Taxes Consolidation Act, 1997 (Number 39 of 1997)
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499 Value received from company.
[FA84 s18]
(1) In this section, “ordinary trade debt” means any debt for goods or services supplied in the ordinary course of a trade or business where the credit period given does not exceed 6 months and is not longer than that normally given to the customers of the person carrying on the trade or business.
(2) In this section—
(a) any reference to a payment or transfer to an individual includes a reference to a payment or transfer made to the individual indirectly or to his or her order or for his or her benefit, and
(b) any reference to an individual includes a reference to an associate of the individual and any reference to the company includes a reference to any person connected with the company.
(3) For the purposes of this section, an individual shall receive value from a company where the company—
(a) repays, redeems or repurchases any of its share capital or securities which belong to the individual or makes any payment to the individual for giving up his or her right to any of the company’s share capital or any security on its cancellation or extinguishment,
(b) repays any debt owed to the individual other than—
(i) an ordinary trade debt incurred by the company, or
(ii) any other debt incurred by the company—
(I) on or after the earliest date on which the individual subscribed for the shares in respect of which the relief is claimed, and
(II) otherwise than in consideration of the extinguishment of a debt incurred before that date,
(c) makes to the individual any payment for giving up his or her right to any debt on its extinguishment other than—
(i) a debt in respect of a payment of the kind mentioned in paragraph (d) or (e) of section 493(3), or
(ii) a debt of the kind mentioned in subparagraph (i) or (ii) of paragraph (b),
(d) releases or waives any liability of the individual to the company or discharges, or undertakes to discharge, any liability of the individual to a third person,
(e) makes a loan or advance to the individual,
(f) provides a benefit or facility for the individual,
(g) transfers an asset to the individual for no consideration or for consideration less than its market value or acquires an asset from the individual for consideration exceeding its market value, or
(h) makes to the individual any other payment except a payment of the kind mentioned in paragraph (a), (b), (c), (d) or (e) of section 493(3) or a payment in discharge of an ordinary trade debt.
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(3A) (a) A specified individual shall not have received value from a company by virtue of subsection (3)(b) where—
(i) the specified individual has made an investment in the company by way of a loan,
(ii) the loan is converted into eligible shares within one year of the making of the loan, and
(iii) the specified individual provides a statement by the auditor of the company certifying that, in his or her opinion, the money raised by the company by way of the loan was used, and only used, by it in accordance with the provisions of section 489(1)(c).
(b) Where paragraph (a) applies, conversion of the loan into eligible shares shall, notwithstanding any other provision of this Part, be treated as the making of a relevant investment by the specified individual on the date of the making of the loan.
(c) For the purposes of this subsection “auditor”, in relation to a company, means the person or persons appointed as auditor of the company for all the purposes of the Companies Acts 1963 to 2003.
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(4) For the purposes of this section, an individual shall also receive value from the company where the individual receives in respect of ordinary shares held by the individual any payment or asset in a winding up or in connection with a dissolution of the company, being a winding up or dissolution within section 495(8).
(5) For the purposes of this section, an individual shall also receive value from the company where any person who for the purposes of section 493 would be treated as connected with the company—
(a) purchases any of its share capital or securities which belong to the individual, or
(b) makes any payment to the individual for giving up any right in relation to any of the company’s share capital or securities.
(6) The value received by an individual shall be—
(a) in a case within paragraph (a), (b) or (c) of subsection (3), the amount receivable by the individual or, if greater, the market value of the shares, securities or debt in question,
(b) in a case within subsection (3)(d), the amount of the liability,
(c) in a case within subsection (3)(e), the amount of the loan or advance,
(d) in a case within subsection (3)(f), the cost to the company of providing the benefit or facility less any consideration given for it by the individual,
(e) in a case within subsection (3)(g), the difference between the market value of the asset and the consideration (if any) given for it,
(f) in a case within subsection (3)(h), the amount of the payment,
(g) in a case within subsection (4), the amount of the payment or, as the case may be, the market value of the asset, and
(h) in a case within subsection (5), the amount receivable by the individual or, if greater, the market value of the shares or securities in question.
(7) For the purposes of subsection (3)(d), a company shall be treated as having released or waived a liability where the liability is not discharged by payment within 12 months of the time when it ought to have been discharged by payment.
(8) For the purposes of subsection (3)(e), there shall be treated as if it were a loan made by the company to the individual—
(a) the amount of any debt (other than an ordinary trade debt) incurred by the individual to the company, and
(b) the amount of any debt due from the individual to a third person which has been assigned to the company.
(9) Where an individual who subscribes for eligible shares in a company—
(a) has, before the issue of the shares but within the relevant period, received any value from the company, or
(b) on or after their issue but before the end of the relevant period, receives any such value,
then, the amount of the relief to which the individual is entitled in respect of the shares shall be reduced by the value so received.
