<\/span><\/h4>\nSchedule 18B, Part 1 Matters relating to election for tonnage tax (paras. 1-6)
\nMethod of making and giving effect to an election<\/p>\n
1.<\/p>\n
(1)A tonnage tax election shall be made by notice to the Revenue Commissioners and shall be made by means of a form prescribed for that purpose by them.<\/p>\n
(2)<\/p>\n
(a)The notice shall be supported by such information, particulars and documentation (in this paragraph referred to as ‘information’) as the Revenue Commissioners may require for the purposes of this Part and the election shall not take effect until such information is provided to the satisfaction of the Revenue Commissioners.<\/p>\n
(b)Without prejudice to the generality of this subparagraph, the information referred to in clause (a) may include information relating to the matters specified in subparagraph (3).<\/p>\n
(3)<\/p>\n
(a)The information which may be requested from an applicant company by the Revenue Commissioners for the purposes of subparagraph (2) includes –<\/p>\n
(i)documentation on legal status, constitution, memorandum and articles of association, and certificate of incorporation of the company,<\/p>\n
(ii)business plans or similar documents of the company,<\/p>\n
(iii)the name and address of each of the directors of the company,<\/p>\n
(iv)the name and address of each of the beneficial shareholders of the company and the number and class of shares held by each,<\/p>\n
(v)details of the qualifying ships owned or leased by the company,<\/p>\n
(vi)particulars of how the strategic and commercial management of the qualifying ships is carried on by the company in the State,<\/p>\n
(vii)in the case of a group election, particulars of all the companies in the group, their respective shareholdings, and the flow of funds between all of the companies in the group.<\/p>\n
(b)For the purposes of this subparagraph, ‘applicant company’ means a company that makes an election by notice to the Revenue Commissioners in accordance with subparagraph (1).<\/p>\n
When election may be made<\/p>\n
2.<\/p>\n
(1)A tonnage tax election may be made at any time before the end of the period (in this Schedule referred to as the ‘initial period’) of 36 months beginning on the commencement date.<\/p>\n
(2)After the end of the initial period a tonnage tax election may only be made in the circumstances specified in subparagraphs (3) and (4).<\/p>\n
(3)<\/p>\n
(a)An election may be made after the end of the initial period in respect of a single company that becomes a qualifying company and has not previously been a qualifying company at any time on or after the commencement date.<\/p>\n
(b)Any election under this subparagraph shall be made before the end of the period of 36 months beginning with the day on which the company became a qualifying company.<\/p>\n
(4)<\/p>\n
(a)An election may be made after the end of the initial period in respect of a group of companies that becomes a qualifying group of companies by virtue of a member of the group becoming a qualifying company, not previously having been a qualifying company, at any time on or after the commencement date.<\/p>\n
(b)This subparagraph shall not apply if the group of companies –<\/p>\n
(i)was previously a qualifying group at any time on or after the commencement date, or<\/p>\n
(ii)is substantially the same as a group that was previously a qualifying group of companies at any such time.<\/p>\n
(c)An election under this subparagraph shall be made before the end of the period of 36 months beginning with the day on which the group of companies became a qualifying group of companies.<\/p>\n
(5)This paragraph shall not prevent an election being made under Part 4.<\/p>\n
(6)The Minister for Finance may by order provide for further periods within which a tonnage tax election may be made, and any such order may provide for this Part of this Schedule to apply, with any necessary modifications, as appears to the Minister to be appropriate in relation to such further periods as it applies in relation to the initial period.<\/p>\n
When election takes effect<\/p>\n
3.<\/p>\n
(1)Subject to this paragraph, a tonnage tax election shall have effect from the beginning of the accounting period in which it is made.<\/p>\n
(2)A tonnage tax election shall not have effect in relation to an accounting period beginning before 1 January 2002, but where a tonnage tax election would have effect under subparagraph (1) for an accounting period beginning before 1 January 2002 the election shall have effect from the beginning of the accounting period following that in which it is made.<\/p>\n
(3)The Revenue Commissioners may allow a tonnage tax election made before the end of the initial period to have effect from the beginning of an accounting period earlier than that in which it is made (but not one beginning before 1 January 2002).<\/p>\n
(4)The Revenue Commissioners may allow a tonnage tax election made before the end of the initial period to have effect from the beginning of the accounting period following that in which it is made or, where the Revenue Commissioners determine that due to exceptional circumstances, unrelated to the avoidance or reduction of tax, it is commercially impracticable for the election to take effect, the beginning of the next following accounting period.<\/p>\n
(5)In the case of a group election made in respect of a group of companies where the members have different accounting periods, subparagraph (1) or, if appropriate, subparagraph (3) or (4) shall apply in relation to each qualifying company by reference to that company’s accounting periods.<\/p>\n
