Mergers & Reorganisation

Table of Contents

TAXES CONSOLIDATION ACT

Chapter 4

Shares and securities (ss. 580-592)

580.

Shares, securities, etc: identification.

(1)For the purposes of identifying shares acquired with shares subsequently disposed of, in so far as the shares are of the same class, shares acquired at an earlier time shall for the purposes of the Capital Gains Tax Acts be deemed to have been disposed of before shares acquired at a later time.

(2)Shares shall not be treated for the purposes of this section as being of the same class unless, if dealt with on a stock exchange, they would be so treated, but shall be treated in accordance with this section notwithstanding that they are identified in a different way by a disposal or by the transfer or delivery giving effect to the disposal.

(3)This section shall apply to securities as it applies to shares.

(4)This section apart from subsection (2) shall apply in relation to any assets as it applies in relation to shares where the assets are of a nature to be dealt in without identifying the particular assets disposed of or acquired.

(5)

(a)This subsection shall apply in relation to the disposal of any assets to which paragraph 13 of Schedule 1 to the Capital Gains Tax Act, 1975, applied, where –

(i)any such assets were on the 6th day of April, 1978, comprised in a holding of the kind referred to in that paragraph,

(ii)the holding consisted of assets acquired on different dates, and

(iii)before the 6th day of April, 1978, there had been a disposal of assets which if that disposal had not taken place would have been comprised in the holding on that date.

(b)For the purposes of applying subsection (1) in relation to each disposal to which this subsection applies –

(i)shares acquired on different dates shall be treated as if they were distinguishable parts of a single asset (in this subsection referred to as “the holding”) acquired respectively on the separate dates on which they were acquired and for the consideration for which they were acquired, and

(ii)it shall be assumed that, on each occasion before the 6th day of April, 1978, on which a disposal was made of shares in the holding, each of the distinguishable parts of the holding as it existed immediately before the disposal was reduced, both as regards the number of shares comprised in that part and the expenditure attributable to that part under paragraphs (a) and (b) of section 552(1), in the same proportion as the number of shares so disposed of bears to the number of shares comprised in the holding immediately before that disposal, and

(iii)the number of shares comprised in each such part on the 6th day of April, 1978, and the expenditure attributable (apart from section 556) to that part under paragraphs (a) and (b) of section 552(1) shall, in relation to a disposal made on or after that date, be the number and expenditure respectively determined in accordance with this subsection.

(c)Nothing in this subsection shall affect the computation of any chargeable gain or allowable loss in relation to any disposal of assets made before the 6th day of April, 1978.

(6)This section shall apply subject to section 581.

581.

Disposals of shares or securities within 4 weeks of acquisition.

(1)For the purposes of the Capital Gains Tax Acts, where the same person in the same capacity disposes of shares of the same class as shares which such person acquired within 4 weeks preceding the disposal, the shares disposed of shall be identified with the shares so acquired within those 4 weeks.

(2)For the purposes of the Capital Gains Tax Acts, where the quantity of shares of the same class disposed of exceeds the quantity of shares of the same class acquired within the period of 4 weeks preceding the disposal, the excess shall be identified with shares of the same class acquired otherwise than within the period of 4 weeks.

(3)Where a loss accrues to a person on the disposal of shares and such person reacquires shares of the same class within 4 weeks after the disposal, that loss shall not be allowable under section 538 or 546 otherwise than by deduction from a chargeable gain accruing to such person on the disposal of the shares reacquired; but, if the quantity of shares so reacquired is less than the quantity so disposed of, such proportion of the loss shall be allowable under section 538 or 546 as bears the same proportion to the loss on the disposal as the quantity not reacquired bears to the quantity disposed of.

(4)In the case of a man and his wife living with him, or civil partners living together –

(a)subsections (1) and (2) shall, with the necessary modifications, apply where shares are acquired by one of them and shares of the same class are disposed of within 4 weeks by the other, and

(b)subsection (3) shall, with the necessary modifications, apply also where a loss on the disposal accrues to one of them and the acquisition after the disposal is made by the other.

(5)This section shall apply to securities as it applies to shares.

582.

Calls on shares.

Where, as respects an issue of shares in or debentures of a company, a person gives any consideration on a date which is more than 12 months after the date on which the shares or debentures were allotted, the consideration shall, in the computation of a gain accruing to such person on a disposal of the shares or debentures, be deemed for the purposes of section 556 to be expenditure incurred on the date on which the consideration was given.

583.

Capital distributions by companies.

(1)In this section, “capital distribution” means any distribution from a company (including a distribution in the course of dissolving or winding up the company) in money or money’s worth except a distribution which in the hands of the recipient constitutes income for the purposes of income tax.

(2)Where a person receives or becomes entitled to receive in respect of shares in a company any capital distribution from the company (other than a new holding within the meaning of section 584), such person shall be treated for the purposes of the Capital Gains Tax Acts as if such person had in consideration of that capital distribution disposed of an interest in the shares.

584.

Reorganisation or reduction of share capital.

(1)In this section –

“new holding”, in relation to any original shares, means the shares in and debentures of the company which as a result of the reorganisation or reduction of capital represent the original shares (including such, if any, of the original shares as remain);

“original shares” means shares held before and concerned in the reorganisation or reduction of capital;

references to a reorganisation of a company’s share capital include –

(a)any case where persons are, whether for payment or not, allotted shares in or debentures of the company in respect of and in proportion to (or as nearly as may be in proportion to) their holdings of shares in the company or of any class of shares in the company, and

(b)any case where there is more than one class of shares and the rights attached to shares of any class are altered;

references to a reduction of share capital do not include the paying off of redeemable share capital and, where shares in a company are redeemable by the company otherwise than by the issue of shares or debentures (with or without other consideration) and otherwise than in a liquidation, the shareholder shall be treated as disposing of the shares at the time of the redemption.

(2)This section shall apply for the purposes of the Capital Gains Tax Acts in relation to any reorganisation or reduction of a company’s share capital.

(3)Subject to subsections (4) to (10), a reorganisation or reduction of a company’s share capital shall not be treated as involving any disposal of the original shares or any acquisition of the new holding or any part of it; but the original shares (taken as a single asset) and the new holding (taken as a single asset) shall be treated as the same asset acquired as the original shares were acquired.

(4)

(a)Where on a reorganisation or reduction of a company’s share capital a person gives or becomes liable to give any consideration for such person’s new holding or any part of it, that consideration shall, in the computation of a gain accruing to such person on a disposal of the new holding or any part of it, be deemed for the purposes of section 556 to be expenditure incurred on the date the consideration was given and, if the new holding or part of it is disposed of with a liability attaching to it in respect of that consideration, the consideration given for the disposal shall be adjusted accordingly.

(b)Notwithstanding paragraph (a), there shall not be treated as consideration given for the acquisition of the new holding –

(i)any surrender, cancellation or other alteration of the original shares or of the rights attached to the original shares, or

(ii)any consideration consisting of any application, in paying up the shares or debentures or any part of them, of any assets of the company, or of any dividend or other distribution declared out of those assets but not made;

but, if section 816 applies in relation to the issue of any of the shares, the sum in cash which the person would have received if the person had not exercised the option to receive additional share capital instead of a sum in cash shall be treated for the purposes of this subsection as consideration given for those shares.

(5)Where on a reorganisation or reduction of a company’s share capital a person receives (or is deemed to receive), or becomes entitled to receive, any consideration other than the new holding for the disposal of an interest in the original shares, and in particular –

(a)where under section 583 such person is to be treated as if such person had in consideration of a capital distribution disposed of an interest in the original shares, or

(b)where such person receives (or is deemed to receive) a consideration from other shareholders in respect of a surrender of rights derived from the original shares,

such person shall be treated as if the new holding resulted from such person having for that consideration disposed of an interest in the original shares (but without prejudice to the original shares and the new holding being treated in accordance with subsection (3) as the same asset).

(6)Where, for the purpose of computing the gain or loss accruing to a person from the acquisition and disposal of any part of the new holding, it is necessary to apportion the cost of acquisition of any of the original shares between the part which is disposed of and the part which is retained, the apportionment shall be made by reference to market value at the date of the disposal (with such adjustment of the market value of any part of the new holding as may be required to offset any liability attaching to the new holding but forming part of the cost to be apportioned), and any corresponding apportionment for the purposes of subsection (5) shall be made in the like manner.