(10) Where by virtue of this section any relief is withheld or withdrawn in the case of an individual to whom ordinary shares in a company have been issued at different times, the relief shall be withheld or withdrawn in respect of shares issued earlier rather than in respect of shares issued later.
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499 Value received by persons other than claimants.
(1) The relief to which an individual is entitled in respect of any shares in a company shall be reduced in accordance with subsection (4) if at any time in the specified period the company repays, redeems or repurchases any of its share capital which belongs to any member other than—
(a) that individual, or
(b) another individual whose relief is thereby reduced by virtue of section 497(3),
or makes any payment to any such member for giving up such member’s right to any of the company’s share capital on its cancellation or extinguishment.
(2) Subsection (1) does not apply in relation to the redemption of any share capital for which the redemption date was fixed before 26 January 1984.
(3) Where—
(a) after 5 April 1984, a company issues share capital (in this subsection referred to as the “original shares”) of nominal value equal to the authorised minimum ([3]>within the meaning of the Companies (Amendment) Act 1983<[3][3]>within the meaning of Part 17 of the Companies Act 2014<[3]) for the purposes of complying with the requirements of [4]>section 6<[4][4]>section 1010<[4] of that Act, and
(b) after the registrar of companies has issued the company with a certificate under [4]>section 6<[4][4]>section 1010<[4] of that Act the company issues eligible shares,
then subsection (1) does not apply in relation to any redemption of any of the original shares within 12 months of the date on which those shares were issued.
(4) Where subsection (1) applies, the amount of relief to which an individual is entitled shall be reduced by the amount receivable by the member or, if greater, the nominal value of the share capital in question and, where apart from this subsection, 2 or more individuals would be entitled to relief, the reduction shall be made in proportion to the amounts of relief to which those individuals would have been entitled apart from this subsection.
(5) Where at any time in the specified period a member of a company receives or is entitled to receive any value from the company within the meaning of this subsection, then, for the purposes of section 492(4) in its application to any subsequent time—
(a) the amount of the company’s issued ordinary share capital, and
(b) the amount of the part of that capital which consists of the shares relevant to section 492(4) and the amount of the part consisting of the remainder,
shall each be treated as reduced in accordance with subsection (6).
(6) The amount of each of the parts mentioned in subsection (5)(b) shall be treated as equal to such proportion of that amount as the amount subscribed for that part less the relevant value bears to the amount subscribed, and the amount of the issued share capital shall be treated as equal to the sum of the amounts treated under this subsection as the amount of those parts respectively.
(7) In subsection (5)(b), the reference to the part of the capital which consists of the shares relevant to section 492(4) is a reference to the part consisting of shares which (within the meaning of that section) the individual directly or indirectly possesses or is entitled to acquire, and in subsection (6) the “relevant value”, in relation to each of the parts mentioned in that subsection, means the value received by the member or members entitled to the shares of which that part consists.
(8) For the purposes of subsection (5), a member of a company receives or is entitled to receive value from the company within the meaning of that subsection in any case in which an individual would receive value from the company by virtue of paragraph (d), (e), (f), (g) or (h) of section 497(3) (but treating as excepted from paragraph (h) all payments made for full consideration), and the value received shall be determined as for the purposes of that section.
(9) For the purposes of subsection (8), a person shall be treated as entitled to receive anything which the person is entitled to receive at a future date or will at a future date be entitled to receive.
(10) Where by virtue of this section any relief is withheld or withdrawn in the case of an individual to whom ordinary shares in the company have been issued at different times, the relief shall be withheld or withdrawn in respect of shares issued earlier rather than in respect of shares issued later.
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499. Anti-avoidance: qualifying investment (investor perspective)
(1)(a) For the purposes of this Part, an investment shall not be a qualifying investment in respect of an individual to whom this subsection applies where at any time in the compliance period the company or any of its qualifying subsidiaries——
(i) begins to carry on a business previously carried on at any time in that period otherwise than by the company or any of its qualifying subsidiaries, or
(ii) acquires the whole or greater part of the assets used for the purposes of a business previously so carried on.
(b) This subsection applies to an individual where——
(i) any person or group of persons to whom an interest amounting in the aggregate to more than a 50 per cent share in the business (as previously carried on) belonged at any time in the compliance period is a person or a group of persons to whom such an interest in the business carried on by the company, or any of its subsidiaries, belongs or has at any such time belonged, or
(ii) 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 business,
and the individual is that person or one of those persons.
(2) 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 compliance 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.
(3) For the purposes of subsection (1)(b)——
(a) the person or persons to whom a business belongs and, where a business belongs to 2 or more persons, their respective shares in that business 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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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 FA17 sched2(1)(u)(ii). Deemed to have come into operation on 1 June 2015.