Taxes Consolidation Act, 1997 (Number 39 of 1997)
[15]>
[14]>
495 Qualifying companies.
[FA84 s15(1) to (12); FA85 s13(c); FA87 s10(a); FA91 s17(2); FA93 s25(f); FA95 s17(1)(e); FA96 s22; FA97 s146(1) and Sch9 PtI par13(5)]
[7]>
(1) In this section, “qualifying subsidiary”, in relation to a company, means a subsidiary of that company of a kind which a company may have by virtue of section 507.
(2) A company shall be a qualifying company if it is incorporated in the State and complies with this section.
<[7]
[7]>
(1) In this section—
[11]>
“assisted area” means an area specified in the National Regional State Aid Map for Ireland in relation to the period 1 January 2007 to 31 December 2013 approved under Commission Decision No. N 374/2006 of 24 October 20063;
<[11]
“EEA Agreement” means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993;
“EEA State” means a state which is a contracting party to the EEA Agreement;
“qualifying subsidiary”, in relation to a company, means a subsidiary of that company of a kind which a company may have by virtue of section 507.
(2) A company shall be a qualifying company if it is incorporated in the State or in an EEA State other than the State and complies with this section.
<[7]
(3) (a) The company shall throughout the relevant period be an unquoted company [8]>which is resident in the State and not resident elsewhere,<[8][8]>which is resident in the State, or is resident in an EEA State other than the State and carries on business in the State through a branch or agency,<[8] and be—
(i) a company which exists wholly for the purpose of carrying on wholly or mainly in the State one or more qualifying trades, or
(ii) a company whose business consists wholly of—
(I) the holding of shares or securities of, or the making of loans to, one or more qualifying subsidiaries of the [1]>company, or<[1][1]>company,<[1]
(II) both the holding of such shares or securities, or the making of such loans and the carrying on wholly or mainly in the State of one or more qualifying [2]>trades.<[2][2]>trades, or<[2]
[3]>
(III) both the holding of shares or securities in, or the making of loans to, Exchange Axess, and the carrying on in limited partnership with Exchange Axess of such qualifying trading operations as are referred to in section 496(2)(a)(iv) [4]>and, in the case of a company to which this clause applies, its business shall be regarded as having complied with the conditions of this clause throughout the relevant period (where, otherwise, it would not have done so) if it so complied for that part of the relevant period up to and including 31 December 2002<[4].
<[3]
(b) Where a company raises any amount through the issue of eligible shares for the purposes of raising money for a qualifying trade which is being carried on by a qualifying subsidiary or which such a qualifying subsidiary intends to carry on, the amount so raised shall be used for the purpose of acquiring eligible shares in the qualifying subsidiary and for no other purpose.
[9]>
(3A) The company shall—
(a) as respects the period 5 February 2004 to 31 December 2004 be a small or medium-sized enterprise within the meaning of Annex 1 to Commission Regulation (EC) No. 70/2001 of 12 January 20011, and
(b) as respects the period commencing on 1 January 2005 be a micro, small or medium-sized enterprise within the meaning of Annex 1 to Commission Regulation (EC) No. 364/2004 of 25 February 20042.
<[9]
[12]>
(3B) The company shall as respects the period commencing on 1 January 2007—
(a) be a micro or small enterprise within the meaning of Annex 1 to Commission Regulation (EC) No. 364/2004 of 25 February 20044,
(b) be a medium-sized enterprise within the meaning of Annex 1 to Commission Regulation (EC) No. 364/2004 of 25 February 2004 located in an assisted area, or
(c) where it is not located in an assisted area, be a medium-sized enterprise within the meaning of Annex 1 to Commission Regulation (EC) No. 364/2004 of 25 February 2004 which is at a stage of development not beyond start-up stage within the meaning of the Community Guidelines on State Aid to Promote Risk Capital Investments in Small and Medium-Sized Enterprises5.
(3C) For the purposes of subsection (3B), the location of a company shall be determined by reference to the location at which the company or, as the case may be, the qualifying subsidiary, carries on qualifying trading operations or, in the case of a company which is resident in an EEA State other than the State that carries on business in the State through a branch or agency, the location at which that branch or agency carries on qualifying trading operations.