(7)Notwithstanding subsection (6) –

(a)where a new holding –

(i)consists of more than one class of shares in or debentures of the company and one or more of those classes is of shares or debentures which, at any time not later than the end of the period of 3 months beginning on the date on which the reorganisation or reduction of capital took effect, or of such longer period as the Revenue Commissioners may by notice in writing allow, had quoted market values on a recognised stock exchange in the State or elsewhere, or

(ii)consists of more than one class of rights of unit holders and one or more of those classes is of rights the prices of which were published regularly by the managers of the scheme at any time not later than the end of that period of 3 months (or longer if so allowed), and

(b)where, for the purpose of computing the gain or loss accruing to a person from the acquisition and disposal of the whole or any part of any class of shares or securities or rights of unit holders forming part of a new holding of the kind referred to in paragraph (a), it is necessary to apportion costs of acquisition between the part that is disposed of and the part that is retained,

then, the cost of acquisition of the new holding shall first be apportioned between the entire classes of shares or debentures or rights of which it consists by reference to market value on the first day (whether that day fell before the reorganisation or reduction of capital took effect or later) on which market values or prices were quoted or published for the shares, debentures or rights mentioned in paragraph (a) or (b) (with such adjustment of the market value of any class as may be required to offset any liability attaching thereto but forming part of the cost to be apportioned) and, for the purposes of this subsection, the day on which a reorganisation of share capital involving the allotment of shares or debentures or unit holders’ rights takes effect shall be the day following the day on which the right to renounce any allotment expires.

(8)Where a person receives or becomes entitled to receive in respect of any shares in or debentures of a company a provisional allotment of shares in or debentures of the company and such person disposes of such person’s rights, section 583 shall apply as if the amount of the consideration for the disposal were a capital distribution received by such person from the company in respect of the first-mentioned shares, and as if such person had, instead of disposing of the rights, disposed of an interest in those shares.

(9)Subsection (3) shall not apply to the extent that the new holding comprises debentures, loan stock or other similar securities issued or allotted on or after 4 December 2002, unless

(a)they were so issued or allotted pursuant to a binding written agreement made before that date, or

(b)this section has application by virtue of section 586.

(10)

(a)In this subsection, ‘investment undertaking’ and ‘unit’ have the same meanings respectively as in section 739B.

(b)Subsection (3) shall not apply where the new holding comprises units in an investment undertaking, being a company.

585.

Conversion of securities.

(1)In this section –

“conversion of securities” includes –

(a)a conversion of securities of a company into shares in the company,

(b)a conversion at the option of the holder of the securities converted as an alternative to the redemption of those securities for cash where the conversion takes place before 4 December 2002, or where the conversion takes place after that date pursuant to a binding written agreement made before that date, and

(c)any exchange of securities effected in pursuance of any enactment which provides for the compulsory acquisition of any shares or securities and the issue of securities or other securities instead;

“security” includes any loan stock or similar security, whether of any government or of any public or local authority or of any company and whether secured or unsecured but excluding securities within section 607.

“investment undertaking” and ”unit” have the same meanings respectively as in section 739B;

(1A)For the purposes of this section, a conversion of securities shall not include a conversion of securities into units in an investment undertaking, being a company.

(2)Section 584 shall apply with any necessary modifications in relation to the conversion of securities as it applies in relation to the reorganisation or reduction of a company’s share capital.

586.

Company amalgamations by exchange of shares.

(1)Subject to section 587, where a company issues shares or debentures to a person in exchange for shares in or debentures of another company, section 584 shall apply with any necessary modifications as if the 2 companies were the same company and the exchange were a reorganisation of its share capital.

(2)This section shall apply only where –

(a)the company issuing the shares or debentures has, or in consequence of the exchange will have, control of the other company, or

(b)the first-mentioned company issues the shares or debentures in exchange for shares as the result of a general offer made to members of the other company or any class of them (with or without exceptions for persons connected with the first-mentioned company), the offer being made in the first instance on a condition such that if it were satisfied the first-mentioned company would have control of the other company.

(3)

(a)In this subsection, “shares” includes stock, debentures and any interests to which section 587(3) applies and also includes any option in relation to such shares.

(b)This section shall not apply to the issue by a company of shares in the company by means of an exchange referred to in subsection (1) unless it is shown that the exchange is effected 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 tax.

(c)This section shall not apply where, on or after 4 December 2002, a company issues debentures, loan stock or other similar securities to a person in exchange for shares of another company unless –

(i)such issue is pursuant to a binding written agreement made before that date, or

(ii)the company issuing the debentures, loan stock or other similar securities and the person to whom they are issued are members of the same group (within the meaning of section 616) throughout the period commencing one year before and ending one year after the day the debentures, loan stock or other similar securities are issued, or

(iii)the other company is a company quoted on a recognised stock exchange and its board of directors had, before 4 December 2002, made a public announcement that they had agreed the terms of a recommended offer to be made for the company’s entire issued, and to be issued, ordinary share capital.

(d)This section shall not apply where the company issuing the shares or debentures is an investment undertaking within the meaning of section 739B.

587.

Company reconstructions and amalgamations.

(1)In this section, “scheme of reconstruction or amalgamation” means a scheme for the reconstruction of any company or companies or the amalgamation of any 2 or more companies, and references to shares or debentures being retained include their being retained with altered rights or in an altered form, whether as the result of reduction, consolidation, division or otherwise.

(2)Where under any arrangement between a company and the persons holding shares in or debentures of the company or any class of such shares or debentures, being an arrangement entered into for the purposes of or in connection with a scheme of reconstruction or amalgamation, another company issues shares or debentures to those persons in respect of and in proportion to (or as nearly as may be in proportion to) their holdings of the first-mentioned shares or debentures, but the first-mentioned shares or debentures are either retained by those persons or cancelled, then, those persons shall be treated as exchanging the first-mentioned shares or debentures for those held by them in consequence of the arrangement (any shares or debentures retained being for this purpose regarded as if they had been cancelled and replaced by a new issue), and accordingly section 586(1) shall apply to such exchange of shares or debentures.

(2A)

(a)In this subsection, ‘merger’ and ‘division’ have the same meaning as in section 638A (inserted by the Finance Act 2017).

(b)References in subsection (2) to shares being cancelled shall be deemed to include references to shares which are extinguished as a result of a merger or division.

(3)Subsection (2) shall apply in relation to a company which has no share capital as if references to shares in or debentures of a company included references to any interests in the company possessed by members of the company, and sections 584 and 586 shall apply accordingly.

(4)

(a)In this subsection, “shares” has the same meaning as in section 586(3).

(b)This section shall not apply to the issue by a company of shares in the company under a scheme of reconstruction or amalgamation referred to in subsection (2) unless it is shown that the reconstruction or amalgamation is effected 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 tax.

(c)This section shall not apply to any person to whom, under a scheme of reconstruction or amalgamation, a company issues debentures, loan stock or other similar securities on or after 4 December 2002, unless –

(i)they were issued pursuant to a binding written agreement made before that date, or

(ii)that person and the company are members of the same group (within the meaning of section 616) throughout the period commencing one year before and ending one year after the day the debentures, loan stock or other similar securities were issued, or

(iii)they were issued pursuant to a scheme or arrangement, the principal terms of which had been brought to the attention of the Revenue Commissioners and the Revenue Commissioners had acknowledged in writing before 4 December 2002, to the effect that the scheme or arrangement was a scheme of reconstruction and amalgamation.

(d)This section shall not apply where the company issuing the shares or debentures is an investment undertaking within the meaning of section 739B.

588.

Demutualisation of assurance companies.

(1)In this section –

“assurance company” means-

(a)an assurance company within the meaning of section 3 of the Insurance Act 1936, or

(b)a person that holds an authorisation –

(i)within the meaning of the European Communities (Life Assurance) Framework Regulations 1994 (S.I. No. 360 of 1994), or

(ii)under the European Union (Insurance and Reinsurance) Regulations 2015 (S.I. No. 485 of 2015), in respect of insurance of a class listed in Schedule 2 to those Regulations;

“free shares”, in relation to a member of the assurance company, means any shares issued by the successor company to that member in connection with the arrangement but for no new consideration;

“member”, in relation to the assurance company, means a person who is or has been a member of it, in that capacity, and any reference to a member includes a reference to a member of any particular class or description;

“new consideration” means consideration other than –

(a)consideration provided directly or indirectly out of the assets of the assurance company or the successor company, or

(b)consideration derived from a member’s shares or other rights in the assurance company or the successor company.

