Taxes Consolidation Act, 1997 (Number 39 of 1997)
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498 Disposals of shares.
[FA84 s17; FA89 s9(d)]
(1) Where an individual disposes of any eligible shares before the end of the relevant period, then—
(a) in a case where the disposal is otherwise than by means of a bargain made at arm’s length, the individual shall not be entitled to any relief in respect of those shares, and
(b) in any other case, the amount of relief to which the individual is entitled in respect of those shares shall be reduced by the amount or value of the consideration which the individual receives for those shares.
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(2) Subsection (1) shall not apply to a disposal made by a wife to her husband at a time when she is treated as living with him for income tax purposes in accordance with section 1015 or to a disposal made at such a time by him to her; but where shares issued to one of them have been transferred to the other by a transaction inter vivos—
(a) that subsection shall apply on the disposal of the shares by the transferee to a third person, and
(b) if at any time the wife ceases to be treated as living with her husband for income tax purposes in accordance with section 1015 and any of those shares have not been disposed of by the transferee before that time, any assessment for withdrawing relief in respect of those shares shall be made on the transferee.
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(2) Subsection (1) shall not apply—
(a) to a disposal made by a married person to his or her spouse at a time when he or she is treated as living with his or her spouse for income tax purposes in accordance with section 1015, or
(b) to a disposal by a civil partner to the other civil partner at a time when he or she is treated as living with his or her civil partner for income tax purposes in accordance with section 1031A,
but where shares issued to one of them have been transferred to the other by a transaction inter vivos—
(i) that subsection shall apply on the disposal of the shares by the transferee to a third person, and
(ii) if at any time the married person ceases to be treated as living with his or her spouse for income tax purposes in accordance with section 1015, or the civil partner ceases to be treated as living with his or her civil partner for income tax purposes in accordance with section 1031A, and any of those shares have not been disposed of by the transferee before that time, any assessment for withdrawing relief in respect of those shares shall be made on the transferee.
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(3) (a) For the purposes of this subsection, references to an option or an agreement shall include references to a right or obligation to acquire or grant an option or enter into an agreement, and references to the exercise of an option shall include references to the exercise of an option which may be acquired or granted by the exercise of such a right or under such an obligation.
(b) Where in the relevant period an individual, either directly or indirectly—
(i) (I) acquires an option where the exercise of the option, either under the terms of the option or under the terms of any arrangement or undertaking subject to which or otherwise in connection with which the option is acquired, would—
(A) bind the person from whom the option was acquired or any other person, or
(B) cause that person or such other person,
to purchase or otherwise acquire any eligible shares for a price which, having regard to the terms of the option or the terms of such arrangement or undertaking and the net effect of those terms considered as a whole, is other than the market value of the eligible shares at the time the purchase or acquisition is made, or
(II) enters into an agreement where, either under the terms of the agreement or under the terms of any arrangement or understanding subject to which or otherwise in connection with which the agreement is made, it would—
(A) bind the person with whom the agreement is made or any other person, or
(B) cause that person or such other person,
to purchase or otherwise acquire any eligible shares in the manner described in clause (I),
or
(ii) (I) grants to any person an option where the exercise of the option, either under the terms of the option or under the terms of any arrangement or understanding subject to which or otherwise in connection with which the option is granted, would bind the individual to dispose, or cause the individual to dispose, of any eligible shares to the person to whom the individual granted the option or any other person for a price which, having regard to the terms of the option or the terms of such arrangement or understanding and the net effect of those terms considered as a whole, is other than the market value of the eligible shares at the time the disposal is made, or
(II) enters into an agreement where, either under the terms of the agreement or under the terms of any arrangement or understanding subject to which or otherwise in connection with which the agreement is made, it would bind the individual to dispose, or cause the individual to dispose, of any eligible shares to the person with whom the agreement is made or any other person in the manner described in clause (I),
the individual shall not be entitled to any relief in respect of the shares to which the option or the agreement relates.
