regulation made under this subsection 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.

240.

Provisions as to tax under section 239.

(1)Subsections (2) to (4) shall apply only in respect of a company to which section 239(10) relates.

(2)The provisions of the Income Tax Acts relating to –

(a)persons who are to be chargeable to income tax,

(b)income tax assessments, and

(c)the collection and recovery of income tax,

shall, in so far as they are applicable, apply to the charge, assessment, collection and recovery of income tax under section 239.

(3)

(a)Any tax payable in accordance with section 239 without the making of an assessment shall carry interest from the date when the amount becomes due and payable until payment –

(i)for any day or part of a day before 1 August 1978 during which the amount remains unpaid, at a rate of 0.0492 per cent,

(ii)for any day or part of a day on or after 1 August 1978 and before 1 April 1998 during which the amount remains unpaid, at a rate of 0.0410 per cent,

(iii)for any day or part of a day on or after 1 April 1998 and before 1 July 2009 during which the amount remains unpaid, at a rate of 0.0322 per cent, and

(iv)for any day or part of a day on or after 1 July 2009 during which the amount remains unpaid, at a rate of 0.0274 per cent.

(b)Subsections (3) to (5) of section 1080 shall apply in relation to interest payable under this subsection as they apply in relation to interest payable under section 1080.

(4)In its application to any tax charged by an assessment to income tax in accordance with section 239, section 1080 shall apply as if subsection (2)(b) of that section were deleted.

(5)Section 1081(1) shall not apply where by virtue of section 438(4) there is any discharge or repayment of tax assessed under section 239.

(6)

(a)Subject to paragraph (b), a person aggrieved by an assessment made on that person under section 239 may appeal the assessment to the Appeal Commissioners, in accordance with section 949I, within the period of 30 days after the date of the notice of assessment.

(b)Where, in accordance with section 239, a person is required to make a return of relevant payments, no appeal under this section lies against an assessment until such time as the person makes the return and pays or has paid any income tax payable on the basis of that return.

241.

Income tax on payments by non-resident companies.

(1)This section shall apply in relation to an accounting period of a company not resident in the State if the company is –

(a)required by virtue of section 238(3) to deliver an account to the Revenue Commissioners, and

(b)within the charge to corporation tax in respect of the accounting period.

(2)Where this section applies in relation to an accounting period of a company, then –

(a)the company shall make a return to the inspector of –

(i)payments made by the company in the accounting period and in respect of which income tax is required to be deducted by virtue of section 238(2) or 246(2), and

(ii)the tax deducted out of those payments by virtue of section 238(2) or 246(2),

(b)section 239(5) shall apply to income tax in respect of payments referred to in paragraph (a), and

(c)income tax in respect of which a return is to be made under paragraph (a) shall, for the purposes of the charge, assessment, collection and recovery from the company making the payments of that tax and of any interest or penalties on that tax, be treated as if it were corporation tax chargeable for the accounting period for which the return is required under paragraph (a).

242.

Annual payments for non-taxable consideration.

(1)This section shall apply to any payment which is –

(a)an annuity or other annual payment charged with tax under Case III of Schedule D, other than –

(i)interest,

(ii)an annuity granted in the ordinary course of a business of granting annuities, or

(iii)a payment made to an individual under a liability incurred in consideration of the individual surrendering, assigning or releasing an interest in settled property to or in favour of a person having a subsequent interest,

and

(b)made under a liability incurred for consideration in money or money’s worth, where all or any part of such consideration is not required to be taken into account in computing for the purposes of income tax or corporation tax the income of the person making the payment.

(2)Any payment to which this section applies –

(a)shall be made without deduction of income tax,

(b)shall not be allowed as a deduction in computing the income or total income of the person by whom it is made, and

(c)shall not be a charge on income for the purposes of corporation tax.

242A.

Tax treatment of certain royalties.

(1)In this section ‘ relevant territory ‘ has the meaning assigned to it in section 172A.

(2)This section applies to a payment of royalties –

(a)made by a company in the course of a trade or business carried on by the company,

(b)to a company (in this subsection referred to as the ‘receiving company’) which –

(i)is not resident in the State, and

(ii)is, by virtue of the law of a relevant territory, resident for the purposes of tax in a relevant territory which imposes a tax that generally applies to royalties receivable in that territory by companies from sources outside that territory,

and

(c)which is made for bona fide commercial reasons and does not form part of any arrangement or scheme of which the main purpose or one of the main purposes is avoidance of liability to income tax, corporation tax or capital gains tax,

except where the royalties are paid to the receiving company in connection with a trade or business carried on in the State by the company through a branch or agency.

(3)Subject to section 817W, where, apart from this section, section 238 would apply to a payment of royalties to which this section applies, that section shall not apply to that payment.

(4)Subject to section 817W, a company shall not be chargeable to corporation tax or income tax in respect of a royalty payment to which this section applies where –

(a)the company –

(i)is not resident in the State, and

(ii)is, by virtue of the law of a relevant territory, resident for the purposes of tax in a relevant territory which imposes a tax that generally applies to royalties receivable in that territory by companies from sources outside that territory,

and

(b)the payment is made for bona fide commercial reasons and does not form part of any arrangement or scheme of which the main purpose or one of the main purposes is avoidance of liability to income tax, corporation tax or capital gains tax,

except where the royalty payment is made to the company in connection with a trade or business which is carried on in the State by the company through a branch or agency.

Chapter 2

Charges on income for corporation tax purposes (ss. 243-243B)

243.

Allowance of charges on income.

(1)Subject to this section and to any other express exceptions, “charges on income” means, for the purposes of corporation tax, payments of any description mentioned in subsection (4), not being dividends or other distributions of the company; but no payment deductible in computing profits or any description of profits for the purposes of corporation tax shall be treated as a charge on income.

(1A)For the purposes of this section, ‘bank’ has the meaning assigned to it by section 845A and includes building society within the meaning of section 256(1).

(2)In computing the corporation tax chargeable for any accounting period of a company, any charges on income paid by the company in the accounting period, in so far as paid out of the company’s profits brought into charge to corporation tax, shall be allowed as deductions against the total profits for the period reduced by any other relief from corporation tax other than group relief in accordance with section 420.

(3)

(a)This subsection shall apply to expenditure incurred for the purposes of a trade or profession set up and commenced on or after the 22nd day of January, 1997.

(b)Where –

(i)a company pays any charges on income before the time it sets up and commences a trade, and

(ii)the payment is made wholly and exclusively for the purposes of that trade,

that payment, to the extent that it is not otherwise deducted from total profits of the company, shall be treated for the purposes of corporation tax as paid at that time.

(c)An allowance or deduction shall not be made under any provision of the Tax Acts, other than this subsection, in respect of any expenditure or payment treated under this section as incurred on the day on which a trade or profession is set up and commenced.

(4)Subject to subsections (5) to (8), the payments referred to in subsection (1) are –

(a)any yearly interest, annuity or other annual payment and any other payments mentioned in section 104 or 237(2), and

(b)any other interest payable on an advance from –

(i)a bank carrying on a bona fide banking business in a Member State of the European Communities or the United Kingdom, or

(ii)a person who in the opinion of the Revenue Commissioners is bona fide carrying on business as a member of a stock exchange in a Member State of the European Communities or the United Kingdom or bona fide carrying on the business of a discount house in a Member State of the European Communities or the United Kingdom,

and for the purposes of this section any interest payable by a company as is mentioned in paragraph (b) shall be treated as paid on such interest being debited to the company’s account in the books of the person to whom it is payable.

(5)No payment mentioned in subsection (4)(a) made by a company to a person not resident in the State shall be treated as a charge on income unless it is a payment –

(a)from which, in accordance with –

(i)section 238, or

(ii)that section as applied by section 246,

except where –

(I)the company has been authorised by the Revenue Commissioners to do otherwise,

(II)the interest is interest referred to in paragraph (a), (b) or (h) of section 246(3), or

(III)the interest is interest to which section 64(2) applies,

the company deducts income tax which it accounts for under sections 238 and 239, or under sections 238 and 241, as the case may be,

(b)which is payable out of income brought into charge to tax under Case III of Schedule D and which arises from securities and possessions outside the State, or

(c)to which section 238 or 246(2) do not apply by virtue of section 242A or 267I.

(6)No such payment made by a company as is mentioned in subsection (4) shall be treated as a charge on income if –

(a)the payment is not ultimately borne by the company, or

(i)in the case of any royalty or other sum in respect of the user of a patent, the payment is in respect of capital expenditure, and

(ii)in any other case, the payment is charged to capital, or

(b)the payment is not made under a liability incurred for a valuable and sufficient consideration and, in the case of a company not resident in the State, incurred wholly and exclusively for the purposes of a trade carried on by the company in the State through a branch or agency, and for the purposes of this paragraph a payment within subparagraph (ii) or (iii) of section 792(1)(b) shall be treated as incurred for valuable and sufficient consideration.

(7)Subject to subsection (8), interest shall not be treated as a charge on income.

(8)Subject to subsection (9), subsection (7) shall not apply to any payment of interest on a loan to a company if –

(a)subject to subsections (2A), (2B), (4), (4A) and (4E) of that section, subsection (2) of section 247 applies to the loan, and

(b)the conditions specified in subsection (3) of section 247 are fulfilled.

(9)Section 249 shall apply for corporation tax as for income tax, and accordingly references in that section to section 247, to the investing company and to the borrower, to interest eligible for relief, and to affording relief for interest shall apply as if they were or included respectively references to subsection (8), to such a company as is mentioned in that subsection, to interest to be treated as a charge on income, and to treating part only of a payment of interest as a charge on income.

243A.

Restriction of relevant charges on income.

(1)In this section –

‘relevant trading charges on income’, in relation to an accounting period of a company, means the charges on income paid by the company in the accounting period wholly and exclusively for the purposes of a trade carried on by the company, other than so much of those charges as are charges on income paid for the purposes of an excepted trade within the meaning of section 21A;

‘relevant trading income’, in relation to an accounting period of a company, means the trading income of the company for the accounting period (not being income chargeable to tax under Case III of Schedule D) other than so much of that income as is income of an excepted trade within the meaning of section 21A.

(2)Notwithstanding section 243, relevant trading charges on income paid by a company in an accounting period shall not be allowed as deductions against the total profits of the company for the accounting period.

(3)Where a company pays relevant trading charges on income in an accounting period and, apart from subsection (2), those charges would be allowed as deductions against the total profits of the company for the accounting period, those charges shall be allowed as deductions against –

(a)income specified in section 21A(4),

(b)relevant trading income, and

(c)income to which section 21A(3) does not apply by virtue of section 21B,

of the company for the accounting period as reduced by any amount set off against that income under section 396A.

243B.

Relief for certain charges on income on a value basis.

(1)In this section –

‘relevant corporation tax’, in relation to an accounting period of a company, means the corporation tax which, apart from this section and sections 239, 241, 396B, 420B, 440 and 441, would be chargeable on the company for the accounting period;

‘relevant trading charges on income’ has the same meaning as in section 243A.

(2)Where a company pays relevant trading charges on income in an accounting period and the amount so paid exceeds an amount equal to the aggregate of the amounts allowed as deductions against the income of the company for the accounting period in accordance with section 243A, then the company may claim relief under this section for the accounting period in respect of the excess.

(3)Where for any accounting period a company claims relief under this section in respect of the excess, the relevant corporation tax of the company for the accounting period shall be reduced, in so far as the excess consists of relevant trading charges, by an amount determined by the formula –

 

where –

Cis the amount of the relevant trading charges on income, and

Ris the rate per cent of corporation tax which, by virtue of section 21, applies in relation to the accounting period.

(4)Where a company makes a claim for relief under this section in respect of any relevant trading charges on income paid in an accounting period, an amount (which shall not exceed the amount of the excess in respect of which a claim under this section may be made), determined by the formula –

 

where –

Tis the amount by which the relevant corporation tax for the accounting period is reduced by virtue of that paragraph, and

Ris the rate per cent of corporation tax which, by virtue of section 21, applies in relation to the accounting period,

shall be treated for the purposes of the Tax Acts as relieved under this section.

Chapter 3

Principal provisions relating to the payment of interest (ss. 244-255)

244.

Relief for interest paid on certain home loans.