(2)This section shall apply as on and from the 21st day of April, 1997, in respect of an arrangement between a company and its members, being an arrangement to which subsection (2) of section 587 applies by virtue of subsection (3) of that section, and where the company is an assurance company which carries on a mutual life business.

(3)Where in connection with the arrangement there is conferred on a member of the assurance company concerned any rights –

(a)to acquire shares in another company (in this section referred to as the “successor company”) in priority to other persons,

(b)to acquire shares in the successor company for consideration of an amount or value lower than the market value of the shares, or

(c)to free shares in the successor company,

then, any such rights so conferred on a member shall be regarded for the purposes of capital gains tax as an option (within the meaning of section 540) granted to and acquired by such member for no consideration and having no value at the time of that grant and acquisition.

(4)Where in connection with the arrangement shares in the successor company are issued to a member of the assurance company concerned, and such shares are treated under section 587 as having been exchanged by the member for the interest in the company possessed by the member, those shares shall, notwithstanding section 584, be regarded for the purposes of section 552(1) –

(a)as having been issued to the member for a consideration given by the member of an amount or value equal to the amount or value of any new consideration given by the member for the shares or, if no new consideration is given, as having been issued for no consideration, and

(b)as having, at the time of their issue to the member, a value equal to the amount or value of the new consideration so given or, if no new consideration is given, as having no value;

but this subsection is without prejudice to the operation where applicable of subsection (3).

(5)Subsection (6) shall apply in any case where –

(a)in connection with the arrangement, shares in the successor company are issued by that company to trustees on terms which provide for the transfer of those shares to members of the assurance company concerned for no new consideration, and

(b)the circumstances are such that in the hands of the trustees the shares constitute settled property.

(6)

(a)Where this subsection applies, then, for the purposes of capital gains tax –

(i)the shares shall be regarded as acquired by the trustees for no consideration,

(ii)the interest of any member in the settled property constituted by the shares shall be regarded as acquired by the member for no consideration and as having no value at the time of its acquisition, and

(iii)where on the occasion of a member becoming absolutely entitled as against the trustees to any of the settled property, both the trustees and the member shall be treated as if, on the member becoming so entitled, the shares in question had been disposed of and immediately reacquired by the trustees, in their capacity as trustees within section 567(2), for a consideration of such an amount as would secure that on the disposal neither a gain nor a loss would accrue to the trustees, and accordingly section 576(1) shall not apply in relation to that occasion.

(b)Reference in paragraph (a) to the case where a member becomes absolutely entitled to settled property as against the trustees shall be taken to include reference to the case where the member would become so entitled but for being a minor or otherwise under a legal disability.

(7)Where in connection with the arrangements there is conferred on a member of an assurance company a right to acquire shares in a successor company, or a right to a distribution of assets (including cash) of the assurance company, the assurance company shall, within 30 days of the arrangements being effected or within such longer period as the Revenue Commissioners may on request allow, make a return to the Revenue Commissioners in such electronic format as they require, which, in respect of each such member, specifies –

(a)the name of the member,

(b)the address of the member,

(c)the number of shares in the successor company which the member has a right to acquire,

(d)the amount of new consideration which the member is required to give to acquire those shares,

(e)the value of any assets of the assurance company to which the member has a right, and

(f)such other information that the Revenue Commissioners advise the assurance company that they require.

589.

Shares in close company transferring assets at undervalue.

(1)Where a close company transfers an asset to any person otherwise than by means of a bargain made at arm’s length and for a consideration of an amount or value less than the market value of the asset, an amount equal to the difference shall be apportioned among the issued shares of the company, and the holders of those shares shall be treated in accordance with subsections (2) and (3).

(2)For the purposes of the computation of a chargeable gain accruing on the disposal of any of those shares by the person owning them on the date of transfer, an amount equal to the amount so apportioned to that share shall be excluded from the expenditure allowable as a deduction under section 552(1)(a) from the consideration for the disposal.

(3)Where the person owning any of those shares at the date of transfer is itself a close company, an amount equal to the amount apportioned to the shares so owned under subsection (1) to that close company shall be apportioned among the issued shares of that close company, and the holders of those shares shall be treated in accordance with subsection (2), and so on through any number of close companies.

(4)This section shall apply to a company within section 590 as it applies to a close company.

590. Attribution to participators of chargeable gains accruing to non-resident company.
(1)In this section –

(a)’participator’, in relation to a company, has the meaning assigned to it by section 433(1);

(b)references to a person’s interest as a participator in a company are references to the interest in the company which is represented by all the factors by reference to which the person falls to be treated as such a participator; and

(c)references to the extent of such an interest are references to the proportion of the interests as participators of all the participators in the company (including any who are not resident or ordinarily resident in the State) which on a just and reasonable apportionment is represented by that interest.

(2)For the purposes of this section, where –

(a)the interest of any person in a company is wholly or partly represented by an interest (in this subsection referred to as the ‘person’s beneficial interest’) which the person has under any settlement, and

(b)the person’s beneficial interest is the factor, or one of the factors, by reference to which the person would be treated, apart from this subsection, as having an interest as a participator in the company,

the interest as a participator in the company which would be that person’s shall be deemed, to the extent that it is represented by the person’s beneficial interest, to be an interest of the trustees of the settlement, and not an interest of the person’s, and references in this section, in relation to a company, to a participator shall be construed accordingly.

(3)This section shall apply as respects chargeable gains accruing to a company –

(a)which is not resident in the State, and

(b)which would be a close company if it were resident in the State.

(4)Subject to this section, every person who at the time when the chargeable gain accrues to the company is resident or ordinarily resident in the State, who, if an individual, is domiciled in the State, and who is a participator in the company, shall be treated for the purposes of the Capital Gains Tax Acts as if a part of the chargeable gain had accrued to that person.

(5)The part of the chargeable gain referred to in subsection (4) shall be equal to the proportion of that gain that corresponds to the extent of the participator’s interest as a participator in the company.

(6)Subsection (4) shall not apply in the case of any participator in the company to which the gain accrues where the aggregate amount falling under that subsection to be apportioned to the participator and to persons connected with the participator does not exceed one-twentieth of the gain.

(7)This section shall not apply in relation to –

(a)a chargeable gain accruing on the disposal of assets, being –

(i)tangible property, whether movable or immovable, or a lease of such property, or

(ii)specified intangible assets within the meaning of section 291A(1),

where the assets were used, and used only, for the purposes of a trade carried on by a company, or by another company which is a member of the same group (within the meaning of subsection (16)) as the first-mentioned company, wholly outside the State,

(aa)a chargeable gain accruing on the disposal of an asset where it is shown in writing or otherwise to the satisfaction of the Revenue Commissioners that, at the time of the disposal, genuine economic activities are carried on by the company in a relevant Member State (within the meaning of section 806(11)(a)),

(b)a chargeable gain accruing on the disposal of currency or of a debt within section 541(6), where the currency or debt is or represents money in use for the purposes of a trade carried on by the company wholly outside the State, or

(c)a chargeable gain in respect of which the company is chargeable to capital gains tax by virtue of section 29 or to corporation tax by virtue of section 25(2)(b).

(8)Where –

(a)any amount of capital gains tax is paid by a person in pursuance of subsection (4), and

(b)an amount in respect of the chargeable gain is distributed, whether by way of dividend or distribution of capital or on the dissolution of the company, within 2 years from the time when the chargeable gain accrued to the company,

that amount of tax, so far as neither reimbursed by the company nor applied as a deduction under subsection (9), shall be applied for reducing or extinguishing any liability of the person to income tax in respect of the distribution or (in the case of a distribution falling to be treated as a disposal on which a chargeable gain accrues to the person) to any capital gains tax in respect of the distribution.

