79A Matching of relevant foreign currency assets with foreign currency liabilities.

(1) (a) In this section—

“foreign currency asset”, in relation to a company, means an asset, not being a relevant monetary item (within the meaning of section 79), of the company the consideration for the acquisition of which consisted solely of an amount denominated in a currency other than the currency of the State;

“foreign currency liability”, in relation to a company, means—

(i) a liability, not being a relevant monetary item (within the meaning of section 79), or

(ii) a sum subscribed for paid-up share capital or contributed to the capital,

of the company which is denominated in a currency other than the currency of the State;

“rate of exchange” has the meaning assigned to it by section 79.

(b) For the purposes of this section—

(i) a foreign currency asset is a relevant foreign currency asset in relation to a company if it consists of shares in another company acquired by the company and immediately after the acquisition by the company of the shares in the other company—

(I) the company owns not less than 25 per cent of the share capital of the other company, and

(II) the other company is a trading company or a holding company of a trading company,

(ii) where at any time a company disposes of a relevant foreign currency asset which has been matched with a corresponding foreign currency liability and the company does not discharge the liability at that time, the company shall be deemed to discharge the liability, and to incur a new liability equal to the amount of the liability, at that time,

(iii) where in accordance with subsection (2) a company specifies that a relevant foreign currency asset acquired by it at any time is to be matched with a corresponding foreign currency liability incurred by it before that time, the company shall be deemed to discharge the foreign currency liability, and to incur a new liability equal to the amount of the liability, at that time, and

(iv) the amount of a gain or loss on the discharge of a foreign currency liability shall be the amount which would be the gain accruing to, or as the case may be the loss incurred by, the company on the disposal of an asset acquired by it at the time the liability was incurred and disposed of at the time at which the liability was discharged if—

(I) the amount given by the company to discharge the liability was the amount given by the company as consideration for the acquisition of the asset, and

(II) the amount of the liability incurred by the company was the consideration received by the company on the disposal of the asset.

(2) (a) A company may, by giving notice in writing to the inspector, specify that a relevant foreign currency asset denominated in a currency other than the currency of the State shall be matched with such corresponding foreign currency liability denominated in that currency as is specified by the company.

(b) A notice under paragraph (a) shall be given within 3 weeks after the acquisition by the company concerned of the relevant foreign currency asset.

(3) Where in an accounting period a company disposes of a relevant foreign currency asset which has been matched by the company under subsection (2) with a foreign currency liability of the company, any chargeable gain or allowable loss on the relevant foreign currency asset shall be computed for the purposes of capital gains tax as if the consideration received for the disposal of the asset—

(a) where the company incurs a loss on discharge of the liability which loss results directly from a change in a rate of exchange, were reduced by an amount equal to the amount of that loss, but the amount of any such reduction shall not exceed the amount of so much of any gain on the disposal of the asset as results directly from a change in a rate of exchange, and

(b) where the company realises a gain on discharge of the liability which gain results directly from a change in a rate of exchange, were increased by an amount equal to the amount of that gain, but the amount of any such increase shall not exceed the amount of so much of any loss incurred on the disposal of the asset which loss results directly from a change in a rate of exchange.