(6)Subject to section 697E(4), a tonnage tax election under paragraph 2(3) or (4) shall have effect from the time at which the company in question became a qualifying company.<\/p>\n
Period for which election is in force<\/p>\n
4.<\/p>\n
(1)Subject to subparagraphs (2) and (3) and paragraph 6(3), a tonnage tax election shall remain in force until it expires at the end of the period of 10 years beginning –<\/p>\n
(a)in the case of a company election, with the first day on which the election has effect in relation to the company, and<\/p>\n
(b)in the case of a group election, with the first day on which the election has effect in relation to any member of the group.<\/p>\n
(2)A tonnage tax election shall cease to be in force –<\/p>\n
(a)in the case of a company election, if the company ceases to be a qualifying company, and<\/p>\n
(b)in the case of a group election, if the group of companies ceases to be a qualifying group.<\/p>\n
(3)A tonnage tax election may also cease to be in force under Part 4.<\/p>\n
Effect of election ceasing to be in force<\/p>\n
5.A tonnage tax election that ceases to be in force shall cease to have effect in relation to any company.<\/p>\n
Renewal election<\/p>\n
6.<\/p>\n
(1)At any time when a tonnage tax election is in force in respect of a single company or group of companies a further tonnage tax election (in Part 24A and this Schedule referred to as a ‘renewal election’) may be made in respect of that company or group.<\/p>\n
(2)Section 697D and paragraphs 1, 4 and 5 shall apply in relation to a renewal election as they apply in relation to an original tonnage tax election.<\/p>\n
(3)A renewal election supersedes the existing tonnage tax election.<\/p>\n
Schedule 18B, Part 2 Matters relating to qualifying ships (paras. 7-9)
\nCompany temporarily ceasing to operate qualifying ships<\/p>\n
7.<\/p>\n
(1)This paragraph shall apply where a company temporarily ceases to operate any qualifying ships.<\/p>\n
(2)This paragraph shall not apply where a company continues to operate a ship that temporarily ceases to be a qualifying ship.<\/p>\n
(3)If a company which temporarily ceases to operate any qualifying ships gives notice to the Revenue Commissioners stating –<\/p>\n
(a)its intention to resume operating qualifying ships, and<\/p>\n
(b)its wish to remain within tonnage tax,<\/p>\n
the company shall be treated for the purposes of Part 24A and this Schedule as if it had continued to operate the qualifying ship or ships it operated immediately before the temporary cessation.<\/p>\n
(4)The notice must be given on or before the specified return date for the chargeable period (within the meaning of Part 41A) of the company in which the temporary cessation begins.<\/p>\n
(5)This paragraph shall cease to apply if and when the company –<\/p>\n
(a)abandons its intention to resume operating qualifying ships, or<\/p>\n
(b)again in fact operates a qualifying ship.<\/p>\n
Meaning of operating a ship<\/p>\n
8.<\/p>\n
(1)Subject to this paragraph, a company is regarded for the purposes of Part 24A and this Schedule as operating any ship owned by, or chartered to, the company.<\/p>\n
(2)<\/p>\n
(a)A company shall not be regarded as the operator of a ship where part only of the ship has been chartered to it.<\/p>\n
(b)For the purpose of subparagraph (a), a company shall not be taken as having part only of a ship chartered to it by reason only of the ship being chartered to it jointly with one or more other persons.<\/p>\n
(3)Except as provided by subparagraphs (4) and (5), a company shall not be regarded as the operator of a ship that has been chartered out by it on bareboat charter terms.<\/p>\n
(4)<\/p>\n
(a)A company shall be regarded as operating a ship that has been chartered out by it on bareboat charter terms if the person to whom it is chartered is not a third party.<\/p>\n
(b)For the purpose of subparagraph (a), a ‘third party’ means –<\/p>\n
(i)in the case of a single company, any other person,<\/p>\n
(ii)in the case of a member of a group of companies –<\/p>\n
(I)any member of the group that is not a tonnage tax company (and does not become a tonnage tax company by virtue of the ship being chartered to it), or<\/p>\n
(II)any person who is not a member of the group.<\/p>\n
(5)A company shall not be regarded as ceasing to operate a ship that has been chartered out by it on bareboat charter terms if –<\/p>\n
(a)the ship is chartered out because of short-term over-capacity, and<\/p>\n
(b)the term of the charter does not exceed 3 years.<\/p>\n
(6)A company shall be regarded as operating a qualifying ship for the purposes of the activity described in paragraph (j) of the definition of ‘relevant shipping income’ in section 697A if that company has entered contractual arrangements in relation to the provision of ship management services for the qualifying ship for a stipulated period and the terms of those arrangements give the company –<\/p>\n
(a)possession and control of the ship,<\/p>\n
(b)control over the day to day management of the ship, including the right to appoint the master and crew and route planning,<\/p>\n
(c)control over the technical management of the ship, including decisions on its repair and maintenance,<\/p>\n
(d)control over the safety management of the ship, including ensuring that all necessary safety and survey certificates are current,<\/p>\n
(e)control over the training of the officers and crew of the ship, and<\/p>\n
(f)the management of the bunkering, victualling and provisioning of the ship,<\/p>\n
and those terms are actually implemented for the period in which the company provides ship management services in respect of that ship.<\/p>\n
Qualifying ship used as vessel of an excluded kind<\/p>\n
9.<\/p>\n
