Taxes Consolidation Act, 1997 (Number 39 of 1997)
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PART 16
Income Tax Relief for Investment in Corporate Trades — Employment and Investment Incentive and Seed Capital Scheme
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488 Interpretation (Part 16).
[FA84 s11(1), (3) and (4), s12(2) and (7) and s16(4); FA85 s13(a); FA90 s10(a); FA93 s25(a) and (b)(v); FA94 s16(1)(a)(i); FA95 s17(1)(a); FA96 s16; FA97 s9(a), s146(1) and Sch9 PtI par13(1)]
(1) In this Part—
“advance factory building” means a factory building the construction of which is—
(a) promoted by a local community group the objective of which, or one of the main objectives of which, is to promote the development of, and the creation of opportunities for employment in, its locality, and
(b) undertaken without any prior commitment, either direct or indirect, in writing or otherwise, by a person that either the person or any other person will enter into a lease for its use;
“associate” has the same meaning in relation to a person as it has by virtue of subsection (3) of section 433 in relation to a participator, except that the reference in paragraph (b) of that subsection to any relative of a participator shall be excluded from such meaning;
“certifying agency” means an industrial development agency, [3]>Bord Fáilte Éireann<[3][3]>the National Tourism Development Authority<[3], An Bord Iascaigh Mhara or An Bord Tráchtála — The Irish Trade Board (as may be appropriate);
“certifying Minister” means the Minister for Agriculture and Food, the Minister for Arts, Heritage, Gaeltacht and the Islands or the Minister for the Marine and Natural Resources (as may be appropriate);
“control”, except in sections 493(7) and 507(2)(b), shall be 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;
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“director” shall be construed in accordance with section 433(4);
“eligible shares” means new ordinary shares which, throughout the period of 5 years beginning on the date on which they are issued, carry no present or future preferential right to dividends or to a company’s assets on its winding up and no present or future preferential right to be redeemed;
[2]>
“Exchange Axess” means the company incorporated under the Companies Acts, 1963 to 1999, on 19 July 1999 as Exchange Axess Limited;
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“factory building” has the same meaning as in section 2 of the Industrial Development Act, 1986;
“full-time employee” and “full-time director” have the same meanings respectively as in section 250;
“industrial development agency” means Forbairt, the Industrial Development Agency (Ireland), the Shannon Free Airport Development Company Limited or Údarás na Gaeltachta (as may be appropriate);
“market value” shall be construed in accordance with section 548;
“ordinary shares” means shares forming part of a company’s ordinary share capital;
“qualifying company” has the meaning assigned to it by section 495;
“qualifying trading operations” has the meaning assigned to it by section 496(2);
“relevant employment”, in relation to a specified individual, means employment throughout the relevant period by the company in which the specified individual makes a relevant investment (being that individual’s first such investment in that company) and where the specified individual is a full-time employee or full-time director of the company;
“relevant investment”, in relation to a specified individual, means the amount or the aggregate of the amounts subscribed in a year of assessment by the specified individual for eligible shares in a qualifying company which carries on or intends to carry on relevant trading operations;
“relevant period”, in relation to relief in respect of any eligible shares issued by a company, means—
(a) as respects sections 493 and 498 to 501, the period beginning on the incorporation of the company (or, if the company was incorporated more than [4]>2 years<[4][4]>one year<[4] before the date on which the shares were issued, beginning 2 years before that date) and ending 5 years after the issue of the shares,
(b) as respects sections 495, 496, 503 and 507, the period beginning on the date on which the shares were issued and ending either 3 years after that date or, where the company was not at that date carrying on a qualifying trade, 3 years after the date on which it subsequently began to carry on such a trade,
(c) as respects a relevant employment, the period beginning on the date on which the shares are issued or, if later, the date on which the employment commences and ending 12 months after that date, and
(d) as respects a specified individual, the period beginning on the date on which the shares are issued and ending either 2 years after that date or, where the company was not at that date carrying on relevant trading operations, 2 years after the date on which it subsequently began to carry on such operations;
“relevant trading operations” has the meaning assigned to it by section 497;
“specified individual” has the meaning assigned to it by section 494;
“the relief” and “relief” mean relief under section 489, and references to the amount of the relief shall be construed in accordance with subsection (6) of that section;
“unquoted company” means a company none of whose shares, stocks or debentures are—
(a) listed in the official list of a stock exchange, or
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(b) quoted on an unlisted securities market of a stock exchange other than on the market known as the Developing Companies Market of the Irish Stock Exchange.