(1)

(a)In this section –

“dependent relative”, in relation to an individual, means any of the persons mentioned in paragraph (a) or (b) of subsection (2), or in paragraph (a) or (b) of subsection (2A), of section 466 in respect of whom the individual is entitled to a tax credit under that section;

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

“EEA state”, means a state (including the State) which is a contracting party to the EEA Agreement;

“loan” means any loan or advance or any other arrangement whatever by virtue of which interest is paid or payable;

“qualifying interest”, in relation to an individual and a year of assessment, means –
(i)as respects a year of assessment before 2018, the amount of interest paid by the individual in respect of a qualifying loan,
(ii)as respects the year of assessment 2018, 75 per cent of the amount of interest paid by the individual in respect of a qualifying loan,
(iii)as respects the year of assessment 2019, 50 per cent of the amount of interest paid by the individual in respect of a qualifying loan, and
(iv)as respects the year of assessment 2020, 25 per cent of the amount of interest paid by the individual in respect of a qualifying loan;

“qualifying loan”, in relation to an individual, means a loan or loans which, without having been used for any other purpose, is or are used by the individual solely for the purpose of defraying money employed in the purchase, repair, development or improvement of a qualifying residence or in paying off another loan or loans used for such purpose;

“qualifying residence”, in relation to an individual, means a residential premises situated in an EEA state or in the United Kingdom which is used as the sole or main residence of –
(i)the individual
(ii)a former or separated spouse of the individual, or a former civil partner or a civil partner from whom the individual is living separately in circumstances where reconciliation is unlikely, or
(iii)a person who in relation to the individual is a dependent relative, and which is, where the residential premises is provided by the individual, provided rent-free and without any other consideration;

“relievable interest”, in relation to an individual and a year of assessment, means –
(i)in the case of –
(I)an individual assessed to tax for the year of assessment in accordance with section 1017 or 1031C, or
(II)a widowed individual or a surviving civil partner
the amount of qualifying interest paid by the individual in the year of assessment or, if less, €6,000
(ii)in the case of any other individual, the amount of qualifying interest paid by the individual in the year of assessment or, if less, €3,000
but, notwithstanding the preceding provisions of this definition and subject to paragraph (c), as respects the first 7 years of assessment for which there is an entitlement to relief under this section in respect of a qualifying loan taken out on or after 1 January 2004 and on or before 31 December 2012, ‘relievable interest’, in relation to an individual and a year of assessment, shall mean –
(iii)in the case of –
(I)an individual assessed to tax for the year of assessment in accordance with section 1017 or 1031C, or
(II)a widowed individual or a surviving civil partner
the amount of qualifying interest paid by the individual in the year of assessment or, if less, €20,000
(iv)in the case of any other individual, the amount of qualifying interest paid by the individual in the year of assessment or, if less, €10,000;

“residential premises” means –
(i)a building or part of a building used, or suitable for use, as a dwelling, and
(ii)land which the occupier of a building or part of a building used as a dwelling has for the occupier’s own occupation and enjoyment with that building or that part of a building as its garden or grounds of an ornamental nature;

“separated” means separated under an order of a court of competent jurisdiction or by deed of separation or in such circumstances that the separation is likely to be permanent.

(b)For the purposes of this section, in the case of an individual assessed to tax for a year of assessment in accordance with section 1017 or 1031C, any payment of qualifying interest made by the individual’s spouse or civil partner, in respect of which the individual’s spouse or civil partner would have been entitled to relief under this section if that spouse or civil partner were assessed to tax for the year of assessment in accordance with section 1016 (apart from subsection (2) of that section) or section 1031B (apart from subsection (2) of that section) shall be deemed to have been made by the individual.

(c)The number of years of assessment for which the amount of relievable interest is to be determined by reference to paragraph (iii) or (iv) of the definition of ‘relievable interest’ shall be reduced by one year of assessment for each year of assessment in which an individual was entitled to relief for a year of assessment before the year 1997-1998 under section 76(1) or 496 of, or paragraph 1(2) of Part III of Schedule 6 to, the Income Tax Act, 1967.

(1A)

(a)This section shall not apply as respects interest paid on or after 1 May 2009.

(b)Notwithstanding paragraph (a), this section shall continue to apply for the year of assessment 2010 and subsequent years of assessment up to and including the year of assessment 2020 in respect of qualifying interest paid in respect of a qualifying loan taken out on or after 1 January 2004 and on or before 31 December 2012.

(c)

(i)Paragraph (b) shall not apply in respect of qualifying interest attributable to that part of a qualifying loan used to repay another qualifying loan (in this paragraph referred to as an ‘existing qualifying loan’) unless the qualifying interest on that existing qualifying loan would, had the existing qualifying loan not been repaid, have been interest referred to in paragraph (b).

(ii)Where subparagraph (i) applies, the number of years of assessment for which there is an entitlement to relief under this section in respect of qualifying interest attributable to that part of a qualifying loan used to repay the existing qualifying loan shall not exceed the number of years of assessment for which relief would have applied had the existing qualifying loan not been repaid.

(d)As respects the year of assessment 2009 only, the definition of ‘relievable interest’ is amended-

(i)in paragraph (i) by substituting ‘the amount of qualifying interest paid by the individual in the period 1 January 2009 to 30 April 2009 or, if less, €2,000 and the amount of qualifying interest paid by the individual in the period 1 May 2009 to 31 December 2009 or, if less, €4,000’ for ‘the amount of qualifying interest paid by the individual in the year of assessment or, if less, €6,000’, and

(ii)in paragraph (ii) by substituting ‘the amount of qualifying interest paid by the individual in the period 1 January 2009 to 30 April 2009 or, if less, €1,000 and the amount of qualifying interest paid by the individual in the period 1 May 2009 to 31 December 2009 or, if less, €2,000’ for ‘the amount of qualifying interest paid by the individual in the year of assessment or, if less, €3,000’.

(2)

(a)In this subsection ‘appropriate percentage’, in relation to a year of assessment, means –

(i)as respects qualifying interest to which subsection (1A)(b) applies –

(I)where relievable interest is determined by reference to paragraph (i) or (ii) of the definition of ‘relievable interest ‘, 15 per cent for that year, and

(II)where relievable interest is determined by reference to paragraph (iii) or (iv) of the definition of ‘relievable interest ‘:

(A)25 per cent for the first and second years of assessment for which there is an entitlement to relief under this section,

(B)22.5 per cent for the third, fourth and fifth years of assessment for which there is an entitlement to relief under this section, and

(C)a percentage equal to the standard rate of tax for the sixth and seventh years of assessment for which there is an entitlement to relief under this section,

and

(ii)notwithstanding subparagraph (i), 30 per cent for the year of assessment 2012 and subsequent years of assessment up to and including the year of assessment 2020 as respects qualifying interest paid on a qualifying loan taken out on or after 1 January 2004 and on or before 31 December 2008 to purchase an individual’s –

(I)first qualifying residence, or

(II)second or subsequent qualifying residence but only where the first qualifying residence was purchased on or after 1 January 2004.

(b)Where an individual for a year of assessment proves that in the year of assessment such individual paid an amount of qualifying interest, then, the income tax to be charged, other than in accordance with section 16(2), on such individual for that year of assessment shall be reduced by an amount which is the lesser of –

(i)the amount equal to the appropriate percentage of the relievable interest, and

(ii)the amount which reduces that income tax to nil.

(c)Except for the purpose of section 188, no account shall be taken of relievable interest in calculating the total income of the individual by whom the relievable interest is paid.

(3)

(a)Where the amount of relievable interest is determined by reference to paragraph (iii) or (iv) of the definition of ‘relievable interest’, then, notwithstanding any other provision of the Tax Acts, in the case of an individual who has elected or could be deemed to have duly elected to be assessed to tax for the year of assessment in accordance with section 1017 or 1031C, where either –

(i)the individual, or

(ii)the individual’s spouse or civil partner,

was previously entitled to relief under this section or under section 76(1) or 496 of, or paragraph 1(2) of Part III of Schedule 6 to, the Income Tax Act, 1967, and the other person was not so entitled –

(I)the relief to be given under this section, other than that part of the relief (in this subsection referred to as ‘the additional relief’) which is represented by the difference between the relievable interest and the amount which would have been the amount of the relievable interest if this had been determined by reference to subparagraph (i) or (ii) of that definition, shall be treated as given in equal proportions to the individual and that individual’s spouse or civil partner for that year of assessment, and

(II)the additional relief shall be reduced by 50 per cent and the additional relief, as so reduced, shall be given only to the person who was not previously entitled to relief under this section or under section 76(1) or 496 of, or paragraph 1(2) of Part III of Schedule 6 to, the Income Tax Act, 1967.

(b)Paragraph (a) shall apply notwithstanding that –

(i)section 1023 or 1031H may have applied for the year of assessment, and

(ii)the payments in respect of which relief is given may not have been made in equal proportions.

(4)

(a)Notwithstanding anything in this section, a loan shall not be a qualifying loan, in relation to an individual, if it is used for the purpose of defraying money applied in –

(i)the purchase of a residential premises or any interest in such premises from an individual who is the spouse of the purchaser,

(ii)the purchase of a residential premises or any interest in such premises if, at any time after the 25th day of March, 1982, that premises or interest was disposed of by the purchaser or by his or her spouse or if any interest which is reversionary to the interest purchased was so disposed of after that date, or

(iii)the purchase, repair, development or improvement of a residential premises, and the person who, directly or indirectly, received the money is connected with the individual and it appears that the purchase price of the premises substantially exceeds the value of what is acquired or, as the case may be, the cost of the repair, development or improvement substantially exceeds the value of the work done.

(b)Subparagraphs (i) and (ii) of paragraph (a) shall not apply in the case of a husband and wife who are separated.

(5)Where an individual acquires a new sole or main residence but does not dispose of the previous sole or main residence owned by the individual and it is shown to the satisfaction of the inspector that it was the individual’s intention, at the time of the acquisition of the new sole or main residence, to dispose of the previous sole or main residence and that the individual has taken and continues to take all reasonable steps necessary to dispose of it, the previous sole or main residence shall be treated as a qualifying residence, in relation to the individual, for the period of 12 months commencing on the date of the acquisition of the new sole or main residence.

(6)

(a)In this subsection, “personal representative” has the same meaning as in section 799.

(b)Where any interest paid on a loan used for a purpose mentioned in the definition of “qualifying loan” by persons as the personal representatives of a deceased person or as trustees of a settlement made by the will of a deceased person would, on the assumptions stated in paragraph (c), be eligible for relief under this section and, in a case where the condition stated in that paragraph applies, that condition is satisfied, that interest shall be so eligible notwithstanding the preceding provisions of this section.

(c)For the purposes of paragraph (b), it shall be assumed that the deceased person would have survived and been the borrower and if, at the time of the person’s death, the residential premises was used as that person’s sole or main residence, it shall be further assumed that the person would have continued so to use it and the following condition shall then apply, namely, that the residential premises was, at the time the interest was paid, used as the sole or main residence of the deceased’s widow, widower or surviving civil partner, or of any dependent relative of the deceased.

(7)This subsection shall apply to a loan taken out and used by an individual –

(a)on or after 1 January 2012 and on or before 31 December 2012 solely for the purpose of defraying money employed in the purchase of an estate or interest in the land referred to in paragraph (b) and in respect of which the permission in subsection (10) applies but only where a residential premises, which is a qualifying residence in relation to that individual, is constructed on that land, or

(b)on or after 1 January 2012 and on or before 31 December 2013 solely for the purpose of defraying money employed in the construction of a residential premises which is a qualifying residence in relation to that individual on land –

(i)in respect of which he or she has, on or after 1 January 2012 and on or before 31 December 2012, acquired an estate or interest, and

(ii)the acquisition of which was financed by way of the loan referred to in paragraph (a).

(8)This subsection shall apply to a loan in respect of which there was in place, on or after 1 January 2012 and on or before 31 December 2012, an agreement evidenced in writing to provide that loan to an individual and –

(a)part of that loan is used in the period 1 January 2012 to 31 December 2012, and

(b)the balance of that loan is used in the period 1 January 2013 to 31 December 2013,

by that individual solely for the purpose of defraying money employed in the repair, development or improvement of a residential premises which is a qualifying residence in relation to that individual.

(9)Any loan to which subsection (7) or (8)(b) applies shall, for the purposes of this section, be deemed to be a qualifying loan taken out on or after 1 January 2012 and on or before 31 December 2012.

(10)Relief shall not be granted in respect of interest paid on any loan to which subsection (7) or (8) applies unless any permission required under the Planning and Development Act 2000 was granted on or before 31 December 2012 in respect of such construction, repair, development or improvement, as appropriate, and such permission has not ceased to exist.

(11)For the purposes of the application of this section, the definition of ‘relievable interest’ in subsection (1)(a) has effect as if –

(a)in subparagraph (i) of that definition –

(i)as respects the year of assessment 2018, ‘€4,500’,

(ii)as respects the year of assessment 2019, ‘€3,000’, and

(iii)as respects the year of assessment 2020, ‘€1,500’,

were substituted for ‘€6,000’,

(b)in subparagraph (ii) of that definition –

(i)as respects the year of assessment 2018, ‘€2,250’,

(ii)as respects the year of assessment 2019, ‘€1,500’, and

(iii)as respects the year of assessment 2020, ‘€750’,

were substituted for ‘€3,000’,

(c)in subparagraph (iii) of that definition –

(i)as respects the year of assessment 2018, ‘€15,000’,

(ii)as respects the year of assessment 2019, ‘€10,000’, and

(iii)as respects the year of assessment 2020, ‘€5,000’,

were substituted for ‘€20,000’, and

(d)in subparagraph (iv) of that definition –

(i)as respects the year of assessment 2018, ‘€7,500’,

(ii)as respects the year of assessment 2019, ‘€5,000’, and

(iii)as respects the year of assessment 2020, ‘€2,500’,

were substituted for ‘€10,000’.