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(4) Where an individual holds ordinary shares of any class in a company and the relief has been given in respect of some shares of that class but not others, any disposal by the individual of ordinary shares of that class in the company shall be treated for the purposes of this section as relating to those in respect of which relief has been given under this Part rather than to others.
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(4) Where an individual holds ordinary shares of any class in a company and the relief has been given in respect of some shares of that class but not others, any disposal by the individual of ordinary shares of that class in the company, not being a disposal to which section 479(3) or 512(2) applies, shall be treated for the purposes of this section as relating to those in respect of which relief has been given under this Part rather than to others.
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(5) Where the relief has been given to an individual in respect of shares of any class in a company which have been issued to the individual at different times, any disposal by the individual of shares of that class shall be treated for the purposes of this section as relating to those issued earlier rather than to those issued later.
(6) Where shares in respect of which the relief was given have by virtue of any such allotment mentioned in subsection (1) of section 584 (not being an allotment for payment) been treated under subsection (3) of that section as the same asset as a new holding—
(a) the new holding shall be treated for the purposes of subsection (4) as shares in respect of which the relief has been given, and
(b) a disposal of the whole or part of the new holding shall be treated for the purposes of this section as a disposal of the whole or a corresponding part of those shares.
(7) Shares in a company shall not be treated for the purposes of this section as being of the same class unless they would be so treated if dealt in on a stock exchange in the State.
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498 Replacement capital.
(1) In this section—
“subsidiary” means a subsidiary of a kind which a qualifying company may have by virtue of section 505;
“trade” includes any business, profession or vocation, and references to a trade previously carried on include references to part of such a trade.
(2) An individual to whom subsection (3) applies is not entitled to relief in respect of any shares in a company where at any time in the specified period the company or any of its subsidiaries—
(a) begins to carry on, as its trade or as a part of its trade, a trade previously carried on at any time in that period otherwise than by the company or any of its subsidiaries, or
(b) acquires the whole or greater part of the assets used for the purposes of a trade previously so carried on.
(3) This subsection applies to an individual where—
(a) any person or group of persons to whom an interest amounting in the aggregate to more than a 50 per cent share in the trade (as previously carried on) belonged at any time in the specified period is a person or a group of persons to whom such an interest in the trade carried on by the company, or any of its subsidiaries, belongs or has at any such time belonged, or
(b) any person or group of persons who controls or at any such time has controlled the company is a person or a group of persons who at any such time controlled another company which previously carried on the trade,
and the individual is that person or one of those persons.
(4) An individual is not entitled to relief in respect of any shares in a company where—
(a) the company comes to acquire all of the issued share capital of another company at any time in the specified period, and
(b) any person or group of persons who controls or has at any such time controlled the company is a person or a group of persons who at any such time controlled that other company,
and the individual is that person or one of those persons.
(5) For the purposes of subsection (3)—
(a) the person or persons to whom a trade belongs and, where a trade belongs to 2 or more persons, their respective shares in that trade shall be determined in accordance with paragraphs (a) and (b) of subsection (1), and subsections (2) and (3), of section 400, and
(b) any interest, rights or powers of a person who is an associate of another person shall be treated as those of that other person.
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498. Qualifying investment (investor perspective)
(1) Subject to section 598J(1), a subscription for eligible shares by an individual in a qualifying company of less than €€250 in a year of assessment shall not be a qualifying investment.
(2) In the case of an individual who is a married person assessed to tax for a year of assessment in accordance with section 1017, or a nominated civil partner assessed to tax for a year of assessment in accordance with section 1031C, any amount subscribed by the individual’s spouse or civil partner for eligible shares issued to that spouse or civil partner in that year of assessment by the company shall be deemed to have been subscribed by the individual for eligible shares issued to the individual by the company.
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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.
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Substituted by F(No.3)A11 sched1(138). Shall have effect from the passing of this Act 27 July 2011.