697E Requirement that not more than 75 per cent of fleet tonnage is chartered in.

(1) It shall be a requirement (in this Part and Schedule 18B referred to as the “75 per cent limit”) of entering or remaining within tonnage tax—

(a) in the case of a single company, that not more than 75 per cent of the net tonnage of the qualifying ships operated by it is chartered in,

(b) in the case of a group of companies, that not more than 75 per cent of the aggregate net tonnage of the qualifying ships operated by the members of the group that are qualifying companies is chartered in.

(2) A ship shall not be counted more than once in determining for the purposes of subsection (1)(b) the aggregate net tonnage of the qualifying ships operated by the members of a group that are qualifying companies.

(3) Where a tonnage tax election (not being a renewal election) is made before the end of the initial period and the 75 per cent limit is exceeded in the first relevant accounting period, the election shall be treated as never having been of any effect.

(4) Where a tonnage tax election (not being a renewal election) is made after the end of the initial period, then—

(a) if the 75 per cent limit is exceeded in the first relevant accounting period, the election shall not have effect in relation to that period,

(b) if the 75 per cent limit is exceeded in the first and second relevant accounting periods, the election shall not have effect in relation to either of those periods, and

(c) if the 75 per cent limit is exceeded in the first, second and third relevant accounting periods, the election shall be treated as never having been of any effect.

(5) For the purposes of subsections (3) and (4) the first, second or third relevant accounting period means—

(a) in relation to a single company, the accounting period that, if the election had been effective, would have been the first, second or third accounting period of the company after its entry into tonnage tax, and

(b) in relation to a group of companies, the accounting period that, if the election had been effective, would have been the first, second or third accounting period of a member of the group that would have been a tonnage tax company.

(6) References in this section to the 75 per cent limit being exceeded in an accounting period are to the limit being exceeded on average over the accounting period in question.

(7) (a) If the 75 per cent limit is exceeded in 2 or more consecutive accounting periods of a tonnage tax company (in this subsection referred to as the “relevant company”) the Revenue Commissioners may give notice excluding the relevant company or the group of companies of which the relevant company is a member from tonnage tax.

(b) The effect of any such notice is that the relevant company’s tonnage tax election or the tonnage tax election of the group of which the relevant company is a member shall cease to be in force from such date as may be specified in the notice.

(c) The specified date shall not be earlier than the beginning of the accounting period of the relevant company that follows the second consecutive accounting period of that company in which the limit is exceeded.

(d) Subject to any arrangements under paragraph 22 of Schedule 18B, a notice under this subsection need only be given to the relevant company.