(1)A qualifying ship that begins to be used as a vessel of an excluded kind ceases to be a qualifying ship when it begins to be so used, but if –<\/p>\n
(a)a company operates a ship throughout an accounting period of the company, and<\/p>\n
(b)in that period the ship is used as a vessel of an excluded kind on not more than 30 days, that use shall be disregarded in determining whether the ship is a qualifying ship at any time during that period.<\/p>\n
(2)In the case of an accounting period shorter than a year, the figure of 30 days in subparagraph (1) shall be proportionately reduced.<\/p>\n
(3)If a company operates a ship during part only of an accounting period of the company, subparagraph (1) shall apply as if for 30 days, or the number of days substituted by subparagraph (2), there were substituted the number of days that bear to the length of that part of the accounting period the same proportion that 30 days bears to a year.<\/p>\n
Schedule 18B, Part 3 Capital Allowances, Balancing Charges and Related Matters (paras. 10-20)
\nPlant and machinery used wholly for tonnage tax trade<\/p>\n
10.<\/p>\n
(1)<\/p>\n
(a)This subparagraph shall apply where, on a company’s entry to tonnage tax, machinery or plant, in respect of which capital expenditure was incurred by the company before its entry into tonnage tax, is to be used wholly and exclusively for the purposes of the company’s tonnage tax trade.<\/p>\n
(b)Where this subparagraph applies –<\/p>\n
(i)no balancing charge or balancing allowance shall be made under section 288 as a result of the machinery or plant concerned being used for the purposes of the company’s tonnage tax trade,<\/p>\n
(ii)any allowance attributable to the machinery or plant referred to in subparagraph (a) which, but for this clause, would have been made to the company under Part 9 or under any provision that is construed as one with that Part for any accounting period in which the company is a tonnage tax company shall not be made, and<\/p>\n
(iii)section 287 shall not apply as respects any accounting period during which the machinery or plant has been used wholly and exclusively for the purposes of a company’s tonnage tax trade.<\/p>\n
(2)<\/p>\n
(a)This subparagraph shall apply where the machinery or plant referred to in subparagraph (1)(a) begins to be used wholly or partly for purposes other than those of the company’s tonnage tax trade.<\/p>\n
(b)Where this subparagraph applies and the asset begins to be wholly used for purposes other than the company’s tonnage tax trade –<\/p>\n
(i)no balancing allowance shall be made on the company under section 288(2) for any period in which the company is subject to tonnage tax,<\/p>\n
(ii)for the purposes of making a balancing charge under section 288 on the happening of any of the events referred to in subsection (1) of that section –<\/p>\n
(I)section 296 shall not apply as respects any accounting period of a company in which the company is subject to tonnage tax,<\/p>\n
(II)where the event occurs at a time when the company is subject to tonnage tax, the amount of the capital expenditure of the company still unallowed at the time of the event shall, notwithstanding section 296, be the amount of the capital expenditure of the company on the provision of the machinery or plant which was still unallowed at the time the company’s election into tonnage tax had effect, and<\/p>\n
(III)where the event occurs at a time when the company is subject to tonnage tax, the references in section 288 to sale, insurance, salvage or compensation moneys and the reference in section 289(3)(b) to the open-market price of the machinery or plant shall be taken to be references to the least of –<\/p>\n
(A)the actual cost to the company of the machinery or plant for the purpose of the trade carried on by the company,<\/p>\n
(B)the price the machinery or plant would have fetched if sold in the open market at the time the company’s election into tonnage tax had effect, and<\/p>\n
(C)the sale, insurance, salvage or compensation moneys (within the meaning of Part 9) arising from the event or, where paragraph (b) of section 289(3) applies, the open-market price of the machinery or plant (within the meaning of that section) at the time of the event.<\/p>\n
(c)Where this subparagraph applies and the asset begins to be partly used for purposes other than the company’s tonnage tax trade –<\/p>\n
(i)the machinery or plant shall be treated as 2 separate assets one in use wholly and exclusively for the purposes of the tonnage tax trade and the other in use wholly and exclusively for purposes other than the company’s tonnage tax trade,<\/p>\n
(ii)subparagraph (2)(b) shall apply in relation to the part of the asset treated by virtue of this subparagraph as in use wholly and exclusively for the purposes of the tonnage tax trade as it applies in relation to machinery or plant which begins to be used wholly for purposes other than the company’s tonnage tax trade,<\/p>\n
(iii)in determining the amount of any capital allowance or balancing charge, if any, to be made under Part 9 or under any other provision to be construed as one with that Part in relation to the part of the asset treated by virtue of this subparagraph as in use wholly and exclusively for purposes other than the company’s tonnage tax trade regard shall be had to all relevant circumstances and, in particular, to the extent of the use, if any, of the machinery or plant for the purposes of a trade, and there shall be made to or on the company, in respect of that trade, an allowance of such an amount or a balancing charge of such an amount, as may be just and reasonable.<\/p>\n
Plant and machinery used partly for purposes of tonnage tax trade<\/p>\n
11.<\/p>\n