(9)The amount of capital gains tax paid by a person in pursuance of subsection (4), so far as neither reimbursed by the company nor applied under subsection (8) for reducing any liability to tax, shall be allowable as a deduction in the computation under the Capital Gains Tax Acts of a gain accruing on the disposal by the person of any asset representing the person’s interest as a participator in the company.

(10)In ascertaining for the purposes of subsection (8) the amount of income tax chargeable on any person for any year of assessment on or in respect of a distribution, any such distribution mentioned in that subsection which falls to be treated as income of that person for that year of assessment shall be regarded as forming the highest part of the income on which the person is charged to tax for the year of assessment.

(11)To the extent that it would reduce or extinguish chargeable gains accruing by virtue of this section to a person in a year of assessment, this section shall apply in relation to a loss accruing to the company on the disposal of an asset in that year of assessment as it would apply if a gain instead of a loss had accrued to the company on the disposal, but shall only apply in relation to that person; and, subject to the preceding provisions of this subsection, this section shall not apply in relation to a loss accruing to the company.

(12)Where the person who is a participator in the company at the time when the chargeable gain accrued to the company is itself a company which is not resident in the State but which would be a close company if it were resident in the State, an amount equal to the amount apportioned under subsection (5) out of the chargeable gain to the participating company’s interest as a participator in the company to which the gain accrues shall be further apportioned among the participators in the participating company according to the extent of their respective interests as participators, and subsection (4) shall apply to them accordingly in relation to the amounts further apportioned, and so on through any number of companies.

(13)The persons treated by this section as if a part of a chargeable gain accruing to a company had accrued to them shall include trustees who are participators in the company, or in any company amongst the participators in which the gain is apportioned under subsection (12), if when the gain accrued to the company the trustees are neither resident nor ordinarily resident in the State.

(14)Where any tax payable by any person by virtue of subsection (4) is paid by the company to which the chargeable gain accrues, or in a case under subsection (12) is paid by any such other company, the amount so paid shall not, for the purposes of income tax, capital gains tax or corporation tax, be regarded as a payment to the person by whom the tax was originally payable.

(15)For the purposes of this section, the amount of the gain or loss accruing at any time to a company which is not resident in the State shall be computed (where it is not the case) as if the company were within the charge to corporation tax on capital gains.

(16)

(a)In this subsection –

‘group’ shall be construed in accordance with subsections (1) (excluding paragraph (a)), (3) and (4) of section 616;

‘non-resident group’ of companies –

(i)in the case of a group none of the members of which is resident in the State, means that group, and

(ii)in the case of a group 2 or more members of which are not resident in the State, means the members not resident in the State.

(b)For the purposes of this section –

(i)section 617 (other than paragraphs (b) and (c) of subsection (1)), section 618 (with the omission of the words ‘to which this section applies’ in subsections (1) (a) and (2), of ‘such’ in subsection (1)(c) and of subsection (3)), section 619(2) (with the substitution for ‘in the course of a disposal to which section 617 applies’ of ‘at a time when both were members of the group’) and section 620(2) (with the omission of the words ‘to which this section applies’) shall apply in relation to non-resident companies which are members of a non-resident group of companies as they apply in relation to companies resident in the State which are members of a group of companies, and

(ii)sections 623 (apart from paragraphs (c) and (d) of subsection (2) and 625 shall apply as if for any reference in those sections to a group of companies there were substituted a reference to a non-resident group of companies, and as if references to companies were references to companies not resident in the State.

591.

Relief for individuals on certain reinvestment.

(1)In this section –

“director” has the same meaning as in section 116;

“eligible shares” means new ordinary shares which carry no present or future preferential right to dividends or to a company’s assets on its winding up and no present or future preferential right to be redeemed;

“full-time director”, “full-time employee”, “part-time director” and “part-time employee” have the same meanings respectively as in section 250;

“holding company” means a company whose business consists wholly or mainly in the holding of shares in, or securities of, one or more companies which are trading companies and which are its 51 per cent subsidiaries;

“material disposal” has the meaning assigned to it by subsection (5);

“ordinary shares” means shares forming part of a company’s ordinary share capital;

“ordinary share capital” has the same meaning as in section 2;

“the original holding” has the meaning assigned to it by subsection (2);

“qualifying company” has the meaning assigned to it by subsection (7);

“qualifying investment” has the meaning assigned to it by subsection (6);

“the reinvestor” has the meaning assigned to it by subsection (2);

“the specified period” has the meaning assigned to it by subsection (6) (b);

“trade” includes a profession, and “trading company”, “trading group”, “qualifying trade” (within the meaning of subsection (8)) and “qualifying trading operations” (within the meaning of that subsection) shall be construed accordingly;

“trading company” means a company whose business consists wholly or mainly of the carrying on of a trade or trades;

“trading group” means a holding company and one or more trading companies which are 51 per cent subsidiaries of the holding company;

“unquoted company” means a company none of whose shares, stocks or debentures are listed in the official list of a stock exchange or quoted on an unlisted securities market of a stock exchange;

“51 per cent subsidiary” has the meaning assigned to it by section 9.

(2)

(a)Subject to this section, where the consideration which an individual (in this section referred to as “the reinvestor”) obtains for any material disposal, before 4 December 2002, by him or her of shares in or securities of any company (in this section referred to as “the original holding”) is applied by him or her within the period of 3 years from the date of that disposal in acquiring a qualifying investment, the reinvestor shall, on making a claim in that behalf, be treated for the purposes of the Capital Gains Tax Acts as if the chargeable gain accruing on the disposal of the original holding did not accrue until he or she disposes of the qualifying investment.

(b)Notwithstanding paragraph (a), where –

(i)the disposal of the qualifying investment is a material disposal for the purposes of this section, and

(ii)the consideration for that disposal is applied by the reinvestor within the period of 3 years from the date of that disposal in acquiring another qualifying investment,

the reinvestor shall be treated as if the chargeable gain accruing on the disposal of the original holding did not accrue until he or she disposes of the other qualifying investment and any further qualifying investment which is acquired in a similar manner.

(3)

(a)Where an individual is not entitled to be treated in accordance with subsection (2) solely by reason of not having satisfied the requirements of either or both paragraphs (a) and (e) of subsection (6), and –

(i)all the other requirements of this section have been satisfied,

(ii)the capital gains tax on the disposal of the original holding has been paid in full, and

(iii)the individual has, throughout a period of 2 years beginning within the specified period, been a full-time employee or a full-time director of the qualifying company,

then, the individual –

(I)shall be entitled on making a claim in that behalf to such repayment of capital gains tax as would secure that the tax which is ultimately borne by the individual does not exceed the tax which would have been borne by the individual if he or she had been entitled to be treated in accordance with subsection (2), and

(II)shall be treated for the purposes of the Capital Gains Tax Acts as if the chargeable gain accruing on the disposal of the original holding did not accrue until the individual disposes of the qualifying investment, and subsection (2) (b) shall apply for the purposes of this subsection as it applies for the purposes of subsection (2).

(b)No repayment of tax under this subsection shall carry interest.

(4)Subsection (2) shall not apply if part only of the amount or value of the consideration for the material disposal of the original holding is applied, within the period of 3 years from the date of that disposal, in acquiring a qualifying investment but, if all of the amount of that consideration except for a part which is less than the amount of the gain accruing on the disposal is so applied, the reinvestor shall, on making a claim in that behalf, be treated for the purposes of the Capital Gains Tax Acts as if the amount of the gain accruing on the disposal were reduced to the amount of the consideration not applied in acquiring a qualifying investment, and the balance of the gain shall be treated as if it did not accrue until the reinvestor disposes of the qualifying investment.

(5)For the purposes of this section, the disposal of shares in or securities of a company shall be a material disposal if –

(a)throughout the period of 3 years ending with the date of the disposal, or

(b)in a case where the company commenced to trade at any time in the period mentioned in paragraph (a), throughout the period beginning at that time and ending with the date of the disposal,

the following conditions are satisfied –

(i)the company has been a trading company or a holding company, and

(ii)the reinvestor has been a full-time employee, part-time employee, full-time director or part-time director of the company or, if that company is a member of a trading group, of one or more companies which are members of the trading group.

