Revenue Note for Guidance

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Revenue Note for Guidance

739KA Associated enterprises

Summary

This section outlines the circumstances in which an enterprise shall be considered to be associated with another enterprise and where one enterprise is considered to have control over another enterprise for the purposes of the IREF regime.

Details

Main Definitions

(1) “connected” is given the same meaning as section 10 as if “control” in that section is read within the meaning of subsection (4) of this section;

“deposit” means a sum of money paid to an enterprise on terms under which it may be repaid with or without interest and may be repaid on demand or under other circumstances as agreed. The amount to be repaid may be to any extent index linked;

“enterprise” means an entity or individual;

“entity” means –

  1. a person (other than an individual),
  2. an investment undertaking (subject to subsection (2)),
  3. a pension scheme,
  4. an offshore fund (within the meaning of section 743(1)), or
  5. any other agreement, undertaking, scheme or arrangement established or created in the State or other territory,

that would be regarded for the purposes of the Tax Acts as –

  1. carrying on any of the activities referred to in paragraph (b), (c) or (d) of subsection (4), or
  2. advancing amounts, making fund available or receiving interest as referred to in section 739LC(3) and (4).

“member” for the purposes of a pension scheme means –

  1. an employer or employee of a scheme referred to in section 774,
  2. an individual referred to in section 784(1)(a), 784A(1)(b), 784C(2) or 785(1), or
  3. a contributor within the meaning of such in section 787A in respect of a PRSA;

“significant influence in the management of” for an entity means the ability to participate in the financial an operating decision of that entity.

(2) Where an investment undertaking is an umbrella scheme then regard is had to each subfund of that umbrella scheme and the unit holders of that sub-fund as if that sub-fund was an entity in its own right for the purposes of this section.

(3) An enterprise is considered an associate of another enterprise if –

  1. one of the 2 enterprises has control of the other or both are under the control of the same enterprise or enterprises,
  2. one enterprise is connected with another,
  3. those enterprises, which are investment undertakings or similar entities established in another territory, are associated with the meaning of section 739D(1)(a),
  4. one enterprise is a pension scheme and the other is a member of that pension scheme, or
  5. one enterprise is a scheme, which is similar to a pension scheme, established in a territory other than the State and the other enterprise if a member of that scheme.

(4) An enterprise shall be considered to have control if one or more of the following conditions are satisfied –

  1. where the enterprise is an entity and –
    1. both entities are consolidated in the same financial statements prepared under international accounting standard or Irish GAAP, or
    2. both entities are not consolidated in the same financial statements, or are included in consolidated financial statements prepared other than under Irish or International GAAP, would be included in financial statements prepared under international accounting standards;
  2. where the enterprise exercises, or is able to exercise or is entitled to acquire, control either directly or indirectly over the entity’s affairs generally and in the following specifics circumstances –
    1. if the enterprise possesses or is entitled to acquire not less than 25% of the issued share capital of a company, units in an investment undertaking, the voting power in an entity or has a right, either directly or indirectly, to receive not less than 25% of the profits if they were distributed, or
    2. by virtue of any powers by the constitution, articles of association or other document regulating that or any other entity;
  3. where the enterprise has significant influence in the management of the entity;
  4. where the enterprise holds in the entity –
    1. securities convertible either directly or indirectly into shares in a company, units in an investment undertaking or securities carrying any right to receive units or securities in the entity;
    2. securities under which the consideration is dependent on the results of the entity or more than a reasonable commercial return is applied for the use of that principal.

(5) If the condition set out in subsection (4)(b) is met by two or more connected enterprises taken together then they shall be taken to have control of the entity.

An enterprise is treated as being entitled to acquire anything which such an enterprise is entitled to acquire at a future date or will be entitled to acquire at a future date.

(6) When applying subsection (4)(b) and (5) any rights or powers of a nominee are attributed to an enterprise.

(7) When applying subsection (4)(b) and (5) also attributed to an enterprise (the first mentioned enterprise) all the rights and powers of –

  1. (8) any enterprise which the first mentioned enterprise has control either solely or when taken with associates,
  2. any 2 or more enterprises which the first mentioned enterprise has control either solely or when taken with associates,
  3. any associate of the first mentioned enterprise, or
  4. any 2 or more associates of the first mentioned enterprise.

Relevant Date: Finance Act 2019