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(b) quoted on an unlisted securities market of a stock exchange other than—
(i) on the market known, and referred to in this definition, as the [5]>Developing Companies Market<[5][5]>Irish Enterprise Exchange<[5] of the Irish Stock Exchange, or
(ii) on the [5]>Developing Companies Market<[5][5]>Irish Enterprise Exchange<[5] of the Irish Stock Exchange and on any similar or corresponding market of the stock exchange of one or more Member States of the European Communities; but this subparagraph shall not apply unless the shares, stocks or debentures are quoted on the [5]>Developing Companies Market<[5][5]>Irish Enterprise Exchange<[5] of the Irish Stock Exchange before or at the same time as they are firstly quoted on an unlisted securities market of a stock exchange of another Member State of the European Communities.
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(2) References in this Part to a disposal of shares include references to a disposal of an interest or right in or over the shares, and an individual shall be treated for the purposes of this Part as disposing of any shares which the individual is treated by virtue of section 587 as exchanging for other shares.
(3) References in this Part to the reduction of any amount include references to its reduction to nil.
(4) References in this Part to a trade shall be construed—
(a) without regard to so much of the definition of “trade” in section 3 as relates to adventures or concerns in the nature of trade, and
(b) as including—
(i) the construction and leasing of an advance factory building,
(ii) the research and development or other similar activity referred to in section 496(2)(a)(x), and
(iii) the production, publication, marketing and promotion of a qualifying recording or qualifying recordings referred to in section 496(2)(a)(xii);
but for the other purposes of the Tax Acts the question of whether a trade is being carried on shall be determined without regard to this subsection.
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488 Interpretation (Part 16).
(1) In this Part—
“associate” has the same meaning in relation to a person as it has by virtue of subsection (3) of section 433 in relation to a participator[18]>, except that the reference in paragraph (b) of that subsection to any relative of a participator shall be excluded from such meaning<[18];
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“average relevant amount” means the total of the emoluments (other than non-pecuniary emoluments) paid by a qualifying company to the qualifying employees 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, divided by the employment relevant number;
“average threshold amount” means the total of the emoluments (other than non-pecuniary emoluments) paid by the qualifying company to the qualifying employees referred to in the definition of employment threshold number, in the year of assessment preceding the year of assessment in which the subscription for eligible shares was made, divided by the employment threshold number;
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“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 sections 492(7) and 505(2)(b), shall be construed in accordance with subsections (2) to (6) of section 432;
“debenture” has the same meaning as in section 2 of the [19]>Companies Act 1963<[19][19]>Companies Act 2014<[19];
“director” shall be construed in accordance with section 433(4);
“distribution system operator” has the same meaning as in the Electricity Regulation Act 1999;
“eligible shares” means new ordinary shares which, throughout [15]>the period of 3 years beginning on the date on which they are issued<[15][15]>the relevant period<[15], carry no present or future preferential right to dividends or to a company’s assets on its winding up and no present or future preferential right to be redeemed;
“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 an effect equivalent to, the extension of credit;
“financing or refinancing facilities” includes—
(a) loans, mortgages, leasing, lease rental and hire-purchase, and all similar arrangements,
(b) equity or other investment,
(c) the factoring of debts and the discounting of bills, invoices and promissory notes, and all similar instruments, and
(d) the underwriting of debt instruments and all other kinds of financial securities;
“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 same meanings respectively as 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;
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“internationally traded financial services” means the services specified in the schedule to the Industrial Development (Service Industries) Order 2010 (S.I. No. 81 of 2010) other than those falling within the meaning of subparagraph (b) or (c) of the definition of ‘relevant trading activities’;
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“market value” shall be construed in accordance with section 548;
“ordinary shares” means 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 assigned to it by section 494;
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“qualifying employee”, in relation to a qualifying company, means an employee (within the meaning of section 983), other than a director, of that company who, throughout his or her period of employment with that company is employed by that company for not less than 4 week days, of each week;
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“qualifying employee”, in relation to a qualifying company, means an employee (within the meaning of section 983), other than a director, of that company—