244A.

Application of section 244 (relief for interest paid on certain home loans) of Principal Act.

(1)

(a)In this section –

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

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

“qualifying dwelling”, in relation to an individual, means a qualifying residence situated in the State;

“qualifying lender” has the meaning assigned to it by subsection (3);

“qualifying mortgage interest”, in relation to an individual and a year of assessment, means the qualifying interest paid by the individual in the year of assessment in respect of a qualifying mortgage loan;

“qualifying mortgage loan”, in relation to an individual, means a qualifying loan or loans secured by the mortgage of freehold or leasehold estate or interest in a qualifying dwelling, and

(ii)”appropriate percentage”, “qualifying interest”, “qualifying loan”, “qualifying residence” and “relievable interest” have the same meanings, respectively, as they have in section 244.

(b)This section provides for a scheme whereby relief due under section 244 shall, in certain circumstances, be given by way of deduction at source (“the tax relief at source scheme”) under subsection (2) (a) and in no other manner.

(2)

(a)Where an individual makes a payment of qualifying mortgage interest to a qualifying lender in respect of which relief is due under section 244, the individual shall be entitled in accordance with regulations to deduct and retain out of it an amount equal to the appropriate percentage, for the year of assessment in which the payment is due, of the relievable interest.

(b)A qualifying lender to which a payment referred to in paragraph (a) is made –

(i)shall accept in accordance with regulations the amount paid after deduction in discharge of the individual’s liability to the same extent as if the deduction had not been made, and

(ii)may, on making a claim in accordance with regulations, recover from the Revenue Commissioners an amount equal to the amount deducted.

(3)The following bodies shall be qualifying lenders –

(a)a bank holding a licence under section 9 or an authorisation granted under section 9A of the Central Bank Act 1971;

(b)a building society incorporated or deemed to be incorporated under the Building Societies Act, 1989;

(c)a trustee savings bank within the meaning of the Trustee Savings Banks Act, 1989;

(d)ACC Bank plc;

(e)a local authority;

(f)a body which –

(i)

(I)holds a licence or similar authorisation, corresponding to a licence granted under section 9 of the Central Bank Act 1971, or

(II)has been incorporated in a manner corresponding to that referred to in paragraph (b),

under the law of an EEA state, other than the State, or of the United Kingdom,

and

(ii)provides qualifying mortgage loans;

and

(g)a body which applies to the Revenue Commissioners for registration as a qualifying lender and in respect of which the Revenue Commissioners, having regard to the activities and objects of the body, are satisfied is entitled to be so registered.

(4)

(a)The Revenue Commissioners shall maintain, and publish in such manner as they consider appropriate, a register for the purposes of subsection (3).

(b)If the Revenue Commissioners are satisfied that an applicant for registration is entitled to be registered, they shall register the applicant with effect from such date as may be specified by them.

(c)If it appears to the Revenue Commissioners at any time that a body which is registered under this subsection would not be entitled to be registered if it applied for registration at that time, the Revenue Commissioners may, by written notice given to the body, cancel its registration with effect from such date as may be specified by them in the notice.

(d)A body aggrieved by a decision of the Revenue Commissioners not to register that body or to cancel its registration, as the case may be, may appeal the decision to the Appeal Commissioners, in accordance with section 949I, within the period of 30 days after the date of the notice of that decision.

(5)

(a)The Revenue Commissioners shall make regulations providing generally as to administration of this section and those regulations may, in particular and without prejudice to the generality of the foregoing, include provision –

(i)that a claim under subsection (2)(b)(ii) shall be –

(I)made in such form and manner,

(II)made at such time, and

(III)accompanied by such documents,

as provided for in the regulations,

(ii)that, in circumstances specified in regulations, a claim may be made under subsection (2)(b)(ii) where a payment is due but not made;

(iii)for the making by qualifying lenders, in such form and manner as may be prescribed, of monthly returns containing particulars in relation to –

(I)each individual making payments of qualifying mortgage interest,

(II)the amount of qualifying mortgage interest paid or due by the individual to date in the year of assessment,

(III)the amount deducted by the individual, or the amount he or she would have been entitled to deduct, under subsection (2)(a),

(IV)the estimated qualifying mortgage interest to be paid by the individual in the year of assessment,

(V)the total amount of qualifying mortgage loans of the qualifying lender outstanding at the date of the return,

(VI)the total amount claimed by the qualifying lender under subsection (2)(b)(ii) for the month to which the return relates,

(VII)qualifying mortgage loans repaid in full in that month, and

(VIII)such other matters as may be specified;

(iv)for the transmission by the Revenue Commissioners to qualifying lenders, on a monthly basis, of such details as may be specified in the regulations in relation to –

(I)qualifying mortgage loans, and

(II)individuals with qualifying mortgage loans,

which are necessary for the operation of this section;

(v)in relation to the obligations and entitlements of individuals with qualifying mortgage loans under the tax relief at source scheme;

(vi)in relation to the obligations and entitlements of qualifying lenders under the tax relief at source scheme;

(vii)for deeming of certain qualifying mortgage loans, in such circumstances as may be specified in the regulations, as being no longer entitled to relief under this section;

(viii)for the granting of appropriate relief in any case where inadequate or excessive relief has been granted under this section; and

(ix)for the implementation of this section where a qualifying lender disposes of all or part of its qualifying mortgage loans.

(b)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.

(6)

(a)Where any amount is paid to a qualifying lender by the Revenue Commissioners as an amount recoverable by virtue of subsection (2)(b)(ii) but is an amount to which that qualifying lender is not entitled, that amount shall be repaid by the qualifying lender.

(b)There shall be made such assessments, adjustments or set-offs as may be required for securing repayment of the amount referred to in paragraph (a) and the provisions of this Act relating to the assessment, collection and recovery of income tax shall, in so far as they are applicable and with necessary modification, apply in relation to the recovery of such amount.

(7)

(a)Notwithstanding any other enactment, an officer of the Revenue Commissioners may request a qualifying lender to provide, in such form as the Revenue Commissioners may require, such information in relation to qualifying mortgage loans granted by the qualifying lender –

(i)as will or may assist an officer of the Revenue Commissioners to determine if relief is due under section 244 for a particular year of assessment, and

(ii)as is necessary for the proper administration of this section.

(b)The qualifying lender shall comply with a request under paragraph (a) no later than –

(i)30 days after receipt of such request, or

(ii)any extension of the period referred to in subparagraph (i) as may be agreed with an officer of the Revenue Commissioners.

(c)Information provided to the Revenue Commissioners under this subsection shall be used by them only for the purposes of section 244 and this section and, notwithstanding section 872, shall be used for no other purpose.

245.

Relief for certain bridging loans.

(1)Where a person –

(a)disposes of such person’s only or main residence and acquires another residence for use as such person’s only or main residence,

(b)obtains a loan, the proceeds of which are used to defray in whole or in part the cost of the acquisition or the disposal or both, and

(c)pays interest on the loan (and on any subsequent loan the proceeds of which are used to repay in whole or in part the first-mentioned loan or any such subsequent loan or to pay interest on any such loan) in respect of the period of 12 months from the date of the making of the first-mentioned loan,

such person shall be entitled on proof of those facts to a reduction in tax under section 244 on the amount of that interest as if no other interest had been paid by such person in respect of the period of 12 months from the date of the making of the first-mentioned loan.

(2)Subsection (1) shall not apply to a loan the proceeds of which are applied for some other purpose before being applied for the purpose specified in that subsection.

246.

Interest payments by companies and to non-residents.

(1)In this section –

“bank” includes building society within the meaning of section 256(1);

“company” means any body corporate;

“investment undertaking” means –

(a)a unit trust mentioned in section 731(5)(a),

(b)a special investment scheme within the meaning given to it in section 737,

(c)an investment undertaking within the meaning given to it in section 739B;

(d)a common contractual fund within the meaning given to it in section 739I (inserted by the Finance Act 2005); or

(e)an investment limited partnership within the meaning of section 739J;

“relevant person” means –

(a)a company, or

(b)an investment undertaking;

“relevant security” means a security issued by a company in the course of carrying on relevant trading operations within the meaning of section 445 or 446, on terms which oblige the company to redeem the security within a period of 15 years after the date on which the security was issued;

“relevant territory” means –

(a)a Member State of the European Communities other than the State,

(b)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) have been made, or

(c)not being a territory referred to in paragraph (a) or (b), a territory with the government of which arrangements have been made which on completion of the procedures set out in section 826(1) will have the force of law;

“tax”, in relation to a relevant territory, means any tax imposed in such territory which corresponds to income tax or corporation tax in the State.

(2)Where any yearly interest charged with tax under Schedule D is paid –

(a)by a company, otherwise than when paid in a fiduciary or representative capacity, to a person whose usual place of abode is in the State, or

(b)by any person to another person whose usual place of abode is outside the State,

the person by or through whom the payment is made shall on making the payment deduct out of the payment a sum representing the amount of the tax on the payment at the standard rate in force at the time of the payment, and subsections (1) and (3) to (5) of section 238 shall apply to such payments as they apply to payments specified in subsection (2) of that section.

(3)Subject to section 817V, subsection (2) shall not apply to –

(a)interest paid in the State on an advance from a bank carrying on a bona fide banking business in the State,

(b)interest paid by such a bank in the ordinary course of such business,

(bb)interest paid in the State –

(i)by a company to another company, being a company to which paragraph (a) of subsection (5) applies, for so long as that other company is a company to which that paragraph applies, or

(ii)by a company (in this paragraph referred to as the ‘first-mentioned company’) to which subparagraphs (i) and (ii) of subsection (5)(a) apply to another company resident in the State where that other company is deemed to be a member of the same group of companies as the first-mentioned company and for this purpose the provisions of subsection (1) of section 411 shall apply to determine whether companies are deemed to be members of the same group of companies as if references in that subsection to a 75 per cent subsidiary were references to a 51 percent subsidiary,

(bbb)interest paid in the State to an investment undertaking within the meaning of section 739B,

(c)interest paid to a person whose usual place of abode is outside the State –

(i)in respect of a relevant security, or

(ii)a specified collective investment undertaking within the meaning of section 734,

(cc)interest paid in the State to a qualifying company (within the meaning of section 110),

(ccc)interest paid by a qualifying company (within the meaning of section 110) to a person who, by virtue of the law of a relevant territory, is resident for the purposes of tax in the relevant territory, except, in a case where the person is a company, where such interest is paid to the company in connection with a trade or business which is carried on in the State by the company through a branch or agency,

(d)interest paid by a company authorised by the Revenue Commissioners to pay interest without deduction of income tax,

(da)interest paid to the Strategic Banking Corporation of Ireland or a subsidiary wholly owned by it or a subsidiary wholly owned by any such subsidiary,

(db)interest paid by the Strategic Banking Corporation of Ireland or a subsidiary wholly owned by it or a subsidiary wholly owned by any such subsidiary,

(e)interest on any securities in respect of which the Minister for Finance has given a direction under section 36,

(ea)interest paid to-

(i)the National Asset Management Agency or a company referred to in section 616(1)(g),

(ii)the State acting through the National Asset Management Agency or through a company referred to in section 616(1)(g), or

(iii)the National Treasury Management Agency by the National Asset Management Agency or by a company referred to in section 616(1)(g),

(eb)interest paid by-

(i)the National Asset Management Agency,

(ii)a company referred to in section 616(1)(g), or

(iii)the State acting through the National Asset Management Agency, or through a company referred to in section 616(1)(g),

to a person who, by virtue of the law of a relevant territory, is resident for the purposes of tax in the relevant territory, except, in a case where the person is a company, where such interest is paid to the company in connection with a trade or business which is carried on in the State by the company through a branch or agency,

(ec)interest paid to –

(i)the National Treasury Management Agency,

(ii)the State acting through the National Treasury Management Agency, or

(iii)a Fund investment vehicle (within the meaning of section 37 of the National Treasury Management Agency (Amendment) Act 2014) of which the Minister for Finance is the sole beneficial owner,

(ed)interest paid by a Fund investment vehicle (within the meaning of section 37 of the National Treasury Management Agency (Amendment) Act 2014) of which the Minister for Finance is the sole beneficial owner,

(f)interest paid without deduction of tax by virtue of section 700,

(fa)interest paid in the State to an exempt approved scheme within the meaning of section 774,

(g)interest which under section 437 is a distribution,

(h)interest, other than interest referred to in paragraphs (a) to (g), paid by a relevant person in the ordinary course of a trade or business carried on by that person to a company –

(I)which, by virtue of the law of a relevant territory, is resident in the relevant territory for the purposes of tax and that relevant territory imposes a tax that generally applies to interest receivable in that territory by companies from sources outside that territory, or

(II)where the interest –

(A)is exempted from the charge to income tax under arrangements made with the government of a territory outside the State having the force of law under the procedures set out in section 826(1), or

(B)would be exempted from the charge to income tax if arrangements made, on or before the date of payment of the interest, with the government of a territory outside the State, that do not have the force of law under the procedures set out in section 826(1), had the force of law when the interest was paid,

except where such interest is paid to that company in connection with a trade or business which is carried on in the State by that company through a branch or agency,

(i)interest paid to Home Building Finance Ireland or a subsidiary wholly owned by it or a subsidiary wholly owned by any such subsidiary, or

(j)interest paid by Home Building Finance Ireland or a subsidiary wholly owned by it or a subsidiary wholly owned by any such subsidiary.

