Revenue Note for Guidance
Part 16 provides tax relief for investment in corporate trades (the scheme is commonly known as the Employment and Investment Incentive or EII. In addition, the scheme also provides tax refunds to encourage employees or former employees to start their own businesses (this aspect of the scheme is known as SURE [Startup Refunds for Entrepreneurs] formerly know as the Seed Capital Scheme [SCS]).
This section gives the meaning for various expressions and terms used throughout this Part.
(1) “associate” has the same meaning as in section 433(3) with the reference to “participator” being replaced by one to “persons”.
“basic pay rate”, in relation to a qualifying employee of a qualifying company, means the employee’s emoluments (other than non-pecuniary emoluments) per hour from the company in respect of an employment held with the company
“control” except in section 492(7) and section 505(2)(b) is construed in accordance with subsections (2) to (6) of section 432.
“debenture” has the same meaning as in section 2 of the Companies Act, 1963. Essentially, “debenture” includes debenture stock, bonds and any other securities of a company whether constituting a charge on the assets of the company or not.
“director” has the meaning set out in section 433(4).
“eligible shares” are new ordinary shares which throughout the “relevant period” —
“emoluments” has the same meaning as in section 983;
“employment relevant number” means the total number of qualifying employees in receipt of emoluments from the qualifying company in the year of assessment in which, in relation to a subscription for eligible shares, a relevant period ends;
“employment threshold number” means the total number of qualifying employees in receipt of emoluments from the qualifying company in the year of assessment preceding the year of assessment in which the subscription for eligible shares was made;
“energy from renewable sources” means energy from renewable non-fossil sources, that is to say wind, solar, aerothermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases and includes the development of any facilities for the storage of energy from renewable sources;
“expenditure on research and development” has the same meaning as in section 766;
“financial activities” means the provision of, and all matters relating to the provision of, financing or refinancing facilities by any means which involves, or has the effect equivalent to the extension of credit;
“financing or refinancing facilities” includes –
“financial assets” includes shares, gilts, bonds, foreign currencies and all kinds of futures, options and currency and interest rate swaps, and similar instruments, including commodity futures and commodity options, invoices and all types of receivables, obligations evidencing debt (including loans and deposits), leases and loan and lease portfolios, bills of exchange, acceptance credits and all other documents of title relating to the movement of goods, commercial paper, promissory notes and all other kinds of negotiable or transferable instruments;
“full-time employee” and “full-time director” have the meanings set out in section 250.
“green energy activities” means activities undertaken with a view to producing energy from renewable sources;
“grid connection agreement” means an agreement with the transmission system operator or distribution system operator, or an offer from the transmission system operator or distribution system operator to enter into an agreement for connection to, or use of, the transmission or distribution system;
“internationally traded financial services” means, with the exception of activities listed in subparagraphs (b) or (c) of the definition of “relevant trading activities”, the services specified in the schedule to the Industrial Development (Service Industries) Order 2010 (S.I. No. 81 of 2010).
“market value” has the meaning set out in section 548 (that is, the price which assets might reasonably be expected to fetch on a sale in the open market).
“ordinary shares” are shares forming part of a company’s ordinary share capital.
“planning consent” means any consent, permission or approval required under the Planning and Development Acts 2000 to 2010 before development can be lawfully carried out;
“qualifying company” has the meaning set out in section 494.
“qualifying employee”, in relation to a qualifying company, means an employee (within the meaning of section 983), other than a director, of that company –
“qualifying new venture” means a venture consisting of relevant trading activities which are set up and commenced by a new company other than –
“relevant employment” requires a specified individual (that is, an individual making a SURE investment) to take up full-time employment for a specified period of 12 months in the company in which he/she has made his/ her SURE investment (being the first tranche of such an investment).
“relevant investment” is the total amount subscribed by a specified individual (that is, an individual making a SURE investment) in a year of assessment for eligible shares in a qualifying company which carries on or intends to carry on relevant trading operations.
“qualifying nursing home” means
It should be noted that a nursing home that is subject to any arrangement which results in the nursing home, or any part of the nursing home, being disposed of to the person, or any person acting on behalf of that person, from who it was purchased is not considered to be a “qualifying nursing home”.
“qualifying residential unit” means a house which
“relevant amount” means the total emoluments (other than non-pecuniary emoluments) paid by a qualifying company to qualifying employees as referred to in the definition of “employment relevant number”, in the year of assessment in which, in relation to a subscription for eligible shares, a relevant period ends.
The term “relevant period” can apply in relation to 3 distinct aspects of the relief. Accordingly, the phrase has a different meaning depending on the context in which it is used.
“relevant trading activities” means activities carried on in the course of a trade the profits or gains of which are charged to tax under Case I of Schedule D, excluding activities related to –
“research and development activities” has the same meaning as in section 766;
“specified individual” has the meaning set out in section 495.
“specified period” means the period beginning on the incorporation of the company (or, if the company was incorporated more than 2 years before the date on which the shares were issued, beginning 2 years before that date) and ending 3 years after the issue of the shares;
“specified relevant period” has the meaning assigned in section 766 to relevant period;
“relief” means relief under section 489 and 493, as the case may be, and references to the amount of the relief shall be construed in accordance with subsection (2) of section 489 and subsection (2) and (3) of section 493, as the case may be;
“threshold amount” means the total emoluments (other than non-pecuniary emoluments) paid by a qualifying company to qualifying employees as referred to in the definition of “employment threshold number”, in the year of assessment preceding the year in which the subscription for eligible shares was made. Where there was a general reduction in the basic pay rate of qualifying employees then the threshold amount shall be reduced accordingly..
“tourist traffic undertakings means” –
“transmission system operator” has the same meaning as in the Electricity Regulation Act 1999;
“unquoted company” is a company none of whose shares are listed in the official list of a stock exchange or quoted on an unlisted securities market other than —
(2) A disposal of shares is treated as occurring on the disposal of an interest or right in or over those shares. Section 587 applies to a scheme of reconstruction or amalgamation whereby a company (the first company) issues shares to the shareholders in a second company. This is treated for capital gains tax purposes as comprising an “exchange of shares”. However, for the purposes of relief under this Part, such a deemed “exchange” of shares is treated as a disposal of the shares in the second company by the shareholders of that company and, for the purpose of restricting the relief under section 496 (disposal of shares), the value of the shares in the first company is a measure of the consideration received for the shares treated as disposed of by those shareholders.
(3) Where there is a reference in this Part to the reduction of any amount the reference is to be taken as including the reduction of the amount to nil.
Relevant Date: Finance Act 2019