<[12]
(4) (a) A company whose trade consists of the cultivation of horticultural produce within the meaning of section 496(7) shall not be a qualifying company unless and until it has shown to the satisfaction of the Revenue Commissioners that it has submitted to, and has had approved of by, the Minister for Agriculture and Food (in this subsection referred to as “the Minister”) a 3 year development and marketing plan in respect of the company’s trade, being a plan primarily designed and formulated to increase the exportation of such produce or to displace the importation of such produce.
(b) In considering whether to approve of such a plan, the Minister shall have regard only to such guidelines in relation to such approval as may from time to time be agreed between the Minister and the Minister for Finance, and those guidelines may, without prejudice to the generality of the foregoing, set out—
(i) the extent to which the company’s interest in land and buildings (other than greenhouses) may form part of its total assets,
(ii) specific requirements which have to be met in order to comply with either of the objectives mentioned in paragraph (a), and
(iii) the extent to which the money raised through the issue of eligible shares should be used to identify new markets and to develop new or existing markets for the company’s produce.
(5) A company whose trade consists of the production, publication, marketing and promotion of a qualifying recording within the meaning of section 496(8) shall not be a qualifying company—
(a) unless it exists solely for the purposes of the production, publication, marketing and promotion of a qualifying recording or qualifying recordings by only one new artist, and
(b) unless and until it shows to the satisfaction of the Revenue Commissioners that a certificate referred to in section 496(8) has been given and not revoked by the Minister for Arts, Heritage, Gaeltacht and the Islands to the company in relation to such qualifying recording or qualifying recordings;
but, where a certificate referred to in section 496(8) is revoked by the Minister for Arts, Heritage, Gaeltacht and the Islands, the company shall not be a qualifying company.
(6) (a) A company whose trade includes one or more tourist traffic undertakings within the meaning of section 496(9) shall not be a qualifying company unless and until it has shown to the satisfaction of the Revenue Commissioners that it has submitted to, and has had approved of by, [5]>Bord Fáilte Éireann<[5][5]>the National Tourism Development Authority<[5] a 3 year development and marketing plan in respect of that undertaking or those undertakings, as the case may be, being a plan primarily designed and formulated to increase tourist traffic and revenue from outside the State.
(b) In considering whether to approve of such a plan, [6]>Bord Fáilte Éireann<[6][6]>the National Tourism Development Authority<[6] shall have regard only to such guidelines in relation to such approval as may from time to time be agreed, with the consent of the Minister for Finance, between it and the Minister for Tourism, Sport and Recreation, and those guidelines may, without prejudice to the generality of the foregoing, set out—
(i) the extent to which the company’s interests in land and buildings may form part of its total assets,
(ii) specific requirements which have to be met in order to comply with the objective mentioned in paragraph (a), and
(iii) the extent to which the money raised through the issue of eligible shares should be used in promoting outside the State the undertaking or undertakings, as the case may be.
(7) Without prejudice to the generality of subsection (3) but subject to subsection (8), a company shall cease to comply with subsection (3) if before the end of the relevant period a resolution is passed, or an order is made, for the winding up of the company (or, in the case of a winding up otherwise than under the Companies Act, 1963, any other act is done for the like purpose) or the company is dissolved without winding up.
(8) A company shall not be regarded as ceasing to comply with subsection (3) by reason only of the fact that it is wound up or dissolved without winding up if—
(a) it is shown that the winding up or dissolution is for bona fide commercial reasons and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and
(b) the company’s net assets, if any, are distributed to its members before the end of the relevant period or, in the case of a winding up, the end (if later) of 3 years from the commencement of the winding up.
(9) The company’s share capital shall not at any time in the relevant period include any issued shares not fully paid up.
[13]>
(10) Subject to section 507, the company shall not at any time in the relevant period—
(a) control (or together with any person connected with it control) another company or be under the control of another company (or of another company and any person connected with that other company), or
(b) be a 51 per cent subsidiary of another company or itself have a 51 per cent subsidiary,
and no arrangements shall be in existence at any time in that period by virtue of which the company could fall within paragraph (a) or (b).
<[13]
[13]>
(10) Subject to section 507, the company shall not at any time in the relevant period—
(a) control (or together with any person connected with it control) another company or be under the control of another company (or of another company and any person connected with that other company) unless such control is exercised by the National Asset Management Agency, or by a company referred to in section 616(1)(g), or
(b) be a 51 per cent subsidiary of any company other than the National Asset Management Agency or a company referred to in section 616(1)(g), or itself have a 51 per cent subsidiary,
and no arrangements shall be in existence at any time in that period by virtue of which the company could fall within paragraph (a) or (b).