(1)This paragraph shall apply where, on a company’s entry into tonnage tax, machinery or plant, in respect of which capital expenditure was incurred by the company before its entry into tonnage tax, is to be used partly for the purposes of the company’s tonnage tax trade and partly for purposes other than the company’s tonnage tax trade.<\/p>\n
(2)Where this paragraph applies –<\/p>\n
(a)the machinery or plant referred to in subparagraph (1) shall be treated as 2 separate assets one in use wholly and exclusively for the purposes of the tonnage tax trade and the other in use wholly and exclusively for the purposes of the other trade of the company,<\/p>\n
(b)subject to clause (c), in determining the amount of –<\/p>\n
(i)any capital allowance or balancing charge to be made in respect of that part of the asset treated as in use wholly and exclusively for purposes other than the company’s tonnage tax trade under Part 9 or under any provision which is to be construed as one with that Part, or<\/p>\n
(ii)the amount of any balancing charge to be made for the purpose of the tonnage tax trade under Part 9, or under any provision which is to be construed as one with that Part, as applied by this Schedule,<\/p>\n
regard shall be had to all relevant circumstances and, in particular, to the extent of the use of the machinery or plant for the purposes of a trade other than the tonnage tax trade, and there shall be made to or on the company, in respect of that trade, an allowance of such an amount, or, in respect of both the tonnage tax trade and the other trade, a balancing charge of such an amount, as may be just and reasonable, and<\/p>\n
(c)paragraph 10(1)(b) and paragraph 10(2)(b) shall apply in relation to the part of the asset treated by virtue of this paragraph as in use wholly and exclusively for the purposes of the tonnage tax trade as they apply in relation to the machinery or plant referred to in paragraph 10(1)(a).<\/p>\n
Plant and machinery: new expenditure partly for tonnage tax purposes<\/p>\n
12.<\/p>\n
(1)This paragraph shall apply where a company subject to tonnage tax incurs capital expenditure on the provision of machinery or plant partly for the purposes of its tonnage tax trade and partly for the purposes of another trade carried on by the company.<\/p>\n
(2)Where this paragraph applies the machinery or plant shall be treated as 2 separate assets one in use wholly and exclusively for the purposes of the tonnage tax trade and the other in use wholly and exclusively for the purposes of the other trade of the company and, in determining the amount of any capital allowance, or the amount of any charge to be made, under Part 9 or under any provision which is to be construed as one with that Part in the case of that part of the asset treated as a separate asset for the purposes of the other trade of the company, regard shall be had to all relevant circumstances and, in particular, to the extent of the use of the machinery or plant for the purposes of the other trade, and there shall be made to or on the company, in respect of the other trade, an allowance of such an amount, or a charge of such an amount, as may be just and reasonable.<\/p>\n
Plant and machinery: change of use of tonnage tax asset<\/p>\n
13.<\/p>\n
(1)This paragraph shall apply where, at a time when a company is subject to tonnage tax, machinery or plant acquired after the company became so subject and which is used wholly and exclusively for the purposes of the company’s tonnage tax trade begins to be used wholly or partly for purposes of another trade.<\/p>\n
(2)Where this paragraph applies –<\/p>\n
(a)if the asset begins to be used wholly for purposes of another trade the provisions of Part 9 shall apply as if capital expenditure had been incurred by the person carrying on the other trade on the provision of the plant or machinery for the purposes of that trade in that person’s chargeable period (within the meaning of Part 9) in which the plant or machinery is brought into use for those purposes, and the amount of that expenditure shall be taken as the lesser of –<\/p>\n
(i)the amount of the capital expenditure actually incurred by the person, and<\/p>\n
(ii)the price which the machinery or plant would have fetched if sold on the open market on the date on which it was so brought into use, and<\/p>\n
(b)if the asset begins to be used partly for purposes of another trade of the company and partly for the purposes of the tonnage tax trade –<\/p>\n
(i)the machinery or plant shall be treated as 2 separate assets one in use wholly and exclusively for the purposes of the tonnage tax trade and the other in use wholly and exclusively for the purposes of the other trade of the company,<\/p>\n
(ii)Part 9 shall apply as if the company had incurred capital expenditure on the provision of that part of the asset treated as in use wholly and exclusively for the other trade of the company in the accounting period of the company in which that part of the asset is brought into use for those purposes, and<\/p>\n
(iii)in determining the amount of any capital expenditure incurred on the provision of that part of the asset treated as in use as a separate asset for the purposes of the other trade of the company regard shall be had to all relevant circumstances as is just and reasonable.<\/p>\n
Plant and machinery: change of use of non-tonnage tax asset<\/p>\n
14.<\/p>\n
(1)This paragraph shall apply where, at a time when a company is subject to tonnage tax, plant or machinery wholly and exclusively used for the purposes of another trade carried on by the company not being a tonnage tax trade begins to be used wholly or partly for the purposes of the company’s tonnage tax trade.<\/p>\n