(6)For the purposes of this section, an individual shall be regarded as acquiring a qualifying investment where he or she acquires any eligible shares in a qualifying company if –

(a)he or she holds not less than 5 per cent of the ordinary share capital of the company at any time in the period (in this subsection referred to as “the initial period”) beginning on the date of the acquisition of the eligible shares and ending on the date which is one year after the date of the disposal of the original holding,

(b)he or she holds not less than 15 per cent of the ordinary share capital of the company at any time in the period (in this section referred to as “the specified period”) beginning on the date of the acquisition of the eligible shares and ending on the date which is 3 years after the date of the disposal of the original holding,

(c)within the specified period, the company uses the money raised through the issue of the eligible shares for the purposes of enabling it, or enlarging its capacity, to undertake qualifying trading operations (within the meaning of subsection (8)),

(d)the company is not –

(i)the company in which the original holding has subsisted, or

(ii)a company that was a member of the same trading group as that company,

and

(e)he or she becomes at any time within the initial period, and is throughout the period beginning at that time and –

(i)ending at the end of the specified period, or

(ii)in a case where the company is wound up or dissolved without winding up and the conditions mentioned in subsection (7) (d) are satisfied, ending at the time of the commencement of the winding up or dissolution of the company,

a full-time employee or a full-time director of the company.

(7)

(a)For the purposes of this section and subject to paragraphs (b) to (d), a company shall be a qualifying company if it is incorporated in the State and if –

(i)it is throughout the specified period –

(I)an unquoted company resident in the State and not resident elsewhere, and

(II)a company which exists wholly for the purposes of carrying on wholly or mainly in the State of one or more qualifying trades,

and

(ii)it is not at any time in the specified period –

(I)under the control of another company (or of another company and any person connected with that other company), or

(II)without being under the control of another company, a 51 per cent subsidiary of that other company.

(b)A company shall be deemed not to have ceased to be a qualifying company solely by virtue of shares in the company commencing, at any time in the specified period, to be quoted on the market known as the Developing Companies Market of the Irish Stock Exchange.

(c)A company shall cease to be a qualifying company if at any time in the specified period a resolution is passed, or an order is made, for the winding up of the company (or in the case of a winding up otherwise than under the Companies Act 2014, any other act is done for the like purpose) or the company is dissolved without winding up.

(d)Notwithstanding paragraph (c), a company shall be deemed not to have ceased to be a qualifying company solely by virtue of the application of that paragraph where –

(i)it is shown that the winding up or dissolution is for bona fide commercial reasons and does not form part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of income tax, corporation tax or capital gains tax, and

(ii)the company’s net assets, if any, are distributed to its members within 3 years from the commencement of the dissolution or the winding up.

(8)

(a)In this subsection, “qualifying trading operations”, in relation to a trade, means all the operations of the trade excluding those of dealing in shares, securities, land, currencies, futures or traded options.

(b)A trade shall be a qualifying trade for the purposes of subsection (7) if throughout the specified period the trade –

(i)is conducted on a commercial basis and with a view to the realisation of profits, and

(ii)consists wholly or mainly of qualifying trading operations,

and a trade which during the specified period consists partly of qualifying trading operations and partly of other trading operations shall be regarded for the purposes of this subsection as a trade which consists wholly or mainly of qualifying trading operations only if the total amount receivable in the specified period by the company carrying on the trade from sales made and services rendered in the course of qualifying trading operations is not less than 75 per cent of the total amount receivable by the company from all sales made and services rendered in the course of the trade in the specified period.

(9)A claim for relief under this section may be made after the making of a material disposal and the acquisition of eligible shares in a qualifying company if all the conditions for the relief are or will be satisfied, but the relief shall be withdrawn if, by reason of the subsequent happening of any event or failure of an event to happen which at the time the relief was claimed was expected to happen, the individual by whom the relief was claimed is not entitled to the relief so claimed.

(10)The withdrawal of relief under subsection (9) shall be made –

(a)for the year of assessment in which the happening or failure to happen, as the case may be, of the event giving rise to the withdrawal of the relief occurred, and

(b)in accordance with subsection (11),

and both –

(i)details of the happening or the failure to happen, as the case may be, of the event giving rise to the withdrawal of relief, and

(ii)the amount to be treated as a gain under subsection (11),

shall be included in the return required to be made by the individual concerned under Chapter 3 of Part 41A for that year of assessment.

(11)

(a)Notwithstanding any other provision of the Capital Gains Tax Acts, where relief is to be withdrawn under subsection (9) for any year of assessment, such amount (in this subsection referred to as “the relevant amount”) of the chargeable gain which accrued to the reinvestor on the disposal of the original holding as was treated under subsection (2) or (4) as not accruing at that time –

(i)reduced in accordance with paragraph (b), and

(ii)increased in accordance with paragraph (c),

shall be treated as a gain which accrued in that year of assessment.

(b)The amount by which the relevant amount is to be reduced under paragraph (a) (i) is an amount equal to the aggregate of –

(i)to the extent that such excess has not been deducted in years of assessment subsequent to the year of assessment in which the disposal of the original holding occurred, the excess of the amount of the losses which would have been deducted under section 31 in the year of assessment in which the disposal of the original holding occurred, if relief under this section had not been claimed, over the amount of such losses which were so deducted in that year, and

(ii)any amount of chargeable gains in the year of assessment in which the disposal of the original holding occurred in respect of which the reinvestor would not by virtue of section 601 have been charged to capital gains tax if relief under this section had not been claimed.

(c)The amount by which the relevant amount is to be increased under paragraph (a) (ii) is an amount determined by the formula –

where –

Gis the relevant amount reduced in accordance with paragraph (b),

Ris 0.083, and

Mis the number of months in the period beginning on the date on which capital gains tax for the year of assessment in which the disposal of the original holding occurred was due and payable and ending on the date on which capital gains tax for the year of assessment for which the withdrawal of relief is to be made is due and payable.

(12)A chargeable gain or the balance of a chargeable gain which under subsection (2) or (4), as may be appropriate, is treated as accruing at a date later than the date of the disposal on which it accrued shall not be so treated for the purposes of section 556.

(13)Without prejudice to the provisions of the Capital Gains Tax Acts providing generally for apportionments, where consideration is given for the acquisition or disposal of any assets some or part of which are shares or other securities to the acquisition or disposal of which a claim under this section relates and some or part of which are not, the consideration shall be apportioned in such manner as is just and reasonable.

(14)This section shall not apply unless the acquisition of a qualifying investment was made for bona fide commercial reasons and not wholly or partly for the purposes of realising a gain from the disposal of the qualifying investment.

591A.

Dividends paid in connection with disposals of shares or securities.

(1)For the purposes of this section, a dividend paid, or a distribution made, by a company to a person in respect of shares or securities of the company in connection with a disposal of shares in the company shall be treated as being abnormal if the amount or value of the dividend, or as the case may be the distribution, exceeds the amount that could reasonably have been expected to be paid, or as the case may be made, in respect of the shares or securities of the company if there were no such disposal of the shares or securities.

(2)Where, in connection with the disposal by a person of any shares or securities of a company, there exists any scheme, arrangement or understanding by virtue of which, either directly or indirectly, an abnormal dividend is paid, or an abnormal distribution is made –

(a)where the person is a company, to that person or to any company connected (within the meaning of section 10) with that person, and

(b)where the person is not a company, to any company connected (within the meaning of section 10) with the person,

then, for the purposes of the Capital Gains Tax Acts, the amount or value of the dividend paid, or distribution made, to the person or, as the case may be, to the connected person, shall be treated as consideration received by the person for the disposal of the shares or securities, and shall be ignored for the purposes of the Tax Acts.

(3)Subsection (2) does not apply if it is shown that the scheme, arrangement or understanding is effected for bona fide commercial reasons and is not, or does not form part of, any scheme, arrangement or understanding of which the main purpose or one of the main purposes is avoidance of liability to tax.

592.

Reduced rate of capital gains tax on certain disposals of shares by individuals.