(4)[deleted]

(5)

(a)This paragraph shall apply to a company –

(i)which advances money in the ordinary course of a trade which includes the lending of money,

(ii)in whose hands any interest payable in respect of money so advanced is taken into account in computing the trading income of the company, and

(iii)which –

(I)has notified in writing the appropriate inspector that it meets the requirements of subparagraphs (i) and (ii), and

(II)

(A)has notified the first company referred to in subsection (3)(bb) in writing that it is a company which meets those requirements and that it has made the notification referred to in subparagraph (iii) (I), and

(B)has provided the first company referred to in subsection (3)(bb) with its tax reference number (within the meaning of section 885).

(b)A company which is no longer a company to which paragraph (a) applies shall, upon that paragraph ceasing to apply to it, immediately notify in writing the inspector referred to in subparagraph (iii)(I) of paragraph (a) and the company referred to in subparagraph (iii)(II) accordingly.

246A.

Interest in respect of wholesale debt instruments.

(1)In this section –

‘approved denomination’, in relation to a wholesale debt instrument, means a denomination of not less than

(a)in the case of an instrument denominated in euro, €500,000;

(b)in the case of an instrument denominated in United States Dollars, US$500,000; or

(c)in the case of an instrument denominated in a currency other than euro or United States Dollars, the equivalent in that other currency of €500,000;

and, for the purposes of this definition, the equivalent of an amount of euro in another currency shall be determined by reference to the rate of exchange –

(i)in the case of instruments issued under a programme, at the time the programme under which the instrument is to be issued is first publicised; or

(ii)in the case of all other instruments, on the date of issue of the instrument;

‘Revenue officer’ means an officer of the Revenue Commissioners;

‘certificate of deposit’ means an instrument, either in physical or electronic form, relating to money in any currency which has been deposited with the issuer or some other person, being an instrument –

(a)issued by a financial institution,

(b)which recognises an obligation to pay a stated amount to bearer or to order, with or without interest, and

(c)

(i)in the case of instruments held in physical form, by the delivery of which, with or without endorsement, the right to receive the stated amount is transferable, or

(ii)in the case of instruments held in electronic form, in respect of which the right to receive the stated amount is transferable;

‘commercial paper’ means a debt instrument, either in physical or electronic form, relating to money in any currency, which –

(a)is issued by –

(i)a financial institution, or

(ii)a company that is not a financial institution,

(b)recognises an obligation to pay a stated amount,

(c)carries a right to interest or is issued at a discount or at a premium, and

(d)matures within 2 years;

‘financial institution’ has the same meaning as it has in section 906A;

‘relevant person’ means the person by or through whom a payment in respect of a wholesale debt instrument is made;

‘tax reference number’ has the meaning assigned to it by section 885;

‘wholesale debt instrument’ means a certificate of deposit or commercial paper, as appropriate.

(2)

(a)In this section and in any other provision of the Tax Acts or the Capital Gains Tax Acts which applies this subsection, ‘recognised clearing system’ means the following clearing systems –

(i)Bank One NA, Depository and Clearing Centre,

(ii)Central Moneymarkets Office,

(iii)Clearstream Banking SA,

(iv)Clearstream Banking AG,

(v)CREST,

(vi)Depository Trust Company of New York,

(vii)Euroclear,

(viii)Monte Titoli SPA,

(ix)Netherlands Centraal Instituut voor Giraal Effectenverkeer BV,

(x)National Securities Clearing Corporation,

(xi)Sicovam SA,

(xii)SIS Sega Intersettle AG, and

(xiii)any other system for clearing securities which is for the time being designated, for the purposes of this section or any other provision of the Tax Acts or the Capital Gains Tax Acts which applies this subsection, by order of the Revenue Commissioners under paragraph (b) as a recognised clearing system.

(b)For the purposes of this section and sections 64 and 739B, the Revenue Commissioners may, designate by order one or more than one system for clearing securities as a ‘recognised clearing system’.

(c)An order of the Revenue Commissioners under paragraph (b) may –

(i)contain such transitional and other supplemental provisions as appear to the Revenue Commissioners to be necessary or expedient, and

(ii)be varied or revoked by a subsequent order.

(3)Subject to section 817V, as respects any payment made in respect of a wholesale debt instrument –

(a)if either

(i)the person by whom the payment is made, or

(ii)the person through whom the payment is made,

is not resident in the State and the payment is not made by or through a branch or agency through which a company not resident in the State carries on a trade or business in the State, and

(I)the wholesale debt instrument is held in a recognised clearing system, and

(II)the wholesale debt instrument is of an approved denomination,

then –

(A)section 246(2) shall not apply to that payment, and

(B)the wholesale debt instrument shall not be treated as a relevant deposit (within the meaning of section 256) for the purposes of Chapter 4 of this Part,

or

(b)

(i)if either –

(I)the person by whom the payment is made, or

(II)the person through whom the payment is made,

is resident in the State or the payment is made either by or through a branch or agency through which a company not resident in the State carries on a trade or business in the State,

and

(ii)

(I)the wholesale debt instrument is held in a recognised clearing system and is of an approved denomination, or

(II)the person who is beneficially entitled to the interest is a resident of the State and has provided the person’s tax reference number to the relevant person, or

(III)the person who is the beneficial owner of the wholesale debt instrument and who is beneficially entitled to the interest is not resident in the State and has made a declaration of the kind described in subsection (5),

then, subject to subsection (4) or (5) –

(A)section 246(2) shall not apply to that payment, and

(B)the wholesale debt instrument shall not be treated as a relevant deposit (within the meaning of section 256) for the purposes of Chapter 4 of this Part.

(4)A relevant person who makes a payment in respect of a wholesale debt instrument shall as respects a case which is within paragraph (b)(ii)(I) or (b)(ii)(II), as the case may be, of subsection (3) and which is not within paragraph (a) of that subsection –

(a)

(i)be regarded as a person to whom section 891(1) applies as respects that case, if that provision would not otherwise apply to that person,

(ii)be regarded as a ‘relevant person’ (within the meaning of section 894) for the purposes of that section as respects that case, if that person would not otherwise be a ‘relevant person’ (within that meaning), and

(iii)in addition to the matters to be included in a return to be made under section 891 for a chargeable period (within the meaning of section 321(2)), include on that return, in respect of that case, the tax reference number of the person to whom the payment was made,

and

(b)on being so required by notice given in writing by a Revenue officer, in relation to any person named by the officer in the notice, deliver an account in writing of the amount of any payment made in respect of a wholesale debt instrument to that person together with details of the person’s name and address and tax reference number if such details have not been included in a return made by that person under section 891.

(5)The declaration referred to in subsection (3)(b)(ii)(III) is a declaration in writing to a relevant person which –

(a)is made by a person (in this section referred to as ‘the declarer’) to whom any payment in respect of which the declaration is made is payable by the relevant person, and is signed by the declarer,

(b)is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(c)declares that at the time the declaration is made the person who is beneficially entitled to the interest is not resident in the State,

(d)contains as respects the person mentioned in paragraph (c) –

(i)the name of the person,

(ii)the address of that person’s principal place of residence, and

(iii)the name of the country in which that person is resident at the time that the declaration is made,

(e)contains an undertaking by the declarer that, if the person referred to in paragraph (c) becomes resident in the State, the declarer shall notify the relevant person accordingly, and

(f)contains such other information as the Revenue Commissioners may reasonably require for the purposes of this section.

(6)Where a relevant person is satisfied that any payment made by that person in respect of a wholesale debt instrument has been made to a person to whom paragraph (b)(ii)(II) or (b)(ii)(III), as the case may be, of subsection (3) applies, the relevant person shall be entitled to continue to treat that person as a person to whom that paragraph applies until such time as the relevant person is in possession, or aware, of information which can reasonably be taken to indicate that that paragraph no longer applies to that person.

(7)

(a)A relevant person shall –

(i)keep and retain for the longer of the following –

(I)a period of 6 years after the declaration is made, and

(II)a period which ends not earlier than 3 years after the latest date on which any payment in respect of which the declaration was made is paid,

and

(ii)on being required by notice given in writing by a Revenue officer, make available to that officer within the time specified in the notice,

all declarations of the kind mentioned in this section that have been made in respect of any payment made by the relevant person.

(b)A Revenue officer may examine or take extracts from or copies of any declarations made available under paragraph (a).

 

247.

Relief to companies on loans applied in acquiring interest in other companies.

(1)

(a)In this section and in sections 248 and 249 –

“control” shall be construed in accordance with section 432;

“intermediate holding company” means a company whose business consists wholly or mainly of the holding of stocks, shares or securities and is, in relation to an investee company referred to in subsection (2)(a)(iv), a company through which the investee company holds stocks, shares or securities in a company referred to in subsection (2)(a)(i);

“material interest”, in relation to a company, means the beneficial ownership of, or the ability to control, directly or through the medium of a connected company or connected companies or by any other indirect means, more than 5 per cent of the ordinary share capital of the company;

“trading stock”, has the same meaning as in section 89.

(b)For the purposes of this section and sections 248 and 249, a company shall be regarded as connected with another company if it would be so regarded for the purposes of the Tax Acts by virtue of section 10 and, except for the purposes of subsections (4A) and (4E), if it is a company referred to in subsection (2)(a).

(2)This section shall apply to a loan to a company (in this section and in section 249(1) referred to as “the investing company”) to defray money applied –

(a)in acquiring any part of the ordinary share capital of –

(i)a company which exists wholly or mainly for the purpose of carrying on a trade or trades,

(ii)a company whose income consists wholly or mainly of profits or gains chargeable under Case V of Schedule D,

(iii)a company whose business consists wholly or mainly of the holding of stocks, shares or securities directly in a company referred to in subparagraph (i),

(iv)a company whose business consists wholly or mainly of the holding of stocks, shares or securities of a company referred to in subparagraph (i) indirectly through an intermediate holding company or companies, or

(v)a company whose business consists wholly or mainly of the holding of stocks, shares or securities directly in a company referred to in subparagraph (ii),

(b)in lending to a company referred to in paragraph (a) money which is used wholly and exclusively –

(i)where the company is a company which exists wholly or mainly for the purpose of carrying on a trade or trades, for the purposes of that trade or those trades,

(ii)where the company is a company whose income consists wholly or mainly of profits or gains chargeable under Case V of Schedule D, in the purchase, improvement or repair of premises to which the profits or gains relate,

(iii)where the company is a company whose business consists wholly or mainly of the holding of stocks, shares or securities directly in a company referred to in paragraph (a)(i), for the purposes of holding such stocks, shares or securities,

(iv)where the company is a company whose business consists wholly or mainly of the holding of stocks, shares or securities of a company referred to in paragraph (a)(i) indirectly through an intermediate holding company or companies, for the purposes of acquiring and holding such stocks, shares or securities, or

(v)where the company is a company whose business consists wholly or mainly of the holding of stocks, shares or securities directly in a company referred to in paragraph (a)(ii), for the purposes of holding such stocks, shares or securities,

(ba)in lending to a company referred to in paragraph (a) (other than a company referred to in paragraph (a)(iv)) money which is used wholly and exclusively by a connected company –

(i)where the connected company is a company which exists wholly or mainly for the purpose of carrying on a trade or trades, for the purposes of that trade or those trades,

(ii)where the connected company is a company whose income consists wholly or mainly of profits or gains chargeable under Case V of Schedule D, in the purchase, improvement or repair of premises to which the profits or gains relate,

(iii)where the connected company is a company whose business consists wholly or mainly of the holding of stocks, shares or securities directly in a company referred to in paragraph (a)(i), for the purposes of holding such stocks, shares or securities, or

(iv)where the connected company is a company whose business consists wholly or mainly of the holding of stocks, shares or securities directly in a company referred to in paragraph (a) (ii), for the purposes of holding such stocks, shares or securities,

(bb)in lending to a company referred to in paragraph (a)(iv) money which is on-lent by that company to a connected company and is used wholly and exclusively by that connected company –

(i)where the connected company is a company referred to in paragraph (a)(iii), for the purposes of acquiring and holding any part of the ordinary share capital of a company referred to in paragraph (a)(i), or

(ii)where the connected company is a company referred to in paragraph (a)(iv), for the purposes of acquiring and holding any part of the ordinary share capital of a company referred to in paragraph (a)(iii), or

(c)in paying off another loan where relief could have been obtained under this section for interest on that other loan if it had not been paid off (on the assumption, if the loan was free of interest, that it carried interest).