(2)Where this paragraph applies and the asset begins to be wholly used for the purposes of the company’s tonnage tax trade –<\/p>\n
(a)no balancing allowance or balancing charge shall be made as a consequence of the change in use, and<\/p>\n
(b)for the purposes of making a balancing charge under section 288 on the happening subsequent to the change in use of any of the events referred to in subsection (1) of that section –<\/p>\n
(i)section 296 shall not apply as respects any accounting period of the company in which the asset is used wholly and exclusively for the purposes of the company’s tonnage tax trade,<\/p>\n
(ii)where the event occurs at a time when the asset is so used, the amount of the capital expenditure of the company still unallowed at the time of the event shall, notwithstanding section 296, be the amount of the capital expenditure of the company on the provision of the machinery or plant which was still unallowed at the time the asset began to be so used, and<\/p>\n
(iii)where the event occurs at a time when the asset is so used, the references in section 288 to sale, insurance, salvage or compensation moneys and the reference in section 289(3)(b) to the open-market value of the machinery or plant shall be taken to be references to the least of –<\/p>\n
(I)the actual cost to the company of the machinery or plant for the purpose of the trade carried on by the company,<\/p>\n
(II)the price the machinery or plant would have fetched if sold in the open market at the time the asset began to be so used, and<\/p>\n
(III)the sale, insurance, salvage or compensation moneys (within the meaning of Part 9) arising on the event or, where paragraph (b) of section 289(3) applies, the open-market price of the machinery or plant (within the meaning of that section) at the time of the event.<\/p>\n
(3)Where this paragraph applies and the asset begins to be partly used for the purposes of the company’s tonnage tax trade –<\/p>\n
(a)the machinery or plant referred to in subparagraph (1) shall be treated as 2 separate assets one in use wholly and exclusively for the purposes of the other trade of the company and the other in use wholly and exclusively for the purposes of the tonnage tax trade of the company,<\/p>\n
(b)no balancing charge or balancing allowance shall be made in respect of the part treated as in use wholly and exclusively for the purposes of the tonnage tax trade as a consequence of the change in use,<\/p>\n
(c)subparagraph (2)(b) shall apply in relation to the part of the asset treated by virtue of this subparagraph as in use wholly and exclusively for the purposes of the tonnage tax trade as it applies in relation to the machinery or plant wholly used for the purposes of the company’s tonnage tax trade.<\/p>\n
Plant and machinery: provisions relating to balancing charges<\/p>\n
15.<\/p>\n
(1)A balancing charge arising under Part 9 as applied by this Schedule or under this Schedule shall –<\/p>\n
(a)be treated as arising in connection with a trade carried on by the company other than the company’s tonnage tax trade, and<\/p>\n
(b)be made in taxing that trade.<\/p>\n
(2)Subject to paragraph 16 or 17, the charge shall be given effect in the accounting period in which it arises.<\/p>\n
(3)On the first occasion of the happening of an event which gives rise to a balancing charge (including such an event arising in respect of more than one asset on the same date) under Part 9 as applied by this Schedule, or under this Schedule, on a tonnage tax company, the tonnage tax company shall by notice in writing to the Revenue Commissioners elect for relief against that charge under either paragraph 16 or, if applicable, paragraph 17 but not for relief under both, and any such election shall be irrevocable and be included in the company’s return under Chapter 3 of Part 41A for the accounting period in which the charge arises.<\/p>\n
(4)Where a balancing charge arises on a tonnage tax company under Part 9 as applied by this Schedule or under this Schedule subsequent to any charge on the company such as is referred to in subparagraph (3), relief against that charge shall only be available under the paragraph for which the company elected for relief in accordance with that subparagraph.<\/p>\n
(5)Relief under paragraph 16 or 17 shall not be available to a company unless the company has made an election under subparagraph (3).<\/p>\n
Reduction in balancing charge by reference to time in tonnage tax<\/p>\n
16.The amount of any balancing charge under Part 9 as applied by this Schedule or under this Schedule shall be reduced by 20 per cent of the amount of the charge for each whole year in which the company on which the charge is to be made has been subject to tonnage tax calculated by reference to the time of the event giving rise to the charge.<\/p>\n
Set-off of accrued losses against balancing charge<\/p>\n
17.Where a balancing charge under Part 9 as applied by this Schedule or under this Schedule arises in connection with the disposal of a qualifying ship, then the company may set off against any balancing charge so arising any losses (including any losses referable to capital allowances treated by virtue of section 307 or 308 as trading expenses of the company) which accrued to the company before its entry to tonnage tax and which are attributable to –<\/p>\n
(a)activities which under tonnage tax became part of the company’s tonnage tax trade, or<\/p>\n
(b)a source of income which under tonnage tax becomes relevant shipping income.<\/p>\n
Deferment of balancing charge on re-investment<\/p>\n
18.<\/p>\n
(1)Where –<\/p>\n
