44 Exemption from corporation tax of certain securities issued by Minister for Finance

Summary

The Minister for Finance may issue securities with a condition that the interest on the securities is exempt from a charge to corporation tax in the hands of certain companies resident in the State whose business consists of trading activities wholly or mainly carried on in the State. Banking, insurance business, dealing in securities and the selling of goods by retail are excluded from the exemption. To qualify for the exemption, the Irish resident company must be owned directly or indirectly by a foreign company or foreign companies resident in a country or countries with which the State has a double taxation treaty. The exemption is also available to Irish resident holding companies who hold shares in an Irish resident trading subsidiary, subject to the same conditions in relation to ownership as applies in relation to an Irish trading company. The exemption also applies to investments in such securities by foreign companies carrying on a relevant trade through a branch or agency in the State.

Details

Definitions

(1) A “qualifying company” is a company resident in the State and not resident elsewhere which is wholly or mainly carrying on a relevant trade or trades. Also regarded as a qualifying company is an Irish resident holding company not resident elsewhere which holds the stocks, shares or securities of a company wholly or mainly carrying on a relevant trade or trades. In the case of both types of companies, not less than 90 per cent of the company’s issued share capital must be held by a foreign company or foreign companies or by a person or persons who are directly or indirectly controlled by a foreign company or foreign companies. A foreign company carrying on a relevant trade through a branch or agency in the State is also a qualifying company.

A number of other definitions are set out which are used to determine the status of a company for the purposes of establishing whether or not it is a qualifying company. For this purpose —

“control” is given the same meaning as in section 432 with the adaptation that if, by the application of section 432, a company could be treated as under the control of persons resident in a state with which this country has a double taxation treaty it is to be so treated.

“foreign company” is a company which is not resident in the State but is under the control of a person or persons resident in a “relevant territory”, that is, a country with the government of which the State has a double taxation treaty under section 826.

“relevant trade” is a trade carried on wholly or mainly in the State, but excludes trades consisting wholly or partly of banking, assurance business, retailing or dealing in securities.

Exemption

(2) Any security which the Minister for Finance has the power to issue may be issued with a condition that the interest on the security is exempt from corporation tax so long as the security is held by a qualifying company continuously from the date of issue of the security.

Relevant Date: Finance Act 2019