(i) who throughout his or her period of employment with that company is employed by that company for at least 30 hours duration per week, and
(ii) his or her employment is capable of lasting at least 12 months;
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“qualifying new venture” means a venture consisting of relevant trading activities which are set up and commenced by a new company other than—
(a) activities which were previously carried on by another person and to which the company has succeeded, or
(b) a venture, the activities of which were previously carried on as part of another person’s trade or profession;
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“qualifying nursing home” means—
(a) a nursing home within the meaning of section 2 of the Health (Nursing Homes) Act 1990 and which is registered under section 4 of that Act, and
(b) where applicable, a qualifying residential unit constructed on the site of, and operated by, a nursing home within the meaning of paragraph (a),
but does not include any nursing home or qualifying residential unit which is subject to any power on the exercise of which the nursing home or residential units, or any part or interest in the nursing home or residential units, may be revested in the person from whom it was purchased or exchanged or in any person on behalf of such person;
“qualifying residential unit” means a house which—
(a) is constructed on the site of, or on a site which is immediately adjacent to the site of, a registered nursing home,
(b) is—
(i) a single storey house, or
(ii) a house that is comprised in a building of one or more storeys in relation to which building a fire safety certificate under Part III of the Building Control Regulations 1997 (S.I. No. 496 of 1997) is required, and prior to the commencement of the construction works on the building, is granted by the building control authority (within the meaning of section 2 of the Building Control Act 1990) in whose functional area the building is situated where—
(I) the house is, or (as the case may be) the house and the building in which it is comprised are, designed and constructed to meet the needs of persons with disabilities, including in particular the needs of persons who are confined to wheelchairs, and
(II) the house consists of one or two bedrooms, a kitchen, a living room, bath or shower facilities, toilet facilities and a nurse call system linked to the registered nursing home,
and
(c) is comprised in a development where—
(i) those units are operated or managed by the registered nursing home and an on-site caretaker is provided, and
(ii) back-up medical care, including nursing care, is provided by the registered nursing home to the occupants of those units when required by those occupants;
“relevant amount” means 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;
“threshold amount” means the total of the emoluments (other than non- pecuniary emoluments) paid by a qualifying company to the qualifying employees referred to in the definition of ‘employment threshold number’, in the year of assessment preceding the year of assessment in which the subscription for eligible shares was made but where there was a general reduction in the basic pay rate of qualifying employees then the threshold amount shall be reduced accordingly;
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“relevant employment”, in relation to a specified individual, means employment throughout the relevant period by the company in which the specified individual makes a relevant investment (being that individual’s first such investment in that company) and where the specified individual is a full-time employee or full-time director of the company;
“relevant investment”, in relation to a specified individual, means the amount or the aggregate of the amounts subscribed in a year of assessment by the specified individual for eligible shares in a qualifying company which carries on or intends to carry on relevant trading activities;
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“relevant period”, in relation to relief in respect of any eligible shares issued by a company, means—
(a) subject to paragraphs (b) and (c), the period beginning on the date on which the shares were issued and ending either 3 years after that date or, where the company was not at that date carrying on relevant trading activities, 3 years after the date on which it subsequently began to carry on such activities,
(b) as respects a relevant employment, the period beginning on the date on which the shares are issued or, if later, the date on which the employment commences and ending 12 months after that date, and
(c) as respects a specified individual, the period beginning on the date on which the shares are issued and ending either one year after that date or, where the company was not at that date carrying on relevant trading activities, one year after the date on which it subsequently began to carry on such activities;
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“relevant period”, in relation to relief in respect of any eligible shares issued by a company, means—
(a) subject to paragraphs (b), (c) and (d), the period beginning on the date on which the shares were issued and ending 4 years after that date or, where the company was not at that date carrying on relevant trading activities, 4 years after the date on which it subsequently began to carry on such activities,
(b) as respects a relevant employment, the period beginning on the date on which the shares are issued or, if later, the date on which the employment commences and ending 12 months after that date,