<[13]
(11) A company shall not be a qualifying company if, in the case of a company in which a relevant investment is made by a specified individual (being that individual’s first such investment in that company), any transaction in the relevant period between the company and another company (being the immediate former employer of the individual), or a company which controls or is under the control of that other company, is otherwise than by means of a transaction at arm’s length, or if—
(a) (i) an individual has acquired a controlling interest in the company’s trade after the 5th day of April, 1984, and
(ii) at any time in the period mentioned in subsection (14) the individual has or has had a controlling interest in another trade,
and
(b) the trade carried on by the company or a substantial part of that trade—
(i) is concerned with the same or similar types of property or parts of property or provides the same or similar services or facilities as the other trade, or
(ii) serves substantially the same or similar outlets or markets as the other trade.
(12) For the purposes of this section, a person shall have a controlling interest in a trade—
(a) in the case of a trade carried on by a company, if—
(i) such person controls the company,
(ii) the company is a close company for the purposes of the Corporation Tax Acts and such person or an associate of such person is a director of the company and the beneficial owner of, or able directly or through the medium of other companies or by any other indirect means to control, more than 30 per cent of the ordinary share capital of the company, or
(iii) not less than 50 per cent of the trade could, in accordance with section 400(2), be regarded as belonging to such person,
or
(b) in any other case, if such person is entitled to not less than 50 per cent of the assets used for, or the income arising from, the trade.
(13) For the purposes of subsection (12), there shall be attributed to any person any rights or powers of any other person who is an associate of that person.
(14) The period referred to in subsection (11)(a)(ii) shall be the period beginning 2 years before and ending 3 years after—
(a) the date on which the shares were issued, or
(b) if later, the date on which the company began to carry on the trade.
(15) In subsections (11) and (14), references to a company’s trade shall include references to the trade of any of its subsidiaries.
[10]>
(16) Notwithstanding the foregoing provisions of this section, a company shall not be a qualifying company while the company is regarded as a firm in difficulty for the purposes of the Community Guidelines on State Aid for rescuing and restructuring firms in difficulty3.
<[10]
Footnotes
[9]>
1 OJ No. L10 of 13 January 2001, p.33
2 OJ No. L63 of 28 February 2004, p. 22
<[9]
[10]>
3 (a) OJ No. C288 of 9 October 1999, p.2 up to and including 9 October 2004, and (b) OJ No. C244 of 1 October 2004, p.2 as on and from 10 October 2004
<[10]
[11]>
3 OJ No. C292 of 1 December 2006, p.11
<[11]
[12]>
4 OJ No. L63 of 28 February 2004, p.22
5 OJ No. C194 of 18 August 2006, p.2
<[12]
<[14]
[14]>
495 Specified individuals.
(1) An individual shall be a specified individual if he or she qualifies for relief in respect of a relevant investment and complies with this section.
(2) The individual, in each of the 3 years of assessment preceding the year of assessment which precedes the year of assessment in which that individual makes a relevant investment (being that individual’s first such investment), shall not have been in receipt of income chargeable to tax otherwise than under—
(a) Schedule E, or
(b) Case III of Schedule D in respect of profits or gains from an office or employment held or exercised outside the State,
in excess of the lesser of—
(i) the aggregate of the amounts, if any, of that individual’s income chargeable to tax under Schedule E and under Case III of Schedule D in respect of the profits or gains referred to in subparagraph (ii), and
(ii) €50,000.
(3) The individual shall throughout the relevant period possess at least 15 per cent of the issued ordinary share capital of the company in which that individual makes a relevant investment.
(4) (a) For the purposes of paragraph (b) and subsections (5) and (6), “specified date”, in relation to a relevant investment in a company, means—
(i) where the investment consists of the subscription of only one amount for eligible shares, the date of that subscription, or
(ii) where that investment consists of the subscription of more than one amount for eligible shares, the date of the last such subscription.
(b) Subject to subsections (5) and (6), the individual at the specified date, in relation to that individual’s first relevant investment in a company, or within the period of 12 months immediately preceding that date, either directly or indirectly, shall not possess or have possessed, or shall not be or have been entitled to acquire, more than 15 per cent of—
(i) the issued ordinary share capital,
(ii) the loan capital (within the meaning of section 492(5)) and the issued share capital, or
(iii) the voting power,
of any company other than—
(I) the company in which that individual makes that relevant investment, or
(II) a company to which subsection (5) applies.