(2A)Subsection (2) shall not apply to a loan to an investing company to defray money applied in subscribing for share capital of another company on the issue of share capital by that other company unless the capital is used by that other company or by a connected company wholly and exclusively –

(a)where the company which uses the capital is a company which exists wholly or mainly for the purpose of carrying on a trade or trades, for the purposes of that trade or those trades,

(b)where the company which uses the capital is a company whose income consists wholly or mainly of profits or gains chargeable under Case V of Schedule D, in the purchase, improvement or repair of premises to which the profits or gains relate, or

(c)where the company which uses the capital is a company whose business consists wholly or mainly of the holding of stocks, shares or securities directly or indirectly in a company referred to in paragraph (a)(i) of subsection (2), for the purposes of holding such stocks, shares or securities, or

(d)where the company which uses the capital is a company whose business consists wholly or mainly of the holding of stocks, shares or securities directly in a company referred to in paragraph (a)(ii) of subsection (2), for the purposes of holding such stocks, shares or securities.

(2B)Subsection (2)(a)(iv), (b)(iv) and (bb) shall apply only to a company, being a company whose business consists wholly or mainly of the holding of stocks, shares or securities of a company referred to in subsection (2)(a)(i) indirectly through an intermediate holding company or companies, where the company and each intermediate holding company exists for bona fide commercial reasons and not as part of a scheme or arrangement the purpose of which or one of the purposes of which is the avoidance of tax.

(3)Relief shall be given in respect of any payment of the interest by the investing company on the loan if –

(a)when the interest is paid the investing company has a material interest in the company and, where subsection (2)(ba) or (2)(bb) applies to the money lent in respect of which the interest is paid, in the connected company,

(b)during the period taken as a whole from the application of the proceeds of the loan until the interest was paid at least one director of the investing company was also a director of the company and, where subsection (2)(ba) applies to the money lent in respect of which the interest is paid, of the connected company, and

(c)the investing company shows that in the period referred to in paragraph (b) it has not recovered any capital from the company or from a connected company apart from any amount taken into account under section 249.

(4)Subsection (2) shall not apply to a loan unless it is made in connection with the application of the money and either on the occasion of its application or within what is in the circumstances a reasonable time from the application of the money, and that subsection shall not apply to a loan the proceeds of which are applied for some other purpose before being applied as described in that subsection.

(4A)

(a)Subject to the following paragraphs of this subsection, subsection (2) shall not apply to a loan to the investing company to defray money applied –

(i)in acquiring any part of the ordinary share capital of, or

(ii)in lending to a company money which is used directly or indirectly for the purposes of acquiring any part of the capital of,

a company (from such company or another company, being in either case a company which, at the time of the acquiring of the capital or immediately after that time, was connected with the investing company) if the loan is made to the investing company by a person who is connected with the investing company.

(b)Where, as a part of, or in connection with, any scheme or arrangement for the making of a loan to the investing company by a person (in this paragraph referred to as the ‘first-mentioned person’) who is not connected with the investing company, another person who is connected with the investing company directly or indirectly makes a loan to, a deposit with, or otherwise provides funds to the first-mentioned person or to a person who is connected with the first-mentioned person, then the loan made to the investing company shall be treated for the purposes of paragraph (a) as being a loan made to the investing company by a person with whom it is connected.

(c)Paragraph (a) shall not apply to interest on a loan (in this paragraph referred to as the ‘original loan’) made to a company if –

(i)the original loan is used to defray money applied –

(I)in acquiring ordinary share capital of another company on the issue of the share capital by the other company, or

(II)in lending to a company money which is used directly or indirectly for the purposes of acquiring ordinary share capital of another company on the issue of the share capital by the other company,

and

(ii)the share capital is issued for the purposes of increasing the aggregate of the capital available to the other company for the use by the other company wholly and exclusively for the purposes of its trade or business and not as part of any arrangement or understanding, entered into in connection with the original loan, the purpose or one of the purposes of which is to provide moneys, directly or indirectly –

(I)to the person (referred to in clause (II) as the ‘original lender’) who made the original loan and to thereby achieve directly or indirectly the effective repayment of the original loan or the greater part of it, or

(II)to another person who is connected with the original lender and to thereby achieve a provision of moneys that is, notwithstanding that the moneys are being provided (as part of the arrangement or understanding) to a person other than the original lender, equivalent to the achievement directly or indirectly of the effective repayment, referred to in clause (I), of the original loan or the greater part of it,

at a time before interest ceased to be payable by the investing company in respect of the original loan or such greater part of it.

(d)Where the use, whether direct use (in this paragraph referred to as the ‘direct use’) by the investing company or subsequent indirect use (in this paragraph referred to as the ‘indirect use’) through another company as investee or borrower or through a sequence of companies acting, in turn, as investees or borrowers, of a loan (in this paragraph and paragraph (e) referred to as the ‘original loan’) received by an investing company involves lending or acquisition of shares so that such use results in –

(i)interest (which is not deductible in computing income or profits under any provision of the Corporation Tax Acts by the investing company or any company connected with it) being received in, or being receivable in respect of, an accounting period, so as to be income, or as the case may be an amount credited in computing income, chargeable to corporation tax for that period, or

(ii)dividends or other distributions chargeable to corporation tax being received in an accounting period,

and the interest mentioned in subparagraph (i) is, or the dividends or distributions mentioned in subparagraph (ii) are, income of the investing company or a company connected with the investing company, being income which would not have arisen but for the direct use or indirect use of the original loan, then that income shall be relevant income for the purposes of paragraph (e) and shall be referred to in that paragraph as ‘relevant income’.

(e)If relief for interest paid (in this paragraph referred to as the ‘relevant interest’) by the investing company in an accounting period (in this paragraph referred to as the ‘relevant accounting period’) in respect of the original loan would, apart from this paragraph, be denied by virtue of paragraph (a), relief shall not be denied in respect of so much of the relevant interest as does not exceed the relevant income of the investing company for the relevant accounting period and where –

(i)the relevant interest exceeds the relevant income of the investing company for the relevant accounting period, by an amount referred to in this paragraph as the ‘relevant excess’,

(ii)apart from relief by virtue of an election under subparagraph (iii), relief could not be claimed under the Corporation Tax Acts in respect of the relevant interest represented by the relevant excess,

(iii)the investing company and a company (in this paragraph referred to as the ‘electing company’) connected with it jointly so elect and notify the inspector of that election in such form as the Revenue Commissioners may require, and

(iv)the aggregate value of relevant interest that may be deducted by virtue of elections under subparagraph (iii), by one or more companies other than the investing company, does not exceed the relevant excess, then so much of the relevant interest represented by the relevant excess may be deducted from the total profits, reduced by any other relief from corporation tax, of the electing company, for the accounting period (in this paragraph referred to as the ‘second-mentioned period’) for which the relevant income of the electing company is chargeable to corporation tax, as does not exceed the lesser of –

(I)the part of the relevant income of the electing company for the second-mentioned period which may be apportioned to the relevant accounting period (by reference to the proportion which the length of the period common to the relevant accounting period and the second-mentioned accounting period bears to the length of the second-mentioned accounting period), and

(II)the amount by which such part of that relevant income of the electing company exceeds the aggregate of any amounts, being –

(A)amounts of any relief, which is referable to the second-mentioned period, surrendered at any time by the electing company under Chapter 5 of Part 12, or

(B)amounts, which are not amounts referred to in clause (A), of any losses which could have been set off under section 396(2) against profits of the second-mentioned period but which were not set off against those profits,

but relief, for interest paid by the investing company, which has been allowed by virtue of this paragraph shall be deemed for the purposes mentioned in Paragraph 4(5) of Schedule 24 to have been allocated by the company concerned to the relevant income of the company by reference to which the relief for the interest was allowed, and the foreign tax in respect of that relevant income shall be disregarded for the purposes of paragraph 9E and 9F of Schedule 24.

(f)Where, as a part of, or in connection with, any scheme or arrangement for the making of a loan to any company (in this paragraph referred to as the ‘borrower’), which is connected with the investing company, by a person (in this paragraph referred to as the ‘first-mentioned person’) who is not connected with the investing company, another person who is connected with the investing company directly or indirectly makes a loan to, a deposit with, or otherwise provides funds to the first-mentioned person or to a person who is connected with the first-mentioned person, then interest payable by the first-mentioned person to the other person in respect of the loan, deposit or other funds shall be treated for the purposes of paragraph (d)(i) as interest which is deductible in computing income or profits under provisions of the Corporation Tax Acts by the investing company or a company connected with it.

(g)For the purposes of paragraph (e), ‘relevant income’ of a company shall be increased or reduced by any amount of profit or gain or, as the case may be, loss directly related to that income or to the source of that income which is an amount arising –

(i)by virtue of a change in a rate of exchange (within the meaning of section 79), or

(ii)from any contract entered into by the company for the purpose of eliminating or reducing the risk of loss being incurred by the company due to a change in a rate of exchange (within the meaning of section 79) or in a rate of interest.

(h)For the purposes of paragraph (c), share capital shall not be treated as issued by a company as part of an arrangement or understanding of a type described in that paragraph, entered into in connection with an original loan (within the meaning of that paragraph), solely because that share capital is used directly or indirectly in paying off, to the person who made the original loan (within that meaning) or to a person connected with that person, a loan, advance or debt (in this paragraph referred to as the ‘other loan’) other than the original loan where –

(i)the other loan was used wholly and exclusively for the purposes of a trade or business of the company and not as part of any arrangement or understanding, entered into in connection with the other loan, the purpose or one of the purposes of which was to provide moneys, directly or indirectly –

(I)to a person (referred to in clause (II) as the ‘original lender’) who made, or directly or indirectly funded, the other loan and to thereby achieve directly or indirectly the effective repayment of the other loan or the greater part of it, or

(II)to another person who is connected with the original lender and to thereby achieve a provision of moneys that is, notwithstanding that the moneys are being provided (as part of the arrangement or understanding) to a person other than the original lender, equivalent to the achievement directly or indirectly of the effective repayment, referred to in clause (I), of the other loan or the greater part of it,

at a time before interest ceased to be payable by the company in respect of the other loan or such greater part of it, and

(ii)interest on the other loan, if that other loan had been made on or after 2 February 2006, would have been deductible in computing profits, or any description of profits, for the purposes of corporation tax –

(I)if the other loan had not been paid off, and

(II)on the assumption, if the other loan was free of interest, that it carried interest.

(4B)Where a loan, or part of a loan, to an investing company has been applied –

(a)to subscriptions for the share capital of another company on the issue of the share capital by the other company, or

(b)in lending moneys to another company,

and such other company (in this subsection and subsection (4D) referred to as the ‘other company’) uses those subscriptions or moneys to provide specified intangible assets (within the meaning of section 291A) in respect of which allowances are to be made to it under section 284 as applied by section 291A, then, notwithstanding subsection (3) and section 243, the amount of the relief to be given in respect of so much (in this subsection and subsections (4C) and (4D) referred to as the ‘relevant interest’) of the interest paid in an accounting period by the investing company on the loan, or the part of the loan, as the case may be, as exceeds the sum of –

(i)any dividends or other distributions chargeable to corporation tax received by the investing company from the other company in that accounting period in respect of that share capital, and

(ii)any interest received by the investing company for that accounting period in respect of those moneys lent to the other company,

shall not exceed the amount of interest that would be –

(I)the amount of the relevant interest to be deducted for the corresponding accounting period (within the meaning of subsection (4D)) by the other company –

(A)if that relevant interest had been incurred by the other company in connection with the provision of a specified intangible asset by reference to which allowances were to be made to it under section 284 as applied by section 291A in addition to any other interest so incurred by it, and

(B)notwithstanding subsection (6) of section 291A, if any additional restrictions of deductions, whether for allowances or interest, which would then be required by that subsection, were to be made solely by restriction of the deduction for that relevant interest,

or

(II)where the corresponding accounting period is not the same as the accounting period of the investing company or there is more than one corresponding accounting period, the aggregate of the amounts of relevant interest to be deducted for the corresponding period or periods by the other company if that relevant interest had been incurred by the other company, which amounts are computed by apportionment in accordance with paragraph (d) of subsection (4D) and are interest paid or treated as paid in the accounting period of the investing company.

(4C)The amount (in this paragraph referred to as the ‘excess amount’) of the interest paid in an accounting period by the investing company in respect of which, in accordance with subsection (4B), relief is not given under this section for that accounting period shall not be deducted or otherwise relieved for that period under any other provision of the Tax Acts but that excess amount of interest paid shall be carried forward and treated as an amount of relevant interest paid in the succeeding accounting period to be added to the relevant interest, if any, actually paid in that accounting period, for which, subject to subsection (4B), relief can be given for that accounting period and any excess amount of interest paid or treated as paid in that next succeeding accounting period shall, in turn, be carried forward and treated as an amount of relevant interest paid in the next succeeding accounting period to be added to the relevant interest, if any, actually paid in that accounting period for which, subject to subsection (4B), relief can be given for that accounting period and so on for each succeeding accounting period.