(c) as respects a specified individual, the period beginning on the date on which the shares are issued and ending either one year after that date or, where the company was not at that date carrying on relevant trading activities, one year after the date on which it subsequently began to carry on such activities, and
(d) as respects sections 489(2)(b) and 501(1)(a)(iii) and the definitions of
[13]>‘average relevant amount’<[13][13]>‘relevant amount’<[13] and ‘employment relevant number’ in this subsection, the period beginning on the date on which the shares were issued and ending 3 years after that date or, where the company was not at that date carrying on relevant trading activities, 3 years after the date on which it subsequently began to carry on such activities;
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“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—
(a) adventures or concerns in the nature of trade,
(b) dealing in commodities or futures or in shares, securities or other financial assets,
(c) financing activities,
(d) the provision of services, which would result in a close company (within the meaning of section 430) that provides those services being treated as a service company for the purposes of section 441 if that close company had no other source of income,
(e) dealing in or developing land,
(f) the occupation of woodlands within the meaning of section 232,
(g) operating or managing hotels, guest houses, self catering accommodation or comparable establishments or managing property used as an hotel, guest house, self catering accommodation or comparable establishment, [7]>except where the operating or managing of such hotels, guest houses, self catering accommodation or comparable establishments, or the managing of property used as a hotel, guest house, self catering accommodation or comparable establishment, is a tourist traffic undertaking,<[7]
[11]>
(h) operating or managing nursing homes or residential care homes or managing property used as a nursing home or residential care home,
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(i) operations carried on in the coal industry or in the steel and shipbuilding sectors, and
(j) the production of a film (within the meaning of section 481),
but including tourist traffic undertakings;
“research and development activities” has the same meaning as in section 766;
“specified individual” has the meaning assigned to it by 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 [12]>3 years<[12][12]>4 years<[12] 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;
“tourist traffic undertakings” means—
(a) the operation of tourist accommodation facilities for which the National Tourism Development Authority maintains a register in accordance with the Tourist Traffic Acts 1939 to 2003, [8]>other than hotels, guest houses and self catering accommodation,<[8]
(b) the operation of such other classes of facilities as may be approved of for the purpose of the relief by the Minister for Finance, in consultation with the Minister for Tourism, Culture and Sport, on the recommendation of the National Tourism Development Authority in accordance with specific codes of standards laid down by it, or
(c) the promotion outside the State of—
(i) one or more tourist accommodation facilities for which the National Tourism Development Authority maintains a register in accordance with the Tourist Traffic Acts 1939 to 2003, or
(ii) any of the facilities mentioned in paragraph (b);
“transmission system operator” has the same meaning as in the Electricity Regulation Act 1999;
“unquoted company” means a company none of whose shares, stocks or debentures are—
(a) listed in the official list of a stock exchange, or
(b) quoted on an unlisted securities market of a stock exchange other than—
(i) on the market known, and referred to in this definition, as the Enterprise Securities Market of the Irish Stock Exchange, or
(ii) on the Enterprise Securities Market of the Irish Stock Exchange and on any similar or corresponding market of the stock exchange of one or more Member States of the European Union; but this subparagraph shall not apply unless the shares, stocks or debentures are quoted on the Enterprise Securities Market of the Irish Stock Exchange before or at the same time as they are initially quoted on an unlisted securities market of a stock exchange of another Member State of the European Union.
(2) References in this Part to a disposal of shares include references to a disposal of an interest or right in or over the shares, and an individual shall be treated for the purposes of this Part as disposing of any shares which the individual is treated by virtue of section 587 as exchanging for other shares.
(3) References in this Part to the reduction of any amount include references to its reduction to nil.
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PART 16
Relief for Investment in Corporate Trades
Chapter 1
Interpretation (Part 16)
488. Interpretation
(1) In this Part——
‘“associate’” has the same meaning in relation to a person as it has by virtue of subsection (3) of section 433 in relation to a participator;
‘“company’” means a body corporate;
‘“compliance period’” means the pre-investment period and the relevant period;
‘“control’” shall be construed in accordance with subsections (2) to (6) of section 432;
‘“director’” shall be construed in accordance with section 433(4);
‘“emoluments’” has the same meaning as in section 983;
‘“General Block Exemption Regulation’” means Commission Regulation (EU) No. 651/2014 of 17 June 20141;
‘“innovation’” means process innovation or organisational innovation;
‘“market value’” shall be construed in accordance with section 548;
‘“organisational innovation’” means the implementation of a new organisational method in an undertaking’s business practices, workplace organisation or external relations, other than——