(a)a balancing charge under Part 9 as applied by this Schedule arises in connection with the disposal of a qualifying ship, and<\/p>\n
(b)within the period beginning on the date the company’s election for tonnage tax takes effect and ending 5 years after the date of the event giving rise to the balancing charge, the company or another qualifying company which is a member of the same tonnage tax group as the company incurs capital expenditure on the provision of one or more other qualifying ships (in this paragraph referred to as the ‘new asset’),<\/p>\n
then<\/p>\n
(i)if the amount on which the charge would have been made, as reduced under paragraph 16 or 17, if applicable, is greater than the capital expenditure on providing the new asset, the balancing charge shall be made only on an amount equal to the difference, and<\/p>\n
(ii)if the capital expenditure on providing the new asset is equal to or greater than the amount on which the charge would have been made, as reduced under paragraph 16 or 17, if applicable, the balancing charge shall not be made.<\/p>\n
(2)Where an event referred to in section 288(1) occurs in relation to the new asset in the period in which the company which incurs the expenditure on the new asset is subject to tonnage tax then a balancing charge shall be made under this paragraph on that company.<\/p>\n
(3)Subject to any reduction under paragraph 16 or 17 and to any further application of this paragraph, the amount of the charge referred to in subparagraph (2) shall be –<\/p>\n
(a)where subparagraph (1)(i) applies, the difference between the balancing charge which, but for subparagraph (1), would have been made on the disposal referred to in subparagraph (1) and the actual charge made,<\/p>\n
(b)where subparagraph (1)(ii) applies, the amount of the charge which, but for subparagraph (1), would have been made on the disposal referred to in that subparagraph.<\/p>\n
(4)Section 290 shall not apply in relation to balancing charges to which this paragraph applies.<\/p>\n
(5)For the purposes of subparagraph (1), where machinery or plant is let to a tonnage tax company on the terms of that company being bound to maintain the machinery or plant and deliver it over in good condition at the end of the lease, and if the burden of the wear and tear on the machinery or plant will in fact fall directly on the company, then the capital expenditure on the provision of the machinery and plant shall be deemed to have been incurred by that company and the machinery and plant shall be deemed to belong to that company.<\/p>\n
Exit: plant and machinery<\/p>\n
19.<\/p>\n
(1)Where a company leaves tonnage tax the amount of capital expenditure incurred on the provision of machinery or plant in respect of each asset used by the company for the purposes of its tonnage tax trade which asset was acquired at a time the company was subject to tonnage tax and held by the company at the time it leaves tonnage tax shall be deemed to be the lesser of –<\/p>\n
(a)the capital expenditure actually incurred by the company on the provision of that machinery or plant for the purposes of the company’s tonnage tax trade, and<\/p>\n
(b)the price the machinery or plant would have fetched if sold in the open market at the date the company leaves tonnage tax.<\/p>\n
(2)For the purposes of the making of allowances and charges under Part 9 or any provision construed as one with that Part, the capital expenditure on the provision of the machinery or plant as determined in accordance with subparagraph (1) shall be deemed to have been incurred on the day immediately following the date the company leaves tonnage tax.<\/p>\n
(3)<\/p>\n
(a)This subparagraph applies where a company –<\/p>\n
(i)leaves tonnage tax having incurred expenditure on the provision of machinery or plant for the purposes of a trade carried on by the company before entry into tonnage tax,<\/p>\n
(ii)has used that machinery or plant for the purposes of its tonnage tax trade,<\/p>\n
(iii)has been denied allowances in respect of that machinery or plant by virtue of section 697O and the provisions of paragraph 10(1)(b)(ii) or paragraph 11(2)(c), and<\/p>\n
(iv)on leaving tonnage tax starts, recommences or continues to use that machinery or plant for the purposes of a trade carried on by it.<\/p>\n
(b)Subject to clauses (c) and (d), where this subparagraph applies any allowance which, but for section 697O and paragraph 10(1)(b) or 11(2)(c), would have been made under Part 9 or any provision construed as one with that Part to the company for any accounting period in which it was subject to tonnage tax shall, subject to compliance with that Part, be made instead for such accounting periods immediately after the company leaves tonnage tax as will ensure, subject to that Part, that all such allowances are made to the company in those accounting periods as would have been made to the company in respect of that machinery or plant if the company had never been subject to tonnage tax.<\/p>\n
(c)No wear and tear allowance shall be made by virtue of this subparagraph in respect of any machinery or plant for any accounting period of a company if such allowance when added to the allowances in respect of that machinery or plant made to that company for any previous accounting period will make the aggregate amount of the allowances exceed the actual cost to that company of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement.<\/p>\n
(d)A wear and tear allowance in respect of any machinery or plant made by virtue of this subparagraph for any accounting period shall not exceed the amount appropriate to that machinery or plant as set out in section 284(2).<\/p>\n
Industrial buildings<\/p>\n
20.<\/p>\n