Repealed from 3 December 1997
(1)In this section –

“disposal” does not include a relevant disposal within the meaning of section 648;

“ordinary share capital” has the same meaning as in section 2;

“ordinary shares” means shares forming part of a company’s ordinary share capital;

“period of ownership”, in relation to an individual making a disposal of qualifying shares, means the individual’s period of continuous ownership of the shares in the same capacity ending on the date of such disposal and, for the purposes of this definition, where the shares were acquired by the individual on the death of that individual’s spouse so that the individual’s period of ownership would apart from this definition be treated as having commenced on the date of that death, the individual’s period of ownership shall be deemed to be extended to include the individual’s spouse’s period of ownership ending on that date;

“qualifying company” shall be construed in accordance with subsection (2);

“qualifying shares”, in relation to a company, means ordinary shares of the company which are fully paid up and which carry no present or future preferential rights to dividends or to the company’s assets on its winding up and no present or future preferential right to be redeemed;

“qualifying trade” shall be construed in accordance with subsection (4);

“qualifying trading operations”, in relation to a trade, means all the operations of the trade excluding those of dealing in shares, securities, land, currencies, futures or traded options;

“the specified period”, in relation to the disposal of qualifying shares, means the period of 3 years immediately preceding the date of the disposal of those shares;

“trade” includes a profession, and “qualifying trade” and “qualifying trading operations” shall be construed accordingly;

“unquoted company” means a company none of whose shares, stocks or debentures are listed in the official list of a stock exchange or quoted on an unlisted securities market.

(2)For the purposes of this section, a company shall be a qualifying company in relation to the disposal of qualifying shares where –

(a)at the date of acquisition of those shares, it is an unquoted company which is resident in the State and not resident elsewhere and which has an issued share capital the market value of which is not more than £25,000,000, and

(b)throughout the specified period, it is a company which is resident in the State and not resident elsewhere and –

(i)which exists wholly or mainly for the purposes of the carrying on of one or more qualifying trades, or

(ii)the business of which consists –

(I)wholly or mainly of the holding of shares in one or more connected companies, or

(II)wholly or mainly of both the holding of such shares and the carrying on of one or more qualifying trades.

(3)

(a)A company shall be regarded as having satisfied the condition referred to in subsection (2)(b)(i) only if throughout the specified period not less than 75 per cent of the market value of all the issued share capital of the company derives from the carrying on by the company of one or more qualifying trades.

(b)A company shall be regarded as having satisfied the condition referred to in clause (I) or (II), as the case may be, of subsection (2)(b)(ii) only if throughout the specified period not less than 75 per cent of the market value of all the issued share capital of the company derives from the carrying on of one or more qualifying trades by the connected companies or, as the case may be, by the company and the connected companies.

(c)In a case where a connected company (in this paragraph referred to as “the first-mentioned company”) is a company whose business consists of the holding of shares in one or more companies, references in paragraph (b) to the connected companies shall be construed as including references to the companies which are connected with the first-mentioned company.

(4)For the purposes of this section, a trade shall be a qualifying trade if throughout the specified period it consists of qualifying trading operations and, where during that period a trade consists partly of qualifying trading operations and partly of other trading operations, the part of the trade which consists of other trading operations shall be treated as a separate trade.

(5)For the purposes of this section, where a company (in this subsection referred to as “the first-mentioned company”) holds shares in another company, that other company shall be regarded as connected with the first-mentioned company if –

(a)at the date of the acquisition of those shares by the first-mentioned company it was an unquoted company,

(b)it is resident in the State and not resident elsewhere, and

(c)not less than 20 per cent of the total voting rights in the company are exercisable by the first-mentioned company.

(6)As respects chargeable gains accruing to an individual on the disposal of qualifying shares in a qualifying company in a case where the individual’s period of ownership of those shares is not less than 3 years, section 28(3) shall apply as if the reference in that section to 40 per cent were a reference to 26 per cent.

(7)

(a)In this subsection and in subsection (8), “original shares” and “new holding” have the same meanings respectively as in section 584.

(b)If the time when an individual acquires qualifying shares would be determined under section 584, 585, 586 or 587, it shall be determined in the same way for the purposes of this section where the following conditions are satisfied –

(i)both the original shares and the new holding constitute qualifying shares, and

(ii)the individual is not treated under section 584(4) as giving or becoming liable to give any consideration, other than the original shares, for the acquisition of the new holding.

(8)

(a)In a case where subsection (7)(b) applies and the new holding is held for a period of not less than 3 years, subsection (2) shall apply as if –

(i)in paragraph (a) of that subsection “at the date of acquisition of the original shares” were substituted for “at the date of acquisition of those shares”,

(ii)where the company in which the new holding subsists is not the company in which the original shares subsisted, in paragraph (a) of that subsection “the company in which the original shares subsisted is” were substituted for “it is”, and

(iii)in paragraph (b) of that subsection “the company in which the new holding subsists is” were substituted for “it is”.

(b)In a case where subsection (7)(b) applies and the new holding is held for a period of less than 3 years, subsection (2) shall apply –

(i)as if in paragraph (a) of that subsection “at the date of acquisition of the original shares” were substituted for “at the date of acquisition of those shares”, and

(ii)where the company in which the new holding subsists is not the company in which the original shares subsisted as if –

(I)in paragraph (a) of that subsection “the company in which the original shares subsisted is” were substituted for “it is”,

(II)in paragraph (b) of that subsection “throughout that part of the specified period commencing on the date of the acquisition of the new holding, the company in which the new holding subsists is” were substituted for “throughout the specified period, it is”, and

(III)the conditions referred to in paragraph (b) of that subsection applied also to the company in which the original shares subsisted but only in relation to the part of the specified period which does not include the part of that period mentioned in clause (II).

Chapter 5

Life assurance and deferred annuities (ss. 593-595)

593. Life assurance and deferred annuities.
(1)This section shall apply for the purposes of the Capital Gains Tax Acts as respects any policy of assurance or contract for a deferred annuity on the life of any person.

(2)No chargeable gain shall accrue on the disposal of or of an interest in the rights under any such policy of assurance or contract except where the person making the disposal is not the original beneficial owner and acquired the rights or interests for a consideration in money or money’s worth.

(3)Subject to subsection (2), the occasion of the payment of the sum or sums assured by a policy of assurance or of the first instalment of a deferred annuity, and the occasion of the surrender of a policy of assurance or of the rights under a contract for a deferred annuity, shall be the occasion of a disposal of the rights under the policy of assurance or contract for a deferred annuity, and the amount of the consideration for the disposal of a contract for a deferred annuity shall be the market value at that time of the right to the first and further instalments of the annuity.

(4)In subsection (3), the reference to payment of the sum assured shall include a reference to the transfer of investments or other assets to the owner of the policy in accordance with the policy.

Part 21 Provisions Relating to Mergers, Divisions and Transfers of Assets (ss. 630-638A)

Chapter 1

Mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States (ss. 630-638)

630. Interpretation (Part 21).
In this Chapter –

“bilateral agreement” means arrangements having the force of law by virtue of section 826(1);

“company” means a company from a Member State;

“company from a Member State” has the meaning assigned to it by Article 3 of the Directive;

“the Directive” means Council Directive 2009/133/EC of 19 October 2009 [OJ No. L310, 25.11.2009, p.34], as amended, on the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States;

“Member State” means a Member State of the European Communities;

“receiving company” means the company to which the whole or part of a trade is transferred in the course of a transfer;

“SE Regulation” means Council Regulation (EC) No. 2157/2001 of 8 October 2001, on the Statute for a European Company (SE) [OJ No. L294, 10.11.2001, p.1];

“SCE Regulation” means Council Regulation (EC) No. 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE) [OJ No. L207, 18.8.2003, p.1];

“securities” means shares and debentures;

“shares” includes stock;

“transfer” means the transfer by a company (other than a transfer referred to in section 633D) of the whole or part of its trade in the circumstances set out in section 631(1) or 634(2), as the case may be;

“transferring company” means the company by which the whole or part of a trade is transferred in the course of a transfer.

631.

Transfer of assets generally.

(1)

(a)This section shall apply where a company transfers the whole of a trade carried on by it in the State to another company and the consideration for the transfer consists solely of the issue to the transferring company of securities (in this section referred to as “the new assets”) in the receiving company.

(b)A company which transfers part of a trade to another company shall be treated for the purposes of this section as having carried on that part of its trade as a separate trade.

(2)

(a)The transfer shall not be treated as giving rise to any allowance or charge provided for by section 307 or 308.

