Revenue Note for Guidance

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Revenue Note for Guidance

495 Specified individuals

Summary

This section sets out the conditions which must be satisfied by an individual in order to qualify for SURE.

Details

Specified individual

Income test

(2) This individual must not have been in receipt of income chargeable to tax other than employment income (whether from an employment in the State or abroad) in excess of the lesser of —

  • the aggregate of the individual’s employment income, and
  • €50,000

The income test applies for each of the three tax years before the tax year preceding the tax year in which the individual makes his/her first SURE investment. There is no restriction on the source of the individual’s income in the year which immediately precedes the year in which he/she makes that investment.

Share ownership test

(3) The individual must, throughout a period (in this note and in the section referred to as the “relevant period”) —

  • of one year beginning on the date of issue of the shares, or
  • where the company is not at that date carrying on the required trading operations, of one year beginning on the date it so begins to carry on such operations,

possess at least 15 per cent of the issued ordinary share capital of the company in which he/she makes a SURE investment. Where an individual makes two SURE investments this requirement applies in respect of both.

Restriction on ownership of other companies

(4)(b) The individual at the specified date in relation to his/her first SURE investment in a company or within a twelve-month period immediately preceding that date, either directly or indirectly, must not possess or have possessed or must not be or have been entitled to acquire more than 15 per cent of —

  • the issued ordinary share capital,
  • the loan capital (within the meaning of section 492(5)) and the issued share capital,
    or
  • the voting power,

(4)(a) The “specified date” is —

  • where the SURE investment consists of only one subscription for eligible shares, the date of that subscription, or
  • where that SURE investment consists of more than one such subscription, the date of the last such subscription.

Dormant companies

(5) An individual who fails one or more of the conditions as to ownership of other companies is not disqualified for relief by virtue of that ownership if the other company in which his/her 15 per cent interest in satisfies certain conditions. These conditions are that the company during a period of 3 years ending on the specified date in relation to an individual’s first SURE investment must —

  • have had no entitlement to assets other than cash or a sum of money on deposit not exceeding €130,
  • not have carried on a trade, profession, business or other activity including the making of investments, and
  • not have paid any charges on income within the meaning of section 243.

Exception for small companies

(6)(a) “an accounting period” is an accounting period determined in accordance with section 27.

A company is treated as carrying on wholly or mainly relevant trading activities, where it receives not less than 75 per cent of its total income from the trade over a period of 3 accounting periods in the case of tourist traffic undertakings and 90 per cent of its total income from the trade over a period of 3 accounting periods in the case of other relevant trading activities.

(6)(b) An individual is not to be treated as having failed to satisfy the requirements as to not owning more than 15 per cent of another company, merely because the individual fails to satisfy those requirements in relation to only one other company —

  • which exists wholly or mainly for the purposes of carrying on relevant trading activities, and
  • where that company’s turnover in each of the 3 accounting periods immediately preceding the accounting period of that company in which the specified date falls does not exceed €127,000.

Bona fide winding up

(7) An individual is not regarded as ceasing to comply with the requirement to retain at least a 15 per cent ownership of the company for the relevant period referred to where he/she does so by reason of the company concerned being wound up for bona fide commercial reasons and not because of a tax avoidance scheme.

Relevant Date: Finance Act 2019