(a) changes that are based on organisational methods already in use in the undertaking,
(b) changes in management strategy, mergers and acquisitions, or
(c) any of the following——
(i) ceasing to use a process,
(ii) simple capital replacement or extension,
(iii) changes resulting purely from changes in factor prices, customisation, localisation, regular, seasonal and other cyclical changes, or
(iv) trading of new or significantly improved products;
‘“PPS Number’” has the meaning assigned to it in section 891B(1);
‘“pre-investment period”, in relation to relief in respect of any eligible shares issued by a company, means the period beginning 2 years before the shares were issued, or if later, beginning on the date the first company in the RICT group was incorporated and ending immediately
before the subscription for eligible shares;
‘“process innovation’” means the implementation of a new or significantly improved production or delivery method (including significant changes in techniques, equipment or software), other than——
(a) minor changes or improvements,
(b) increases in production or service capabilities through the addition of manufacturing or logistical systems which are very similar to those already in use, or
(c) any of the following——
(i) ceasing to use a process,
(ii) simple capital replacement or extension,
(iii) changes resulting purely from changes in factor prices, customisation, localisation, regular, seasonal and other cyclical changes, or
(iv) trading of new or significantly improved products;
‘“qualifying new venture’” means a venture consisting of relevant trading activities which are set up and commenced by a new company other than——
(a) activities which were previously carried on by another person and to which the company has succeeded, or
(b) a venture, the activities of which were previously carried on as part of another person’s trade or profession;
‘“relevant period”, in relation to relief in respect of any eligible shares issued by a company, means the period beginning on the date on which the shares were issued and ending 4 years after that date;
‘“relief’” means a deduction from total income granted under this Part, and includes relief granted on a share issue at any time after 6 April 1984 (and the foregoing reference to this Part includes this Part as it stood enacted at any time before the commencement of section 23 of the Finance Act 2018 or, as the case may be, the commencement of section 33(1)(a) of the Finance Act 2011) and subsection (2) supplements this definition;
‘“R&D+I’” means research and development activities (within the meaning of section 766) and innovation.
(2) In this Part a reference to relief under this Part is a reference to, as the case may be——
(a) relief as provided under this Part as it operates by virtue of section 502 or, where the context admits, as it operates by virtue of section 503 or, as appropriate, section 507, or
(b) relief as provided under all of those sections.
(3) References in this Part to a disposal of shares include references to a disposal of an interest or right in or over the shares, and an individual shall be treated for the purposes of this Part as disposing of any shares which the individual is treated by virtue of section 587 as exchanging for other shares.
(4) References in this Part to the reduction of any amount include references to its reduction to nil.
(5) A word or expression that is used in this Part and is also used in the General Block Exemption Regulation shall have the meaning in this Part that it has in that Regulation.
1 OJ No. L187, 26.6.2014, p. 43
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[2]
Inserted by FA00 s19(1)(a). This section shall apply and have effect as on and from 1 May 1998.
[3]
Substituted by FA06 sched2(1)(n). This section is deemed to have come into force and have taken effect as on and from 28 May 2003.
[5]
Substituted by FA07 s19(1)(a)(ii). With effect from 12 April 2005 per SI 614 of 2007.
[6]
Substituted by FA11 s33(1)(a). Has effect in respect of shares issued on or after 25 November 2011. Note: FA 12 s26 (2) amends FA 11 s33 and provides: (b) This section does not have effect in respect of shares issued before 25 November 2011 and, for all the purposes of Part 16 in connection with those shares, the Principal Act has effect as if this section had not been enacted. (c) This section does not have effect in respect of shares issued on or after 25 November 2011 and on or before 31 December 2011 where— (i) the company issuing the shares, or (ii) where the shares are acquired by an investment fund, the fund acquiring the shares, elects by notice in writing to the Revenue Commissioners on or before 31 December 2011 that, for all the purposes of Part 16 of the Principal Act in connection with those shares, the Principal Act has effect as if this section had not been enacted.
[7]
Inserted by FA13 s22(1)(a)(i). Has effect in respect of shares issued on or after 1 January 2013.
[8]
Deleted by FA13 s22(1)(a)(ii). Has effect in respect of shares issued on or after 1 January 2013.
[9]
Inserted by FA14 s27(1)(a)(i). Applies to shares issued on or after 13 October 2015 as per FA15 s18(1)(c).
[10]
Substituted by FA14 s27(1)(a)(ii). Applies to shares issued on or after 13 October 2015 as per FA15 s18(1)(c).
[11]
Deleted by FA14 s27(1)(a)(iii). Applies to shares issued on or after 13 October 2015 as per FA15 s18(1)(c).
[12]
Substituted by FA14 s27(1)(a)(iv). Applies to shares issued on or after 13 October 2015 as per FA15 s18(1)(c).
[15]
Substituted by FA15 s18(2)(a)(ii). Applies to shares issued on or after 13 October 2015.
[16]
Substituted by FA15 s18(2)(a)(iii). Applies to shares issued on or after 13 October 2015.