(b)There shall be made to or on the receiving company in accordance with sections 307 and 308 all such allowances and charges as would, if the transferring company had continued to carry on the trade and had continued to use the transferred assets for the purposes of the trade, have been made to or on the transferring company in respect of any assets transferred in the course of the transfer, and the amount of any such allowance or charge shall be computed as if the receiving company had been carrying on the trade since the transferring company began to do so and as if everything done to or by the transferring company had been done to or by the receiving company.

(c)This subsection shall not apply as respects assets transferred in the course of a transfer if in consequence of the transfer, or a transaction of which the transfer is a part, the Corporation Tax Acts are to apply subject to subsections (6) to (9) of section 400.

(3)For the purposes of the Capital Gains Tax Acts and, in so far as they apply to chargeable gains, the Corporation Tax Acts –

(a)the transfer shall not be treated as involving any disposal by the transferring company, and

(b)the receiving company shall be treated as if the assets transferred to it in the course of the transfer were acquired by it at the same time and for the same consideration at which they were acquired by the transferring company and as if all things done by the transferring company relating to the assets transferred in the course of the transfer had been done by the receiving company.

(4)Where, at any time within a period of 6 years commencing on the day on which the assets were transferred in the course of the transfer, the transferring company disposes of the new assets then, for the purposes of the Capital Gains Tax Acts and, in so far as they apply to chargeable gains, the Corporation Tax Acts, in computing any chargeable gain on the disposal of any new assets –

(a)the aggregate of the chargeable gains less allowable losses which but for subsection (3)(a) would have been chargeable on the transferring company shall be apportioned between the new assets as a whole, and

(b)the sums allowable as a deduction under section 552(1)(a) shall be reduced by the amount apportioned to the new asset under paragraph (a),

and, if the securities which comprise the new assets are not all of the same type, the apportionment between the securities under paragraph (a) shall be in accordance with their market value at the time they were acquired by the transferring company.

(5)Subsections (2) to (4) shall not apply if –

(a)immediately after the time of the transfer –

(i)the assets transferred in the course of the transfer are not used for the purposes of a trade carried on by the receiving company in the State,

(ii)the receiving company would not be chargeable to corporation tax or capital gains tax in respect of any chargeable gains accruing to it on a disposal, if it were to make such a disposal, of any assets (other than cash) acquired in the course of the transfer, or

(iii)any of the assets are assets in respect of which, by virtue of being of a description specified in a bilateral agreement, the receiving company is to be regarded as not liable in the State to corporation tax or capital gains tax on gains accruing to it on a disposal,

(b)the transferring company and the receiving company jointly so elect by notice in writing to the inspector, and such notice shall be made by the time by which a return is to be made by the transferring company under Chapter 3 of Part 41A for the accounting period in which the transfer takes place.

632.

Transfer of assets by company to its parent company.

(1)Where a company disposes of an asset used for the purposes of a trade carried on by it in the State to another company which holds all of the securities representing the company’s capital and but for this section the companies would not be treated in accordance with section 617 in respect of the asset, then, if –

(a)immediately after the disposal the company acquiring the asset commences to use the asset for the purposes of a trade carried on by it in the State, and

(b)the disposal is not, or does not form part of, a transfer to which section 631 applies,

sections 617 to 619 shall apply as if the companies were resident in the State.

(2)Subsection (5) of section 631 shall apply with any necessary modification for the purposes of this section as if references in that subsection to subsections (2) to (4) of that section were references to subsection (1) of this section.

633.

Company reconstruction or amalgamation: transfer of development land.

Where a company, for the purposes of or in connection with a scheme of reconstruction or amalgamation (within the meaning of section 615), disposes of an asset which consists of development land (within the meaning of section 648) to another company and –

(a)the disposal is not made in the course of a transfer to which section 631 applies, and

(b)the company disposing of the asset and the company acquiring the asset would, if –

(i)the definition of “chargeable gains” in section 78(4), and

(ii)section 649(1),

were deleted, be treated in accordance with section 615(2) in respect of that asset,

then, the companies shall be treated for the purposes of the Capital Gains Tax Acts as if the asset was acquired by the one company from the other company for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the company making the disposal, and for the purposes of section 556 the acquiring company shall be treated as if the acquisition of the asset by the other company had been the acquiring company’s acquisition of the asset.

633A.

Formation of SE or SCE by merger – leaving assets in the State.

(1)For the purposes of this section an asset is a qualifying transferred asset if –

(a)the asset is transferred to an SE or an SCE as part of the process of the merger forming it,

(b)

(i)the transferor in relation to the asset is resident in the State at the time of the transfer, or

(ii)any gain that would have accrued to the transferor in respect of the asset, had it disposed of the asset immediately before the time of the transfer, would have been a chargeable gain,

and

(c)

(i)the transferee SE or SCE in relation to the asset is resident in the State on formation, or

(ii)any gain that would have accrued to the transferee SE or SCE in respect of the asset, if it disposed of the asset immediately after the transfer, would be a chargeable gain.

(2)For the purposes of this section and section 633B, a company is treated as resident for the purposes of tax in a Member State (other than the State) if –

(a)it is so treated by virtue of the law of the Member State, and

(b)it is not treated, for the purposes of double taxation relief arrangements to which the Member State is a party, as resident for the purposes of tax in a territory which is not a Member State, and for this purpose “tax”, in relation to a Member State other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State.

(3)This section applies where –

(a)

(i)an SE is formed by the merger of 2 or more companies in accordance with Articles 2(1) and 17(2)(a) or (b) of the SE Regulation, or

(ii)an SCE is formed by a merger in accordance with Article 2 of the SCE Regulation,

(b)each merging company is resident for the purposes of tax in a Member State,

(c)the merging companies are not all resident for the purposes of tax in the same Member State, and

(d)section 615 does not apply to any qualifying transferred assets.

(4)Where this section applies, qualifying transferred assets shall be treated for the purpose of the Capital Gains Tax Acts and, in so far as they apply to chargeable gains, the Corporation Tax Acts as if acquired by the SE, or as the case may be the SCE, for a consideration resulting in neither gain or loss for the transferor.

(5)Where this section applies –

(a)the transfer of assets in the course of the merger shall be treated as not giving rise to any allowance or charge provided for by section 307 or 308,

(b)there shall be made to or on the SE or (as the case may be) the SCE in accordance with sections 307 and 308 all such allowances and charges as would, if the transferring company had continued to use the transferred assets for the purposes of its trade, have been made to or on the transferring company in respect of any assets transferred in the course of the merger, and the amount of any such allowance or charge shall be computed as if the SE or (as the case may be) the SCE had been carrying on the trade carried on by the transferring company since the transferring company began to do so and as if everything done to or by the transferring company had been done to or by the SE or (as the case may be) the SCE.

633B.

Formation of SE or SCE by merger – not leaving assets in the State.

(1)This section applies where –

(a)

(i)an SE is formed by the merger of 2 or more companies in accordance with Articles 2(1) and 17(2)(a) or (b) of the SE Regulation, or

(ii)an SCE is formed by a merger in accordance with Article 2 of the SCE Regulation,

(b)each merging company is resident for the purposes of tax in a Member State,

(c)the merging companies are not all resident for the purposes of tax in the same Member State,

(d)in the course of the merger a company resident in the State transfers to a company resident in a Member State other than the State all assets and liabilities of a trade which the company resident in the State carried on in a Member State (other than the State) through a branch or agency, and

(e)the aggregate of the chargeable gains accruing to the company resident in the State on the transfer exceeds the aggregate of any allowable losses so accruing.

(2)Where this section applies, for the purposes of the Capital Gains Tax Acts and, in so far as they apply to chargeable gains the Corporation Tax Acts –

(a)the allowable losses accruing to the company resident in the State on the transfer shall be set off against the chargeable gains so accruing, and

(b)the transfer shall be treated as giving rise to a single chargeable gain equal to the aggregate of those gains after deducting the aggregate of those losses.

(3)Where this section applies, section 634 shall also apply.

633C.

Treatment of securities on a merger.

(1)This section applies where –

(a)

(i)an SE is formed by the merger of 2 or more companies in accordance with Articles 2(1) and 17(2)(a) or (b) of the SE Regulation, or

(ii)an SCE is formed by a merger in accordance with Article 2 of the SCE Regulation,

(b)each merging company is resident for the purposes of tax in a Member State,

(c)the merging companies are not all resident for the purposes of tax in the same Member State, and

(d)the merger does not constitute or form part of a scheme of reconstruction or amalgamation within the meaning of section 587.

