Revenue Note for Guidance

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Revenue Note for Guidance

PART 11D

INCOME TAX AND CORPORATION TAX: RELIEFS FOR THE REMOVAL AND RELOCATION OF CERTAIN INDUSTRIAL FACILITIES

Overview

This Part provides for a scheme of increased capital allowances and “additional relocation allowances”, to facilitate the removal and relocation of certain facilities where potentially dangerous activities are undertaken.

The scheme arises from the EU Seveso II Directive, which seeks to protect public safety near locations where potentially dangerous activities are undertaken. In the context of a docklands setting, Seveso-type industrial activities may include the following: fuel (oil, petrol, gas) storage facilities; storage facilities for fertiliser and other similar potentially hazardous substances; oil/petrol refining facilities; etc.

The scheme provides a relocation allowance to cover the removal costs of the industrial facilities and the cost of relocating these facilities. In this context, removal covers the removal and scrappage, if necessary, of an existing industrial premises while relocation covers the cost of building a new premises and associated land purchase costs. The costs of remediating the lands occupied by the facility will not be covered by the scheme in accordance with the EU Commission ‘Polluter Pays’ principle. This ensures that an industry that creates a pollution incident (or in this case, which undertakes the land-use that has damaged a particular location) must bear the cost of remediating the property back to a pre-pollution/pre-damaging land-use basis.

The relocation allowance is limited to the net costs of the removal and relocation. This means that the benefits from the sale of the land where the industrial facilities were previously located will be deducted. In addition to the relocation allowance a further 50% additional allowance is provided. The relief is given by allowing 100% increased wear and tear and industrial buildings allowances with a further 50% allowance on top.

In order to prevent abuse of the scheme there is a facility for a claw-back where machinery, plant or buildings on which wear and tear and industrial buildings allowances were claimed, are sold within two years of first use. The claw-back facility and the provisions to net-off the benefits from the sale of the land of the initial site will ensure that the scheme will be fair and equitable by only meeting costs necessitated by the removal and relocation of Seveso-listed industrial facilities which are hindering the regeneration of urban dockland areas.

Any costs incurred in generating productivity gains or an increase in capacity over and above the costs of the relocation itself will not qualify for relief.

Expenditure incurred on or after 1 January 2009 and before 1 January 2014 will be allowed for the purposes of this section. It should also be noted that to avail of the scheme, the area where the industrial facility is located must be an area which is the subject of either a local area plan adopted by the relevant Local Authority under the Planning and Development Acts 2000 to 2006 or a planning scheme approved by the Minister for the Environment, Heritage and Local Government under section 25 of the Dublin Docklands Development Authority Act 1997 and the relocation must be for the purposes set out in that plan.

In addition, the docklands area where the industrial facility is located must be covered by an area designated by the Minister for the Environment, Heritage and Local Government, with the approval of the Minister for Finance, to be regenerated for the purposes set out in the local area plan or planning scheme.

This Part is subject to a commencement order to be made by the Minister for Finance.

380Q Interpretation (Part 11D)

Summary

The section is the interpretation section for Part 11D. It defines the various terms used in the Part.

Details

Definitions

(1) ‘dangerous substance’ has the meaning assigned to it by Regulation 3 of the European Communities (Control of Major Accident Hazards Involving Dangerous Substances) Regulations 2000 (S.I. No. 476 of 2000);

‘enhancement expenditure’, in relation to establishment land, means the amount of any capital expenditure wholly and exclusively incurred on the land for the purpose of enhancing the value of the land, being expenditure reflected in the state or nature of the land at the time of the disposal but does not include expenditure for which relief may be claimed under this Part;

‘establishment’, in relation to a person who carries on a relevant trade, means the whole area under that person’s control where dangerous substances are present in one or more installations, including common or related infrastructure or activities;

‘establishment land’, in relation to a relevant trade, means the area of land of the establishment of which the old installation is a unit;

‘local authority’ means—

  1. in the case of a city, the city council, and
  2. in the case of a county, the county council,

being a city council or a county council, as the case may be, for the purposes of the Local Government Act 2001;

‘installation’ means a unit within an establishment in which dangerous substances are produced, used, handled or stored, and includes—

  1. equipment, structures, pipework, machinery and tools,
  2. docks and unloading quays serving the installation, and
  3. jetties, warehouses or similar structures, whether floating or not,

which are necessary for the operation of the installation;

‘land’ includes any interest in land and references to establishment land include references to any interest in that land;

‘market value’, in relation to the whole or part of establishment land, means the price that whole or part might reasonably be expected to fetch on a sale in the open market if the old installation was removed;

‘new installation’ means an installation which replaces an old installation;

‘old installation’ means an installation located in an urban dockland area which, by agreement with the relevant local authority, an operator relocates to facilitate the regeneration of that area;

‘operator’ means any person who in the course of a trade operates an establishment or installation;

‘relocation expenditure’ means relevant expenses incurred by a person who carries on a relevant trade in an establishment situated within an urban dockland area in relocating that trade to an establishment in a new location.

‘relevant expenses’ means capital expenditure, incurred in connection with the removal of an old installation and the set up of a replacement installation including the cost of acquiring such land as is necessary for the operation of the new installation but not including expenditure relating to –

  1. any building or structure on that land other than a building or structure which is demolished in the course of the set-up,
  2. the construction of any building or structure, or
  3. machinery or plant;

‘relevant trade’ means a trade of operating an establishment or installation;

‘urban dockland area’ means a dockland area which is the subject of either a local area plan adopted by the relevant local authority under the Planning and Development Acts 2000 to 2006 or a planning scheme approved by the Minister for the Environment, Heritage and Local Government under section 25 of the Dublin Docklands Development Authority Act 1997 and comprises an area designated by that Minister, with the approval of the Minister for Finance, to be regenerated for the purposes set out in the local area plan or planning scheme.

Termination date

(2) Expenditure incurred on or after 1 January 2009 and before 1 January 2014 will be allowed for the purposes of this Part.

Relevant Date: Finance Act 2019