(4D)For the purposes of computing any restriction of relief to be given for an accounting period required by subsection (4B) –

(a)any accounting period (in this subsection referred to as the ‘corresponding accounting period’) of the other company which falls wholly or partly within an accounting period of the investing company corresponds to the accounting period of the investing company,

(b)if an accounting period of the investing company and the corresponding accounting period of the other company are not the same relevant interest will be apportioned to corresponding accounting periods on a time basis according to the proportion which the period common to the accounting period of the investing company and the corresponding accounting period bears to the accounting period of the investing company,

(c)the total relevant interest referable to a corresponding accounting period shall be the aggregate of each of the amounts of relevant interest apportioned to that corresponding accounting period under paragraph (b), and

(d)the amount of the total relevant interest referred to in paragraph (c) which, subject to subsection (4B) (I) (A) and (B), would have been deducted if it had been incurred by the other company for the corresponding accounting period shall be apportioned to each of the amounts of relevant interest referred to in paragraph (c) by reference to the proportion which each of those amounts bears to that total relevant interest.

(4E)

(a)In this subsection ‘asset’ means any asset other than –

(i)share capital in a company,

(ii)an asset referred to in subsection (4B) which is treated by the provisions of section 291A(2) as plant and machinery for the purposes of Chapters 2 and 4 of Part 9, or

(iii)an asset acquired as trading stock.

(b)Subject to paragraphs (c) to (f), subsection (2) shall not apply to a loan to the investing company to defray money applied in lending to a company money which is used directly or indirectly for the purposes of acquiring an asset from a company which, at the time of the acquiring of the asset, was connected with the investing company if the loan is made to the investing company by a person who is connected with the investing company.

(c)

(i)Where, in an accounting period, interest is paid by an investing company on a loan to defray money applied in lending to another company (in this paragraph referred to as the ‘other company’) money which is used wholly and exclusively for the purposes of acquiring a trade (in this subsection referred to as an ‘acquired trade’) which immediately before its acquisition by the other company was carried on by a company which was not within the charge to corporation tax, then paragraph (b) shall not apply to that loan and, notwithstanding subsection (3) and section 243, the amount of the relief to be given in respect of the interest paid in an accounting period by the investing company on the loan shall not exceed the amount of the profits or gains of the other company in respect of the acquired trade for the corresponding period.

(ii)This paragraph shall apply where a company acquires part of a trade as if that part were a separate trade.

(iii)Where the other company begins to carry on the activities of an acquired trade as part of its trade then that part of its trade shall, for the purposes of this subsection, be treated as a separate trade and any necessary apportionment shall be made so that profits or gains shall be attributed to the separate trade on a just and reasonable basis and the amount of those profits or gains shall not exceed the amount which would be attributed to a distinct and separate company, engaged in those activities, if it were independent of, and dealing at arm’s length with, the investing company.

(d)

(i)Where, in an accounting period, interest is paid by an investing company on a loan to defray money applied in lending to another company (in this paragraph referred to as the ‘other company’) money which is used wholly and exclusively for the purposes of acquiring an asset (in this paragraph referred to as an ‘acquired asset’) which is leased by the other company for that accounting period in the course of a trade (in this paragraph referred to as the ‘first-mentioned trade’) then, if immediately before that asset was acquired by the other company it was not in use for the purposes of a trade carried on by a company which was within the charge to corporation tax, paragraph (b) shall not apply to that loan and, notwithstanding subsection (3) and section 243, the amount of the relief to be given in respect of the interest paid in the accounting period by the investing company on the loan shall not exceed the amount of the profits or gains of the first-mentioned trade for the corresponding period as is attributable to the acquired asset.

(ii)For the purposes of subparagraph (i), in arriving at the profits or gains of a trade attributable to an acquired asset, any necessary apportionment shall be made of the expenses and receipts of the trade.

(e)For the purposes of computing any restriction of relief to be given for an accounting period required by paragraphs (c) and (d) –

(i)where an accounting period of the investing company and an accounting period of the other company coincide then the profits or gains of the other company in respect of the acquired trade for the corresponding period shall be the amount of the profits or gains of the acquired trade, for that accounting period, which are chargeable to tax under Case I of Schedule D, and

(ii)

(I)any accounting period of the other company which, without coinciding with that accounting period, falls wholly or partly within an accounting period of the investing company shall correspond to that accounting period, and

(II)where an accounting period of the investing company and an accounting period of the other company do not coincide then the profits or gains of the other company in respect of the acquired trade for the corresponding period shall be the aggregate of the profits or gains in respect of the acquired trade which are chargeable to corporation tax under Case I of Schedule D for accounting periods of the other company that correspond to the accounting period of the investing company as reduced in each case by applying the fraction –

A
___

B

(if the fraction is less than unity)

where –

Ais the length of the period common to the two accounting periods, and

Bis the length of the accounting period of the other company.

(f)Where, as a part of, or in connection with, any scheme or arrangement for the making of a loan to the investing company by a person (in this paragraph referred to as the ‘first-mentioned person’) who is not connected with the investing company, another person who is connected with the investing company directly or indirectly makes a loan to, a deposit with, or otherwise provides funds to the first-mentioned person or to a person who is connected with the first-mentioned person, then the loan made to the investing company shall be treated for the purposes of paragraph (b) as being a loan made to the investing company by a person with whom it is connected.

(4F)

(a)In this subsection ‘relevant period’, in relation to interest paid by an investing company, means the period to which that interest relates.

(b)Where a loan to an investing company, to which subsection (2) applies, has been applied in lending to another company (in this paragraph referred to as the ‘other company’) not within the charge to corporation tax money which is used wholly and exclusively for the purposes of the trade or business of the other company then, notwithstanding subsection (3) and section 243, the amount of the relief to be given in respect of so much of the interest paid (referred to in this paragraph as the ‘interest paid’) in an accounting period by the investing company on the loan, as exceeds the amount (including a nil amount) of any interest, arising to the investing company on the money lent to the other company, for the relevant period, shall not exceed the amount by which the interest paid exceeds the interest (if any) arising to the other company in that relevant period in respect of the money so used.

(c)Where a loan to an investing company, to which subsection (2) applies, has been applied in lending to another company (in this paragraph referred to as the ‘other company’) money which is used wholly and exclusively for the purposes of the trade or business of a connected company not within the charge to corporation tax then, notwithstanding subsection (3) and section 243 –

(i)where the other company is within the charge to corporation tax, the amount of the relief to be given in respect of so much of the interest paid (referred to in this subparagraph as the ‘interest paid’) in an accounting period by the investing company on the loan, as exceeds the amount (including a nil amount) of any interest, arising to the investing company on the money lent to the other company, for the relevant period, shall not exceed the amount by which the interest paid exceeds the interest (if any) arising to the connected company in that relevant period in respect of the money so used, and

(ii)where the other company is not within the charge to corporation tax, the amount of the relief to be given in respect of so much of the interest paid (referred to in this subparagraph as the ‘interest paid’) in an accounting period by the investing company on the loan, as exceeds the amount (including a nil amount) of any interest, arising to the investing company on the money lent to the other company, for the relevant period, shall not exceed the amount by which the interest paid exceeds the greater of –

(I)the interest (if any) receivable by the other company from the connected company (in respect of the use by the other company of the money lent to it by the investing company), and

(II)the interest receivable by the connected company in that relevant period in respect of the money so used.

(4G)Where a loan to an investing company, to which subsection (2) applies, has been applied in lending to a company money which is used wholly and exclusively for the purposes of the trade of the company or of a connected company, the interest on the loan shall be treated for the purposes of Chapter 5 of Part 12 as relevant trading charges on income within the meaning of section 243A.

(5)Interest eligible for relief under this section shall be deducted from or set off against the income (not being income referred to in subsection (2)(a) of section 25) of the borrower for the year of assessment in which the interest is paid and tax shall be discharged or repaid accordingly.

(6)Where relief is given under this section in respect of interest on a loan, no relief or deduction under any other provision of the Tax Acts shall be given or allowed in respect of interest on the loan.

248.

Relief to individuals on loans applied in acquiring interest in companies.

(1)This section shall apply to a loan to an individual to defray money applied –

(a)in acquiring any part of the ordinary share capital of –

(i)a company which exists wholly or mainly for the purpose of carrying on a trade or trades, or

(ii)a company whose business consists wholly or mainly of the holding of stocks, shares or securities of a company referred to in subparagraph (i),

(b)in lending to a company referred to in paragraph (a) money which is used wholly and exclusively for the purpose of the trade or business of the company or of a connected company, or

(c)in paying off another loan where relief could have been obtained under this section for interest on that other loan if it had not been paid off (on the assumption, if the loan was free of interest, that it carried interest).

(1A)Subsection (1)(c) shall not apply to a loan made after 7 December 2005 which is applied in paying off another loan applied in acquiring ordinary share capital in, or making a loan to, a company whose income consists wholly or mainly of profits or gains chargeable under Case V of Schedule D unless –

(a)the loan does not exceed the balance outstanding on, and

(b)the term of the loan does not exceed the balance of the term of, the loan being paid off.

(2)Relief shall be given in respect of any payment of interest by the individual on the loan if –

(a)when the interest is paid the individual has a material interest in the company or in a connected company,

(b)during the period taken as a whole from the application of the proceeds of the loan until the interest was paid, the individual has worked for the greater part of his or her time in the actual management or conduct of the business of the company or of a connected company, and

(c)the individual shows that in the period referred to in paragraph (b) he or she has not recovered any capital from the company or from a connected company, apart from any amount taken into account under section 249.

(3)Relief shall not be given in respect of any payment of interest by an individual on a loan applied on or after the 24th day of April, 1992, for any of the purposes specified in subsection (1) unless the loan is applied 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.

(4)Subsection (1) shall not apply to a loan unless it is made in connection with the application of the money and either on the occasion of its application or within what is in the circumstances a reasonable time from the application of the money, and that subsection shall not apply to a loan the proceeds of which are applied for some other purpose before being applied as described in that subsection.

(5)Interest eligible for relief under this section shall be deducted from or set off against the income of the borrower for the year of assessment in which the interest is paid and tax shall be discharged or repaid accordingly, and such interest shall not be eligible for relief under any provision of the Income Tax Acts apart from this section.

(6)Notwithstanding subsection (5), the deduction authorised by that subsection shall not exceed –

(a)as respects the year of assessment 2011, 75 per cent of the deduction that would but for this subsection be authorised by that subsection,

(b)as respects the year of assessment 2012, 50 per cent of the deduction that would but for this subsection be authorised by that subsection,

(c)as respects the year of assessment 2013, 25 per cent of the deduction that would but for this subsection be authorised by that subsection, and

(d)as respects the year of assessment 2014 and each subsequent year of assessment, zero per cent of the deduction that would but for this subsection be authorised by that subsection.

(7)This section shall not apply to a loan made after 7 December 2010.

248A.

Restriction of relief in respect of loans applied in acquiring interest in companies and partnerships.

(1)In this section –

“chargeable period” has the same meaning as in section 321(2);

“premises” and “rented residential premises” have the same meanings, respectively, as in section 96.

(2)Where –

(a)a loan, being a loan to which section 247, 248 or 253 applies, is applied on or after the 7th day of May, 1998, to defray money for any of the purposes specified in those sections, and

(b)the money so defrayed is used, in whole or in part, directly or indirectly –

(i)in the purchase, improvement or repair of a premises, or

(ii)in paying off a loan used in the purchase, improvement or repair of a premises,

then, the relief to be given for a chargeable period under those sections in respect of that loan shall, for any chargeable period in which the premises is at any time a rented residential premises, be reduced by the interest attributable to so much of the money used for the purposes specified in subparagraphs (i) and (ii) of paragraph (b).

(3)This section shall not apply or have effect in relation to interest referred to in subsection (2) which accrues on or after 1 January 2002 and, for the purposes of this subsection, such interest shall be treated as accruing from day to day.

(4)Notwithstanding subsection (3), subsection (2) shall apply in relation to interest referred to in subsection (2) where the purpose of the loan is the purchase of a residential premises from the spouse or civil partner of the individual to whom relief is given under section 248 or 253.

(5)The reference to ‘spouse or civil partner’ in subsection (4) does not include –

(a)a spouse to a marriage –

(i)in which the spouses are separated under an order of a court of competent jurisdiction or by deed of separation, or

(ii)that has been dissolved under either –

(i)section 5 of the Family Law (Divorce) Act 1996, or

(ii)the law of a country or jurisdiction other than the State, being a divorce that is entitled to be recognised as valid in the State,

or

(b)a civil partner in a civil partnership that has been dissolved under either –

(i)section 110 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010, or

(ii)the law of a country or jurisdiction other than the State, being a dissolution that is entitled to be recognised as valid in the State.

249.

Rules relating to recovery of capital and replacement loans.

(1)

(a)

(i)In this section –

‘specified loan’, in relation to a company, means –

(I)any loan or advance made to the company before 6 February 2003 (other than a loan referred to in paragraph (II)), or

(II)any loan or advance in respect of which any interest paid is, or if charged would be, deductible if the company were within the charge to Irish tax –

(A)in computing the company’s profits or gains for the purposes of Case I of Schedule D, or

(B)in computing the company’s profits or gains for the purposes of Case V of Schedule D;

‘relevant period’, in relation to a loan to which section 247 applies, means the period beginning 2 years before the date of application of the proceeds of the loan and ending on the date of application of the proceeds of the loan.