(5) This subsection applies to a company which during a period of 3 years ending on the specified date in relation to an individual’s first relevant investment in a company—
(a) was not entitled to any assets, other than cash on hands or a sum of money on deposit (within the meaning of section 895) not exceeding €130,
(b) did not carry on a trade, profession, business or other activity including the making of investments, and
(c) did not pay charges on income within the meaning of section 243.
(6) (a) For the purposes of paragraph (b) “accounting period” means an accounting period determined in accordance with section 27.
(b) A company shall be regarded as a company which carries on wholly or mainly relevant trading activities referred to in paragraph (c)(i) only if in each of the 3 accounting periods referred to in paragraph (c)(ii) the total amount receivable from sales made or services rendered in the course of such activities is not less than 75 per cent of the total amount receivable by the company from all sales made and services rendered in the course of tourist traffic undertakings and 90 per cent of the total amount receivable by the company from all sales made and services rendered in the course of other relevant trading activities.
(c) An individual shall not be regarded as failing to satisfy the requirements of subsection (4) merely by reason of the fact that the individual does not satisfy those requirements in relation to only one company (other than the company in which the individual makes his or her first relevant investment or a company to which subsection (5) applies)—
(i) which exists wholly or mainly for the purpose of carrying on relevant trading activities, and
(ii) where the total amount receivable by that company from sales made and services rendered in the course of that company’s relevant trading activities did not exceed €127,000 in each of that company’s 3 accounting periods immediately preceding the accounting period of that company in which the specified date occurs in relation to that individual’s first relevant investment.
(7) An individual shall not be regarded as ceasing to comply with subsection (3) merely by reason of the fact that the company in which the individual makes a relevant investment is wound up, or dissolved without winding up, before the end of the relevant period but only if it is shown that the winding up or dissolution is for bona fide commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which was the avoidance of tax.
<[14]
<[15]
[15]>
495. Anti-avoidance: eligible shares
(1) In this section ‘‘distribution’’ has the same meaning as in the Corporation Tax Acts.
(2) For the purposes of this section, an amount specified or implied shall include an amount specified or implied in a foreign currency.
(3) This section applies to shares in a company where any agreement, arrangement or understanding exists which could reasonably be considered to substantially reduce the risk that the person beneficially owning those shares—
(a) might, at or after a time specified in or implied by that agreement, arrangement or understanding, be unable to realise directly or indirectly in money or money’s worth an amount so specified or implied, other than a distribution, in respect of those shares, or
(b) might not receive an amount so specified or implied of distributions in respect of those shares.
(4) The reference in this section to the person beneficially owning shares shall be deemed to be a reference to both that person and any person connected with that person.
(5) Relief from income tax shall not be allowed under this Part in respect of the amount subscribed for any shares to which this section applies.
(6) Without prejudice to the generality of subsection (3), such agreements, arrangements or understandings may include—
(a) the rights associated with the shares as set out in the company’s constitution other than those permitted under section 494(3),
(b) the terms of any shareholders agreement, or
(c) any other agreement, arrangement or understanding with any member of the RICT group or any person connected with any member of the RICT group, including but not limited to—
(i) personal guarantees from existing shareholders that the investor will be able to dispose of the shares after the relevant period, or
(ii) rights over the assets of the qualifying company or its qualifying subsidiaries, in the event that the investor is not able to dispose of the shares after the relevant period.
<[15]
[1]
Substituted by FA00 s19(1)(c)(i). This section shall apply and have effect as on and from 1 May 1998.
[2]
Substituted by FA00 s19(1)(c)(ii). This section shall apply and have effect as on and from 1 May 1998.
[3]
Inserted by FA00 s19(1)(c)(iii). This section shall apply and have effect as on and from 1 May 1998.
[5]
Substituted by FA06 sched2(1)(o)(i). This section is deemed to have come into force and have taken effect as on and from 28 May 2003.
[6]
Substituted by FA06 sched2(1)(o)(ii). This section is deemed to have come into force and have taken effect as on and from 28 May 2003.
[14]
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 in connection with those shares, the Principal Act has effect as if this section had not been enacted.