(2)Where this section applies, the merger shall be treated for the purposes of section 587 as if it were a scheme of reconstruction.

633D. Mergers where a company is dissolved without going into liquidation.
The transfer of all the assets and liabilities of a company which is a wholly owned subsidiary of another company (in this section referred to as the “parent company”) to the parent company, on that subsidiary company being dissolved without going into liquidation, shall not be treated as involving a disposal by the parent company of the share capital which it held in the subsidiary company immediately before the dissolution.

634.

Credit for tax.

(1)In this section –

“law of the Member State which has the effect of deferring a charge to tax on a gain” means any law of the Member State concerned which provides –

(a)that the gain accruing to the transferring company on the disposal of the assets in the course of the transfer is to be treated as not accruing until the disposal of the assets by the receiving company,

(b)that the receiving company is to be treated as having acquired the assets for a consideration of such amount as would secure that, for the purposes of charging the gain on the disposal to tax in that Member State, neither a gain nor a loss would accrue to the transferring company on the transfer and the receiving company is to be treated as if the acquisition of the assets by the transferring company had been the receiving company’s acquisition of the assets, or

(c)such other deferral of a charge to tax as corresponds to paragraph (a) or (b);

“relevant certificate given by the tax authorities of a Member State” means a certificate so given and which states –

(a)whether gains accruing to the transferring company on the transfer would have been chargeable to tax under the law of the Member State but for –

(i)the Directive, or

(ii)any provision of the law of the Member State which has the effect of deferring a charge to tax on a gain in the case of such a transfer,

(b)if those gains accruing would have been so chargeable, the amount of tax which would have been payable under that law if, in so far as is permitted under that law, any losses arising on the transfer are set against any gains so arising and any deductions and reliefs available to the transferring company under that law other than the provisions mentioned in paragraph (a) had been claimed.

(2)Where –

(a)a company resident in the State transfers the whole or part of a trade which immediately before the time of the transfer it carried on in a Member State (other than the State) through a branch or agency to a company not resident in the State,

(b)the transfer includes the whole of the assets of the transferring company used for the purposes of the trade or the part of the trade or the whole of those assets other than cash, and

(c)the consideration for the transfer consists wholly or partly of the issue to the transferring company of securities in the receiving company,

then, tax specified in a relevant certificate given by the tax authorities of the Member State in which the trade was so carried on shall be treated for the purposes of Chapter 1 of Part 35 as tax –

(i)payable under the law of that Member State, and

(ii)in respect of which credit may be allowed under a bilateral agreement.

(3)

(a)Where –

(i)a company which is not resident in the State transfers the whole of a trade carried on by it, or a part of such a trade, to another company and the consideration for the transfer consists solely of the issue to the transferring company of securities in the receiving company, and

(ii)for the purposes of computing the income or gains of any person (in this subsection referred to as the “relevant person”) who is chargeable to tax in the State, income or gains of the transferring company are treated as being income, or as the case may be chargeable gains, of the relevant person and as not being income or chargeable gains of the transferring company,

then, in computing any liability to tax of the relevant person in respect of the transfer, an appropriate part of tax specified in a relevant certificate given by the tax authorities of the Member State in which the trade was so carried on shall be treated for the purposes of Chapter 1 of Part 35 as tax –

(I)payable under the law of that Member State, and

(II)in respect of which credit may be allowed under a bilateral agreement.

(b)For the purposes of this subsection, the appropriate part of tax on income or gains specified in a certificate in relation to a relevant person shall be so much of that tax as bears to the amount of that tax the same proportion as the part of any income, or as the case may be gains, of the transferring company in respect of the transfer which is treated as income, or as the case may be gains, of the relevant person bears to the amount of that income, or as the case may be gains, of the transferring company.

635.

Avoidance of tax.

Notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts, sections 631, 632, 633, 633A, 633C and 634 shall not apply as respects a transfer, disposal or the formation of an SE or an SCE by merger unless it is shown that the transfer, disposal or merger, as the case may be, is effected 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.

636.

Returns.

(1)[deleted]

(2)Where section 631, 632, 633, 633A, 633B, 633C or 634 applies in relation to a transfer or disposal, the transferring company shall make a return of the transfer or disposal, as the case may be, to the appropriate inspector in such form as the Revenue Commissioners may require.

(3)Where corporation tax or capital gains tax payable by a company is to be reduced by virtue of section 634, a return under this section shall include a relevant certificate given by the tax authorities of the Member State in which the trade was carried on immediately before the time of the transfer.

(4)A company shall make a return under this section within 9 months from the end of the accounting period in which the transfer occurs.

637.

Other transactions.

(1)The Revenue Commissioners may, on an application being made to them in writing in respect of a transaction –

(a)of a type specified in the Directive, and

(b)to which this Chapter does not apply,

give such relief as appears to them to be just and reasonable for the purposes of giving effect to the Directive.

(2)An application under this section shall be made in such form as the Revenue Commissioners may require.

638.

Apportionment of amounts.

(1)Where, in relation to an apportionment to be made for the purposes of this Chapter –

(a)it appears, at the time of the apportionment, that it is material as respects the liability to tax (for whatever period) of 2 or more companies, and

(b)it is not possible for a company making the apportionment and the appropriate inspector to agree on that apportionment,

the inspector shall determine the apportionment and give notice in writing of the determination to each company affected by that apportionment.

(2)A company aggrieved by a determination made under subsection (1) in respect of that company may appeal the determination to the Appeal Commissioners, in accordance with section 949I, within the period of 30 days after the date of the notice of that determination, for their determination of a just and reasonable apportionment.

Chapter 2 Mergers and divisions pursuant to Companies Act 2014 (s. 638A)
638A. Company mergers and divisions
(1)In this section –

‘division’ means a division undertaken in accordance with Chapter 4 of Part 9 or, as the case may be, Chapter 17 of Part 17 of the Companies Act 2014;

‘merger’ means a merger undertaken in accordance with Chapter 3 of Part 9 or, as the case may be, Chapter 16 of Part 17 of the Companies Act 2014;

‘successor company’ means a company to which assets and liabilities have been transferred from a transferor company as a result of a merger or division;

‘the Acts’ has the meaning assigned to it by section 1077A;

‘transferor company’ means a company from which assets and liabilities have been transferred to a successor company or successor companies as a result of a merger or division.

(2)All liabilities and obligations of, and requirements or things to be fulfilled or done by, a transferor company under Part 38, 41A, 42 or 47, as the case may be, shall for the purposes of the Part concerned be treated as liabilities and obligations of, and requirements or things to be fulfilled or done by, the successor company or successor companies.

(3)In relation to an appeal made under any provision of the Acts by a transferor company or to be made by a successor company, as the case may be, an appeal made by a transferor company shall be treated as an appeal made by the successor company for the purposes of Part 40 or 40A, as the case may be.

(4)Any right of appeal in relation to an appealable matter (as defined in section 949A) conferred on a transferor company shall be treated as conferred on the successor company.

Mergers & Reorganisation

TAXES CONSOLIDATION ACT

Shares and securities (ss. 580-592)

Shares, securities, etc: identification.

Disposals of shares or securities within 4 weeks of acquisition.

Calls on shares.

Capital distributions by companies.

Reorganisation or reduction of share capital.

Conversion of securities.

Company amalgamations by exchange of shares.

Company reconstructions and amalgamations.

Demutualisation of assurance companies.

Shares in close company transferring assets at undervalue.

Relief for individuals on certain reinvestment.

Dividends paid in connection with disposals of shares or securities.

Life assurance and deferred annuities (ss. 593-595)

Mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States (ss. 630-638)

Transfer of assets generally.

Transfer of assets by company to its parent company.

Company reconstruction or amalgamation: transfer of development land.

Formation of SE or SCE by merger – leaving assets in the State.

Formation of SE or SCE by merger – not leaving assets in the State.

Treatment of securities on a merger.

Credit for tax.

Avoidance of tax.

Returns.

Other transactions.

Apportionment of amounts.

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