(ii)Where at any time in the relevant period in relation to a loan to which section 247 applies the investing company recovered any amount of capital from the company concerned, other than a repayment in respect of a specified loan, the investing company shall immediately after the application of the loan to which section 247 applies be treated for the purposes of this section as if the investing company had repaid out of the loan an amount equal to the amount of capital recovered and so that out of the interest otherwise eligible for relief and payable for any period after that time there shall be deducted an amount equal to interest on the amount of capital so recovered, but this subparagraph shall not apply to so much of the capital so recovered as was applied by the investing company –

(I)before the application of the loan to which section 247 applies, in repayment of any other loan to which section 247 applies, or

(II)in accordance with paragraph (a) or (b) of section 247(2);

and, for the purposes of this section, the investing company shall not be treated as having repaid so much of an amount out of a loan as does not exceed the amount, if any, of capital so recovered which has been previously treated under this section as being in repayment of a loan.

(iii)Where at any time after the application of the proceeds of the loan to which section 247 applies the investing company –

(I)has recovered any amount of capital from the company concerned or from a connected company, or

(II)is deemed, under subsection (2)(aa) or (2)(ac), to have recovered any amount of capital from the company concerned,

without using the amount recovered or an amount equal to the amount deemed to have been recovered in repayment of the loan, the investing company shall be treated for the purposes of this section as if the investing company had at that time repaid out of the loan an amount equal to the amount of capital recovered or deemed to have been recovered and so that out of the interest otherwise eligible for relief and payable for any period after that time there shall be deducted an amount equal to interest on the amount of capital so recovered or so deemed to have been recovered.

(iv)Where, after the application of the proceeds of a loan to which section 248 applies, the individual has recovered any amount of capital from the company concerned or from a connected company without using that amount in repayment of the loan, the individual shall be treated for the purposes of this section as if the individual had repaid that amount out of the loan and so that out of the interest otherwise eligible for relief and payable for any period after that time there shall be deducted an amount equal to interest on the amount of capital so recovered.

(b)Where part only of a loan referred to in paragraph (a) fulfils the conditions in section 247 or 248 so as to afford relief for interest on that part, the deduction to be made under this subsection shall be made wholly out of interest on that part.

(2)

(a)The investing company or the individual, as the case may be (in this paragraph referred to as the ‘borrower’) shall be treated as having recovered an amount of capital from the company concerned or from a connected company if –

(i)the borrower receives consideration of that amount or value for the sale of any part of the ordinary share capital of the company concerned or of a connected company or any consideration of that amount or value by means of repayment of any part of that ordinary share capital,

(ii)the company concerned or a connected company repays that amount of a loan or advance from the borrower,

(iii)the borrower receives consideration of that amount or value for assigning any debt due to the borrower from the company concerned or from a connected company.

(aa)

(i)Where the company concerned is a company referred to in section 247(2)(a)(iii), (iv) or (v), the investing company shall be deemed to have recovered from the company concerned an amount equal to so much of any capital recovered by the company concerned from another company, being a company more than 50 per cent of the ordinary share capital of which was directly owned by the company concerned, as is not applied by the company concerned –

(I)in repayment of any loan or part of a loan made to it by the investing company,

(II)in redemption, repayment or purchase of any of its ordinary share capital acquired by the investing company,

(III)in accordance with paragraph (a) or (b) of section 247(2), or

(IV)in repayment of a loan to which section 247 applies.

(ii)The company concerned shall be treated as having recovered an amount of capital from another company if –

(I)the company concerned receives consideration of that amount or value for the sale of any part of the ordinary share capital of the other company or any consideration of that amount or value by means of repayment of any part of that ordinary share capital,

(II)the other company repays that amount of a loan or advance from the company concerned, other than a repayment in respect of a specified loan,

(III)the company concerned receives consideration of that amount or value for assigning any debt due to the company concerned from the other company.

(iii)Where subparagraph (i) applies and more than one investing company has either –

(I)made a loan to the company concerned, or

(II)acquired any part of its share capital,

the amount deemed to have been recovered under that subparagraph shall be apportioned between the investing companies in proportion to the aggregate amount of any loan made and any money applied in acquiring that share capital by each company, but if the companies concerned agree between them to such other apportionment of the amount as they may consider appropriate and jointly specify in writing to the inspector, then the amount deemed to have been so recovered shall be apportioned accordingly.

(ab)

(i)Where –

(I)a company (in this paragraph referred to as the ‘first-mentioned company’) issues shares to the company concerned in exchange for shares (in this paragraph referred to as the ‘original shares’) in another company,

(II)section 584 is applied or, but for section 626B, would be applied to the exchange by section 586, and

(III)the investing company, in the absence of an election under this subsection, would be deemed by paragraph (aa) to have, by virtue of the exchange, recovered an amount of capital from the company concerned,

then the investing company may elect that paragraph (aa) shall not so apply.

(ii)Where the investing company makes an election in accordance with subparagraph (i), then the first-mentioned company shall be treated for the purposes of paragraph (aa) as if it were the company concerned if the effect of so treating it is that the investing company is deemed by paragraph (aa) (i) to have recovered an amount of capital equal to the amount of capital treated by paragraph (aa) (ii) (I) as recovered in respect of the original shares by that company.

(iii)An election under this paragraph shall be included by the investing company with the return required under Chapter 3 of Part 41A for the accounting period in which the original shares are exchanged.

(ac)

(i)Where the company concerned is a company referred to in section 247(2)(a)(iv), the investing company shall be deemed, subject to subparagraph (iii), to have recovered from the company concerned an amount equal to so much of any capital recovered by an intermediate holding company from another company where –

(I)the company concerned owns directly or indirectly more than 50 per cent of the ordinary share capital of the intermediate holding company or both companies are under the control of the same person or persons, and

(II)the intermediate holding company owns directly more than 50 per cent of the ordinary share capital of the other company or both companies are under the control of the same person or persons.

(ii)Subparagraph (aa)(ii) shall apply with any necessary modifications for the purposes of determining whether an intermediate holding company has recovered capital from another company, as if in that provision ‘intermediate holding company’ were substituted for the ‘company concerned’.

(iii)An investing company shall not be deemed by subparagraph (i) to have recovered capital where –

(I)and to the extent that, any capital recovered by the intermediate holding company from another company is applied by the intermediate holding company in repaying any loan or advance made to it by the company concerned,

(II)the amount of capital recovered by the intermediate holding company is applied in accordance with paragraph (a) or (b) of section 247(2),

(III)the amount of capital recovered by the intermediate holding company is applied in the repayment of a loan to which section 247 applies, or

(IV)an intermediate holding company (that is not a company to which subparagraph (i) or (ii) of section 247(2)(bb) applies) transfers all of its assets and liabilities to another intermediate holding company and –

(A)the transfer is made in the course of the intermediate holding company being dissolved with or without going into liquidation,

(B)the company concerned, being a company referred to in section 247(2)(a)(iv), continues to hold the same beneficial percentage of stocks, shares or securities of a company referred to in section 247(2)(a)(i) indirectly through one or more intermediate holding companies, and

(C)the transfer is for bona fide commercial reasons and is not part of any scheme or arrangement the purpose of which, or one of the purposes of which, is the avoidance of tax.

(iv)Paragraph (ab) shall apply with any necessary modifications to this paragraph as if references in that paragraph to the ‘company concerned’ were to ‘intermediate holding company’ and references to paragraph (aa) were to paragraph (ac).

(v)

(I)This clause and clauses (II) and (III) shall apply where an investing company is deemed to have recovered an amount of capital under this paragraph or under paragraph (aa) and included within that capital is an amount or value which was, within a reasonable period of time previously and by reference to related transactions or events, an amount of capital deemed to have been recovered by the investing company under this paragraph (in clause (II) referred to as ‘capital previously recovered’).

(II)An investing company may, upon giving notice in writing to the Revenue Commissioners, exclude capital previously recovered from an amount of capital it is deemed to have recovered under this paragraph or paragraph (aa).

(III)An investing company is required to maintain and have available such records as may reasonably be required for the purposes of determining whether it meets the requirements of clause (I).

(vi)Subparagraph (aa)(iii) shall apply with any necessary modifications for the purposes of subparagraph (i) as it applies in relation to subparagraph (aa)(i) as if the reference in that subparagraph to subparagraph (i) were a reference to subparagraph (i) of this paragraph.

(b)In the case of a sale or assignment otherwise than by means of a bargain made at arm’s length, the sale or assignment shall be deemed to be for consideration of an amount equal to the market value of what is disposed of.

(3)Sections 247 (3) and 248 (2) and subsections (1) and (2) shall apply to a loan referred to in section 247 (2) (c) or 248 (1) (c) as if such loan and any loan it replaces were one loan, and as if –

(a)references in sections 247 (3) and 248 (2) and in subsection (1) to the application of the proceeds of the loan were references to the application of the proceeds of the original loan, and

(b)any restriction under subsection (1) which applied to any loan which has been replaced applied also to the loan which replaces that loan.

250.

Extension of relief under section 248 to certain individuals in relation to loans applied in acquiring interest in certain companies.

(1)In this section –

“90 per cent subsidiary” has the meaning assigned to it by section 9;

“full-time employee” and “full-time director”, in relation to a company, mean an employee or director, as the case may be, who is required to devote substantially the whole of his or her time to the service of the company;

“holding company” has the same meaning as in section 411;

“part-time employee” and “part-time director”, in relation to a company, mean an employee or director, as the case may be, who is not required to devote substantially the whole of his or her time to the service of the company;

“private company” has the meaning assigned to it by section 33 of the Companies Act, 1963.

(2)Notwithstanding that an individual does not satisfy one or both of the conditions set out in paragraphs (a) and (b) of section 248(2), the individual shall be entitled to relief under section 248 for any interest paid on any loan to him or her applied for a purpose specified in section 248(1) if –

(a)the company part of whose ordinary share capital is acquired or, as the case may be, to which the money is loaned is –

(i)both a company referred to in paragraph (a)(i) of section 248(1) and a company in relation to which the individual was a full-time employee, part-time employee, full-time director or part-time director during the period taken as a whole from the application of the proceeds of the loan until the interest was paid, or

(ii)both a company referred to in paragraph (a)(ii) of section 248(1) and a private company in relation to which, or in relation to any company which would be regarded as connected with it for the purposes of section 248, the individual was during that period a full-time director or a full-time employee,

and

(b)the company or any person connected with the company has not, during the period specified in paragraph (a)(i), made any loans or advanced any money to the individual or a person connected with the individual other than a loan made or money advanced in the ordinary course of a business which included the lending of money, being business carried on by the company or, as the case may be, by the person connected with the company.

(3)In relation to any payment or payments of interest on any loan or loans applied –

(a)in acquiring any part of the ordinary share capital of a company other than a private company,

(b)in lending money to such a company, or

(c)in paying off any other loan or loans applied for a purpose specified in paragraphs (a) and (b),

no relief shall be given for any year of assessment by virtue of this section other than to a full-time employee or full-time director of the company and no such relief shall be given to such employee or director on the excess of that payment, or the aggregate amount of those payments, for that year of assessment over €3,050.

(4)Where relief is given by virtue of this section to an individual and any loan made or money advanced to the individual or to a person connected with the individual is, in accordance with paragraph (c) of subsection (5) and by virtue of subparagraph (ii), (iii), (iv) or (v) of that paragraph, subsequently regarded as not having been made or advanced in the ordinary course of a business, any relief so given, which would not have been given if, at the time the relief was given, the loan or money advanced had been so regarded, shall be withdrawn and assessments shall, as necessary, be made or amended to give effect to this subsection.

(5)For the purposes of this section –

(a)any question whether a person is connected with another person shall be determined in accordance with section 10 (as it applies for the purposes of the Tax Acts) and paragraph (b),

(b)a person shall be connected with any other person to whom such person has, otherwise than in the ordinary course of a business carried on by such person which includes the lending of money, made any loans or advanced any money, and with any person to whom that other person has so made any loan or advanced any money and so on,

(c)a loan shall not be regarded as having been made, or money shall not be regarded as having been advanced, in the ordinary course of a business if –

(i)the loan is made or the money is advanced on terms which are not reasonably comparable with the terms which would have been applied in respect of that loan or the advance of that money on the basis that the negotiations for the loan or the advance of the money had been at arm’s length,

(ii)at the time the loan was made or the money was advanced the terms were such that subparagraph (i) did not apply, those terms are subsequently altered and the terms as so altered are such that if they had applied at the time the loan was made or the money was advanced subparagraph (i) would have applied,

(iii)any interest payable on the loan or on the money advanced is waived,

(iv)any interest payable on the loan or on the money advanced is not paid within 12 months from the date on which it became payable, or

(v)the loan or the money advanced or any part of the loan or money advanced is not repaid within 12 months of the date on which it becomes repayable,

(d)the cases in which any person is to be regarded as making a loan to any other person include a case where –

(i)that other person incurs a debt to that person, or

(ii)a debt due from that other person to a third party is assigned to that person;

but subparagraph (i) shall not apply to a debt incurred for the supply by that person of goods or services in the ordinary course of that person’s trade or business unless the period for which credit is given exceeds 6 months or is longer than normally given by that person,

(e)a company other than a private company shall be deemed to be a company referred to in section 248(1)(a)(i) if it is a holding company and is resident in the State, and

(f)an individual shall be deemed to be a full-time employee or full-time director of a company referred to in paragraph (e) if the individual is a full-time employee or full-time director of any company which is a 90 per cent subsidiary of that company.

