519C Interest, etc under certified contractual savings schemes

Summary

This section provides relief from income tax on an individual’s savings under a certified contractual savings scheme used only in conjunction with a savings-related share option scheme approved by the Revenue Commissioners in accordance with Schedule 12A. It also exempts a relevant deposit taker (within the meaning of section 256) from having to deduct DIRT at source from that individual’s savings.

Details

Definitions

(1) “qualifying savings institution” specifies the financial institutions with whom individuals may save under certified contractual savings schemes. It includes branches in the State of all licensed banks and certain other institutions excluded from the requirement to hold a licence from the Central Bank, such as building societies, trustee savings banks, the Post Office Savings Bank and credit unions. It also includes branches in the State of financial institutions who hold a licence or other similar authorisation under the law of another Member State of the EEA which corresponds to a licence from the Central Bank. Qualifying savings institutions also includes credit institutions authorised outside the EEA who are authorised to operate a branch in the State. Other financial institutions may be added by an order of the Minister for Finance.

“EEA Agreement” means the Agreement on the European Economic Area signed at Opporto on 2 May 1992, as adjusted by all subsequent amendments to that Agreement.

“EEA state” means a state which is a contracting party to the EEA Agreement.

(2) & (6) Any terminal bonus or interest paid by a qualifying savings institution to an individual on or after 6 April 1999 under a certified contractual savings scheme is exempt from income tax and is not to be included in computing an individual’s total income for the purposes of the Income Tax Acts.

(3) Any terminal bonus or interest paid by a qualifying savings institution under a certified contractual savings scheme is not, where the qualifying savings institution is a relevant deposit taker within the meaning of section 256, treated as relevant interest and therefore is not subject to a deduction of tax at source under section 257.

(4) A certified contractual savings scheme is a scheme —

• providing for periodical contributions to be made by individuals for a specified period to a qualifying savings institution,
• where those individuals are eligible to participate, that is to obtain and exercise rights under an approved savings-related share option scheme and whose contributions under the scheme are to be used in accordance with the provisions of paragraph 17 of Schedule 12A, and
• which is certified by the Revenue Commissioners as qualifying for exemption under the section according to requirements specified by the Minister for Finance in accordance with the provisions of Schedule 12B.

(5) Schedule 12B contains supplementary provisions in relation to the section.

Relevant Date: Finance Act 2019