Revenue Note for Guidance

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Revenue Note for Guidance

48 Exemption of premiums on certain securities

Summary

Premiums payable on the redemption of certain Government securities, certain securities of certain State-sponsored bodies, securities issued by certain European Union institutions and securities issued by the International Bank for Reconstruction and Development are exempt from tax, except where the premiums are taken into account in computing the profits of a trade.

Details

(1) & (2) Premiums received on the redemption of —

  • Government securities other than securities to which section 4 of the Central Fund Act, 1965, section 45(1) (exemption of non-interest-bearing securities) or section 46 (exemption of premiums on investment bonds) applies,
  • securities issued by a body corporate which are statutorily guaranteed by a Minister of the Government (other than the securities set out in the Table to section 37),
  • securities of the European Community, the European Coal and Steel Community, the European Atomic Energy Community or the European Investment Bank, and
  • securities of the International Bank for Reconstruction and Development,

are exempt from tax, unless the premiums are taken into account in computing the profits of a trade.

(3) & (4) This exemption from tax does not apply to premiums paid on securities which are —

  • non-interest-bearing securities issued by the Minister for Finance at a discount (including Exchequer Bills and Exchequer Notes),
  • Agricultural Commodities Intervention Bills issued by the Minister for Agriculture and Food, or
  • strips within the meaning of section 54(10) of the Finance Act, 1970 (inserted by section 161 of the Finance Act, 1997),

and which are issued after 25 January, 1984, unless a tender for any such securities was submitted on or before that date.

(5) Where, however, the owner (that is, the person at any time entitled to the proceeds on redemption of the securities if the issuer were to redeem them at that time) of any such securities is not resident in the State, any profit on the sale or disposal of the securities or any premium paid on the redemption of the securities is exempt from tax; but this exemption does not apply in respect of corporation tax chargeable on the income of an Irish branch or agency of a non-resident company. Prior to 4 April 2009, the exemption applied where the owner of the securities was not ordinarily resident in the State.

Relevant Date: Finance Act 2019