250A.

Restriction of relief to individuals in respect of loans applied in acquiring interest in companies.

(1)In this section –

‘distribution’ has the same meaning as it has for the purposes of the Corporation Tax Acts by virtue of section 4;

‘eligible loan’ in relation to an individual and a company, means a loan, being a loan to which section 248 applies, to the individual to defray money applied for any of the purposes specified in that section;

‘relevant interest’ has the same meaning as in section 269;

‘residue of expenditure’ shall be construed in accordance with section 277;

‘specified amount’ in relation to an eligible loan, means the amount of the eligible loan or so much of the eligible loan where the money or, as the case may be, Part of the money which was defrayed by that loan and which was applied by the individual

(a)is used after 1 January 2003 by the company directly or indirectly –

(i)in the acquisition (whether by the company or by any other person) of the relevant interest in relation to any capital expenditure incurred or deemed to be incurred on the construction or refurbishment of a specified building,

(ii)in replacing money used in such acquisition of such an interest, or

(iii)in paying off a loan used in such acquisition of such an interest,

(b)pays off another eligible loan or so much of another eligible loan where the money or, as the case may be, Part of the money which was defrayed by that other loan (or any previous loan or loans which it replaced) and which was applied by the individual was used after 1 January 2003 by the company directly or indirectly for any of the purposes referred to in paragraph (a), or

(c)was applied in acquiring, on or after 20 February 2004, any Part of the ordinary share capital of a company at least 75 per cent of whose income consists of profits or gains chargeable under Case V of Schedule D in respect of one or more specified buildings;

‘specified building’ means a building or structure, or a Part of a building or structure –

(a)

(i)which is or is to be an industrial building or structure by reason of its use or deemed use for a purpose specified in section 268(1) and in relation to which an allowance has been, or is to be, made to a company under Chapter 1 of Part 9, or

(ii)in relation to which an allowance has been, or is to be, so made to a company by virtue of Part 10 or section 843 or 843A, in respect of –

(I)the capital expenditure incurred or deemed to be incurred on the construction or refurbishment of the building or structure or, as the case may be, the Part of the building or structure, or

(II)the residue of that expenditure,

(b)in relation to which at any time beginning on or after 1 January 2003 the company referred to in paragraph (a) is entitled to the relevant interest in relation to the capital expenditure referred to in that paragraph, and

(c)in relation to which any other company (not being the company referred to in paragraph (a)) is entitled, at any time subsequent to the time referred to in paragraph (b), to an allowance under Chapter 1 of Part 9, in respect of the capital expenditure referred to in paragraph (a) or the residue of that expenditure, following the acquisition of the relevant interest or any Part of the relevant interest in relation to that capital expenditure, whether or not, subsequent to the time referred to in paragraph (b), any other person or persons had previously become entitled to that relevant interest or that Part of that relevant interest;

‘specified provisions’ means section 248 and that section as extended by section 250.

(2)Notwithstanding anything in the specified provisions, relief under section 248 for any year of assessment in relation to any payment or payments of interest on the specified amount of an eligible loan by the individual concerned shall not exceed that individual’s return from the company concerned in that year in relation to that specified amount.

(3)Subject to subsection (4), an individual’s return from a company in relation to a specified amount of an eligible loan in any year of assessment is –

(a)where the specified amount defrays an amount of money applied by the individual for the purpose specified in section 248(1)(a) or (b), the amount, if any, of the distributions (before deduction of any dividend withholding tax under Chapter 8A of Part 6), or, as the case may be, the amount, if any, of the interest, received by the individual from the company in that year as a result of the application by the individual of that amount of money, or

(b)where the specified amount defrays an amount of money applied by the individual, directly or indirectly, in paying off the specified amount of another eligible loan where the earlier specified amount defrayed an amount of money (subsequently referred to in this paragraph as ‘that earlier amount of money’) which was applied by the individual for the purpose specified in section 248(1)(a) or (b), the amount, if any, of the distributions (before deduction of any dividend withholding tax under Chapter 8A of Part 6), or, as the case may be, the amount, if any, of the interest, received by the individual from the company in that year as a result of the application by the individual of that earlier amount of money.

(4)In determining for the purposes of this section –

(a)the amount of any payment or payments of interest by an individual on the specified amount of an eligible loan, or

(b)the amount of interest received by an individual as a result of the application by the individual of an amount of money which was defrayed by the specified amount of an eligible loan,

such apportionment, where necessary, of the total payments of interest by the individual on the eligible loan, or, as the case may be, the total amount of interest received by the individual as a result of the application of all the money defrayed by the eligible loan, shall be made in the same proportion which the specified amount of the eligible loan bears to the amount of the eligible loan.

251.

Restriction of relief to individuals on loans applied in acquiring shares in companies where a claim for

“BES relief” or “film relief” is made in respect of amount subscribed for shares.

Notwithstanding sections 248 and 250, relief shall not be given under either section in respect of any payment of interest on any loan applied in acquiring shares (being shares forming part of the ordinary share capital of a company) issued –

(a)on or after the 20th day of April, 1990, if a claim for relief under Part 16 is made in respect of the amount subscribed for those shares, or

(b)on or after the 6th day of May, 1993, if a claim for relief under section 481 is made in respect of the amount subscribed for those shares.

252.

Restriction of relief to individuals on loans applied in acquiring interest in companies which become quoted companies.

(1)In this section –

“loan” means a loan applied for any of the purposes specified in the principal section;

“the principal section” means section 248 as extended by section 250;

“quoted company” means a company whose shares or any class of whose shares –

(a)are listed in the official list of the Irish Stock Exchange or any other stock exchange, or

(b)are quoted on an unlisted securities market of any stock exchange;

“the specified date”, in relation to a loan, means –

(a)

(i)in a case where the loan was applied on or before the 5th day of April, 1989, the 6th day of April, 1992,

(ii)in a case where the loan was applied on or after the 6th day of April, 1989, but on or before the 5th day of April, 1990, the 6th day of April, 1993, and

(iii)in a case where the loan was applied on or after the 6th day of April, 1990, the 6th day of April, 1994,

or

(b)if later, 1 January in the second year of assessment next after the year of assessment in which the company, part of whose ordinary share capital was acquired or, as the case may be, to which the money was loaned, becomes a quoted company.

(2)Subject to subsection (3), if the company, part of whose ordinary share capital was acquired or, as the case may be, to which the money was loaned, is, at the specified date in relation to the loan, a quoted company, entitlement to relief under the principal section in respect of interest paid on a loan shall be determined subject to the following provisions:

(a)as respects the year of assessment commencing with the specified date, relief shall not be given in respect of the excess of the amount, or of the aggregate amount, of the interest over 70 per cent of the amount, or of the aggregate amount, of the interest in respect of which apart from this paragraph relief would otherwise have been given under the principal section;

(b)as respects the next year of assessment, relief shall not be given in respect of the excess of the amount, or of the aggregate amount, of the interest over 40 per cent of the amount, or of the aggregate amount, of the interest in respect of which apart from this paragraph relief would otherwise have been given under the principal section;

(c)as respects any subsequent year of assessment, no relief shall be given under the principal section.

(3)Notwithstanding anything in subsection (2) or the principal section, the principal section shall not apply in relation to any payment of interest on a loan applied on or after the 29th day of January, 1992, if, at the time the loan is applied, the company, part of whose ordinary share capital was or is acquired or, as the case may be, to which the money was or is loaned, is a quoted company.

253.

Relief to individuals on loans applied in acquiring interest in partnerships.

(1)This section shall apply to a loan to an individual to defray money applied –

(a)in purchasing a share in a partnership,

(b)in contributing money to a partnership by means of capital or a premium, or in advancing money to the partnership, where the money contributed or advanced is used wholly and exclusively for the purposes of the trade or profession carried on by the partnership, or

(c)in paying off another loan where relief could have been obtained under this section for interest on that other loan if it had not been paid off (on the assumption, if the loan was free of interest, that it carried interest).

(2)Relief shall be given in respect of any payment of interest by the individual on the loan if –

(a)throughout the period from the application of the proceeds of the loan until the interest was paid the individual has personally acted in the conduct of the trade or profession carried on by the partnership as a partner therein, and

(b)the individual shows that in that period he or she has not recovered any capital from the partnership, apart from any amount taken into account under subsection (3).

(3)

(a)Where at any time after the application of the proceeds of the loan the individual has recovered any amount of capital from the partnership without using that amount in repayment of the loan, the individual shall be treated for the purposes of this section as if he or she had at that time repaid that amount out of the loan, and accordingly there shall be deducted out of the interest otherwise eligible for relief and payable for any period after that time an amount equal to interest on the amount of capital so recovered.

(b)Where part only of a loan fulfils the conditions in this section so as to afford relief for interest on that part, the deduction to be made under this subsection shall be made wholly out of interest on that part.

(4)

(a)The individual shall be treated as having recovered an amount of capital from the partnership if –

(i)the individual receives a consideration of that amount or value for the sale of any part of his or her interest in the partnership,

(ii)the partnership returns any amount of capital to the individual or repays any amount advanced by the individual, or

(iii)the individual receives a consideration of that amount or value for assigning any debt due to the individual from the partnership.

(b)In the case of a sale or assignment otherwise than by means of a bargain made at arm’s length, the sale or assignment shall be deemed to be for consideration of an amount equal to the market value of what is disposed of.

(5)Subsections (2) to (4) shall apply to a loan referred to in subsection (1)(c) as if such loan and any loan it replaces were one loan, and as if –

(a)references in subsections (2) to (4) to the application of the proceeds of the loan were references to the application of the proceeds of the original loan, and

(b)any restriction under subsection (3) which applied to any loan which has been replaced applied also as respects the loan which replaces that loan.

(6)Subsection (1) shall not apply to a loan unless it is made in connection with the application of the money and either on the occasion of its application or within what is in the circumstances a reasonable time from the application of the money, and that subsection shall not apply to a loan the proceeds of which are applied for some other purpose before being applied as described in that subsection.

(7)Interest eligible for relief under this section shall be deducted from or set off against the income of the individual for the year of assessment in which the interest is paid and tax shall be discharged or repaid accordingly, and such interest shall not be eligible for relief under any provision of the Income Tax Acts apart from this section.

(8)Notwithstanding subsection (7), the deduction authorised by that subsection shall not exceed –

(a)as respects the year of assessment 2014, 75 percent of the deduction that would but for this subsection be authorised by that subsection,

(b)as respects the year of assessment 2015, 50 percent of the deduction that would but for this subsection be authorised by that subsection,

(c)as respects the year of assessment 2016, 25 percent of the deduction that would but for this subsection be authorised by that subsection, and

(d)as respects the year of assessment 2017 and each subsequent year of assessment, zero per cent of the deduction that would but for this subsection be authorised by that subsection.

(9)This section shall not apply to a loan made after 15 October 2013.

(10)Subsections (8) and (9) shall not apply to a loan referred to in subsection (1) where the partnership is a farming partnership within the meaning of section 598A.

(11)Subsection (9) shall not apply to a loan made after 15 October 2013 which is applied in paying off another loan to an individual used to defray money applied under paragraph (a), (b) or (c) of subsection (1), provided-

(a)the loan does not exceed the balance outstanding on the loan being paid off, and

(b)the term of the loan does not exceed the balance of the term of the loan being paid off.

254.

Interest on borrowings to replace capital withdrawn in certain circumstances from a business.

Where a person borrows money to replace in whole or in part capital in any form formerly employed in any trade, profession or other business carried on by the person in respect of the profits or gains of which tax is charged under Schedule D, being capital which within the 5 years preceding the date of replacement was withdrawn from such use for use otherwise than in connection with a trade, profession or other business carried on by the person, interest on such borrowed money shall not be regarded as interest wholly and exclusively laid out or expended for the purposes of a trade, profession or other business.

255.

Arrangements for payment of interest less tax or of fixed net amount.

(1)Any agreement made, whether orally or in writing, for the payment of interest “less tax”, or using words to that effect, shall be construed, in relation to interest payable without deduction of tax, as if the words “less tax” or the equivalent words were not included.

(2)In relation to interest on which the recipient is chargeable to tax under Schedule D and which is payable without deduction of tax, any agreement, whether orally or in writing and however worded, for the payment of interest at such a rate (in this subsection referred to as “the gross rate”) as shall, after deduction of tax at the standard rate of tax for the time being in force, be equal to a stated rate, shall be construed as if it were an agreement requiring the payment of interest at the gross rate.