(1)Where any identifiable part of a building or structure is used for the purposes of a company’s tonnage tax trade, that part is treated for the purposes of Chapter 1 of Part 9 as used otherwise than as an industrial building or structure.<\/p>\n
(2)<\/p>\n
(a)This subparagraph applies where, in an accounting period during which a company is subject to tonnage tax, an event giving rise to a balancing charge occurs in relation to an industrial building or structure in respect of which capital expenditure was incurred by the company before its entry into tonnage tax.<\/p>\n
(b)Where this subparagraph applies –<\/p>\n
(i)the sale, insurance, salvage or compensation moneys to be brought into account in respect of any industrial building or structure shall be limited to the market value of the relevant interest when the company entered tonnage tax, and<\/p>\n
(ii)the amount of any balancing charge under that Part shall, subject to subparagraphs (3) to (5) of paragraph 15, be reduced in accordance with paragraph 16 or 17, as appropriate.<\/p>\n
(3)Where a company subject to tonnage tax disposes of the relevant interest in an industrial building or structure, section 277 shall apply to determine the residue of expenditure in the hands of the person who acquires the relevant interest, as if –<\/p>\n
(a)the company had not been subject to tonnage tax, and<\/p>\n
(b)all writing-down allowances, and balancing allowances and charges, had been made as could have been made if the company had not been subject to tonnage tax.<\/p>\n
(4)Where a company leaves tonnage tax the amount of capital expenditure qualifying for relief under Chapter 1 of Part 9 shall be determined as if –<\/p>\n
(a)the company had never been subject to tonnage tax, and<\/p>\n
(b)all such allowances and charges under that Part had been made as could have been made.<\/p>\n
Schedule 18B, Part 4 Groups, Mergers and Related Matters (paras. 21-30)
\nCompany not to be treated as member of more than one group<\/p>\n
21.<\/p>\n
(1)Where a company is a member of both a tonnage tax group and a non-tonnage tax group which if a group election had been made would have been a tonnage tax group (in this paragraph referred to as a qualifying non-tonnage tax group), the company shall be treated as a member of the tonnage tax group and not of the qualifying non-tonnage tax group.<\/p>\n
(2)Where a company is a member of 2 tonnage tax groups, the company shall be treated as a member of the group whose tonnage tax election was made first and not of the other tonnage tax group. In the case of group elections made at the same time, the company shall choose which election it joins in and for the purposes of Part 24A and this Schedule the company shall be treated as a member of the group in respect of which that election is made and not of any other tonnage tax group.<\/p>\n
Arrangements for dealing with group matters<\/p>\n
22.<\/p>\n
(1)The Revenue Commissioners may enter into arrangements with the qualifying companies in a group for one of those companies to deal on behalf of the group in relation to matters arising under Part 24A and this Schedule that may conveniently be dealt with on a group basis.<\/p>\n
(2)Any such arrangements –<\/p>\n
(a)may make provision in relation to cases where companies become or cease to be members of a group;<\/p>\n
(b)may make provision for or in connection with the termination of the arrangements; and<\/p>\n
(c)may make such supplementary, incidental, consequential or transitional provision as is necessary or expedient for the purposes of the arrangements.<\/p>\n
(3)Any such arrangements shall not affect –<\/p>\n
(a)any requirement under Part 24A and this Schedule that an election be made jointly by all the qualifying companies in the group; or<\/p>\n
(b)any liability under Part 24A, this Schedule or any other provision of the Tax Acts of a company to which the arrangements relate.<\/p>\n
Meaning of ‘merger’ and ‘demerger’<\/p>\n
23.<\/p>\n
(1)In this Schedule –<\/p>\n
“merger” means a transaction by which one or more companies become members of a group;<\/p>\n
“demerger” means a transaction by which one or more companies cease to be members of a group.<\/p>\n
(2)References to a merger to which a group is a party include any merger affecting a member of the group.<\/p>\n
Merger: between tonnage tax groups or companies<\/p>\n
24.<\/p>\n
(1)This paragraph shall apply where there is a merger –<\/p>\n
(a)between 2 or more tonnage tax groups,<\/p>\n
(b)between one or more tonnage tax groups and one or more tonnage tax companies, or<\/p>\n
(c)between two or more tonnage tax companies.<\/p>\n
(2)Where this paragraph applies the group resulting from the merger is a tonnage tax group as if a group election had been made.<\/p>\n
(3)The deemed election referred to in subparagraph (2) continues in force, subject to the provisions of this Part, until whichever of the existing tonnage tax elections had the longest period left to run would have expired.<\/p>\n
Merger: tonnage tax group\/ company and qualifying non-tonnage tax group\/company<\/p>\n
25.<\/p>\n
(1)This paragraph shall apply where there is a merger between a tonnage tax group or company and a qualifying non-tonnage tax group or company.<\/p>\n
(2)Where this paragraph applies the group resulting from the merger may elect that –<\/p>\n
(a)it be treated as if a group election had been made which deemed election shall continue in force until the original election made by the tonnage tax group or company would have expired, or<\/p>\n
(b)the tonnage tax election of the group or company ceases to be in force as from the date of the merger.<\/p>\n
