Revenue Note for Guidance

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Revenue Note for Guidance

372K Non-application of relief in certain cases and provision against double relief

Summary

The section provides, in line with EU requirements, that capital allowances under this scheme in relation to industrial buildings or structures and commercial premises are not available:

  • to property developers in certain circumstances,
  • where any part of the construction or refurbishment expenditure is met by grant assistance or any other assistance from the State or any of its agencies,
  • unless the relevant interest in the construction or refurbishment expenditure is held by a micro, small or medium-sized enterprise as defined by the EU, or
  • to owner-operators of buildings or structures or premises in use in certain sectors and industries (This restriction does not apply to lessors.)
  • unless prior approval of such capital allowances are received from the European Commission where a project is subject to the notification requirements of either the “Multisectoral framework on regional aid for large investment projects”, dated 7 April 1998 or the revised framework dated 19 March 2002, whichever applies.

The section provides for apportionment on the basis of floor area in cases where a part of a building or structure is outside the boundary of a qualifying area in order to determine the amount of expenditure attributable to the part within the area.

Finally, the section ensures that expenditure relieved under this Chapter will not be entitled to relief under any other provision of the Tax Acts. Thus, double relief is precluded.

Details

Restrictions on the availability of capital allowances

(1) Capital allowances under sections 372AC and 372AD in relation to industrial buildings or structures and commercial premises will not apply:

  • (1)(a) to a property developer, where the expenditure on the construction or refurbishment of a building or structure or premises is incurred by the property developer or by a person connected with the property developer. A property developer is defined in section 372AA as a person who devotes the greater part of his or her trading activity (taking account of all of the person’s trading activities) to the construction or refurbishment of buildings or structures for sale. Thus, where a property developer constructs or refurbishes an industrial or commercial premises or buys one from a connected person who constructed or refurbished it, there will be no relief available to the property developer.
  • (1)(aa) where the expenditure on the construction or refurbishment of a building or structure or premises is met directly or indirectly by way of grant assistance or any other assistance from the State, any board established by statute, any public or local authority or any other agency of the State.
  • (1)(ab) unless the relevant interest in the construction or refurbishment expenditure is held by:
    • a small or medium-sized enterprise – as defined by the EU in Commission Regulation (EC) No. 70/2001 (OJ No. L10 of 13 January 2001, p.33), or
    • a micro, small or medium-sized enterprise – as defined in the Annex to Commission Recommendation of 6 May 2003 (OJ No. L124 of 20 May 2003, p.36).
  • (1)(b) in respect of expenditure incurred on the construction or refurbishment of a building or structure or premises by an owner-operator whose trade is carried on wholly or mainly in the agricultural sector, the coal, fishing or motor vehicle industries, or the transport, steel, shipbuilding, synthetic fibres or financial services sectors. This restriction does not apply to lessors.
  • (1)(c) as respects construction or refurbishment expenditure incurred on or after 1 January 2003, where a project is subject to the notification requirements of the “Multisectoral framework on regional aid for large investment projects”, prepared by the European Commission and dated either 7 April 1988 or 19 March 2002, unless prior approval of the potential capital allowances involved has been received from the EU Commission. [The rules of each framework will decide as to which is applicable in any case. The new framework is due to become effective from 1 January 2004.] Approval must be received from the Commission by the Minister for Finance, or by such other Minister of the Government, agency or body as may be nominated for that purpose by the Minister for Finance.

Apportionment

(2) There is provision for apportionment on a floor area basis to determine the amount of expenditure incurred on the part of a building or structure within the boundary of a designated area where part of the building or structure is also outside that boundary. This provision applies for the purposes of sections 372AC and 372AD.

Provision against double relief

(3) Expenditure relieved under this Chapter cannot get relief under any other provision of the Tax Acts. Double relief is, therefore, precluded.

Relevant Date: Finance Act 2019