(3)Any election under subparagraph (2) shall be made jointly by all the qualifying companies in the group resulting from the merger and by way of notice in writing to the Revenue Commissioners within 12 months of the merger.<\/p>\n
Merger: tonnage tax group or company and non-qualifying group or company<\/p>\n
26.<\/p>\n
(1)This paragraph shall apply where there is a merger between a tonnage tax group or company and a non-qualifying group or company.<\/p>\n
(2)Where this subsection applies the group resulting from the merger is a tonnage tax group by virtue of the election of the tonnage tax group or company.<\/p>\n
Merger: non-qualifying group or company and qualifying non-tonnage tax group or company<\/p>\n
27.<\/p>\n
(1)This paragraph shall apply where there is a merger between a non-qualifying group or company and a qualifying non-tonnage tax group or company.<\/p>\n
(2)Where this paragraph applies, the group resulting from the merger may make a tonnage tax election having effect as from the date of the merger.<\/p>\n
(3)Any such election shall be made jointly by all the qualifying companies in the group resulting from the merger, by notice in writing to the Revenue Commissioners, within 12 months of the merger.<\/p>\n
Demerger: single company<\/p>\n
28.<\/p>\n
(1)This paragraph shall apply where a tonnage tax company ceases to be a member of a tonnage tax group and does not become a member of another group.<\/p>\n
(2)Where this paragraph applies –<\/p>\n
(a)the company in question remains a tonnage tax company as if a single company election had been made, and<\/p>\n
(b)that deemed election continues in force, subject to the provisions of this Schedule, until the group election would have expired.<\/p>\n
(3)If 2 or more members of the previous group remain, and any of them is a qualifying company, the group consisting of those companies shall be a tonnage tax group by virtue of the previous group election.<\/p>\n
Demerger: group<\/p>\n
29.<\/p>\n
(1)This paragraph shall apply where a tonnage tax group splits into two or more groups.<\/p>\n
(2)Where this paragraph applies each new group that contains a qualifying company that was a tonnage tax company before the demerger shall be a tonnage tax group as if a group election had been made.<\/p>\n
(3)That deemed election continues in force, subject to the provisions of this Schedule, until the group election would have expired.<\/p>\n
Duty to notify Revenue Commissioners of group changes<\/p>\n
30.<\/p>\n
(1)A tonnage tax company that becomes or ceases to be a member of a group, or of a particular group, shall give notice in writing to the Revenue Commissioners of that fact.<\/p>\n
(2)The notice shall be given within the period of 12 months beginning with the date on which the company became or ceased to be a member of the group.<\/p>\n
Schedule 18B, Part 5 Miscellaneous and supplemental (paras. 31-34)
\nMeasurement of tonnage of ship<\/p>\n
31.<\/p>\n
(1)References in Part 24A and in this Schedule to the gross or net tonnage of a ship are to that tonnage as determined –<\/p>\n
(a)in the case of a vessel of 24 metres in length or over, in accordance with the IMO International Convention on Tonnage Measurement of Ships 1969;<\/p>\n
(b)in the case of a vessel under 24 metres in length, in accordance with tonnage regulations.<\/p>\n
(2)A ship shall not be treated as a qualifying ship for the purposes of this Part and this Schedule unless there is in force –<\/p>\n
(a)a valid International Tonnage Certificate (1969), or<\/p>\n
(b)a valid certificate recording its tonnage as measured in accordance with tonnage regulations.<\/p>\n
(3)In this paragraph ‘tonnage regulations’ means regulations under section 91 of the Mercantile Marine Act, 1955 or the provisions of the law of a country or territory outside the State corresponding to those regulations.<\/p>\n
Second or subsequent application of sections 697P and 697Q<\/p>\n
32.Where sections 697P and 697Q apply on a second or subsequent occasion on which a company ceases to be a tonnage tax company (whether or not those sections applied on any of the previous occasions) –<\/p>\n
(a)the references to the company ceasing to be a tonnage tax company shall be read as references to the last occasion on which it did so, and<\/p>\n
(b)the references to the period during which the company was a tonnage tax company do not include any period before its most recent entry into tonnage tax.<\/p>\n
Appeals<\/p>\n
33.[deleted]<\/p>\n
Delegation of powers and functions<\/p>\n
34.The Revenue Commissioners may nominate any of their officers to perform any acts and discharge any functions authorised by Part 24A or this Schedule to be performed or discharged by the Revenue Commissioners.<\/p>\n
<\/p>\n
<\/p>\n\n
\n <\/div>\n\n","protected":false},"excerpt":{"rendered":"
TAXES CONSOLIDATION ACT Part 24A Shipping: Tonnage Tax (ss. 697A-697Q) 697A. Interpretation (Part 24A). (1)In this Part and in Schedule 18B – “bareboat charter terms” in relation to the charter of a ship, means the letting on charter of a ship for a stipulated period on terms which give the charterer possession and control […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[115],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/34786"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=34786"}],"version-history":[{"count":7,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/34786\/revisions"}],"predecessor-version":[{"id":34964,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/34786\/revisions\/34964"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=34786"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=34786"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=34786"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}