TAXES CONSOLIDATION ACT, 1997

• (I) enabling the company, or enlarging its capacity, to undertake qualifying trading operations,

• (II) enabling the company to engage in, or assisting the company in—

• (A) research and development,

• (B) the acquisition of technological information and data,

• (C) the development of new or existing products or services, or

• (D) the provision of new products or services,

• (III) enabling the company to identify new markets, and to develop new and existing markets, for its products and services, or

• (IV) enabling the company to increase its sales of products or provision of services,

and

• (ii) with a view to the creation or maintenance of employment—

• (I) in the company, or

• (II) in the case of qualifying trading operations referred to in section 496(2)(a)(ix), in either or both a company contracted to construct the advance factory building concerned and a company which enters into a lease for its use.

• (2) Where the money raised for the purpose specified in subsection (1)(b) was used, is being used or is intended to be used—

• (a) for the purposes of qualifying trading operations referred to in section 496(2)(a)(iv) and in respect of which money is raised or intended to be raised under this Part by virtue of section 496(2)(a)(iv)(II), the evidence referred to in subsection (1)(c) shall include the certificate referred to in section 496(5),

• (b) for the purposes of qualifying trading operations referred to in section 496(2)(a)(vii), the evidence referred to in subsection (1)(c) shall include the certificate referred to in section 496(7),

• (c) for the purposes of qualifying trading operations referred to in section 496(2)(a)(x) (in this paragraph referred to as “the operations”), the evidence referred to in subsection (1)(c) shall include a certificate by an industrial development agency certifying that it is satisfied that the operations—

• (i) have the potential to result in the commencement of qualifying trading operations referred to in subparagraphs (i), (ii) and (viii) of section 496(2)(a), and

• (ii) have commenced,

• (d) for the purposes of qualifying trading operations referred to in section 496(2)(a)(xii), the evidence referred to in subsection (1)(c) shall include the certificate referred to in section 496(8),

• (e) for the purpose of the construction and the leasing of an advance factory building, the evidence referred to in subsection (1)(c) shall include a certificate by an industrial development agency certifying that it has satisfied itself that—

• (i) the building is or will be an advance factory building, and

• (ii) (I) the advance factory building is or will be situated in an area which, on the basis of guidelines agreed with the consent of the Minister for Finance between the industrial development agency and the Minister for Enterprise, Trade and Employment or the Minister for Arts, Heritage, Gaeltacht and the Islands (as may be appropriate in the circumstances), was or is in particular need of development and of the creation of opportunities for employment, and

• (II) the construction of the advance factory building contributes or will contribute significantly to meeting those needs, and

• (f) for the purposes of relevant trading operations, the evidence referred to in subsection (1)(c) shall include a certificate under section 497(2).

• (3) Subject to subsections (4) and (5), relief in respect of the amount subscribed by an individual for any eligible shares shall be given as a deduction of that amount from his or her total income for the year of assessment in which the shares are issued.

• (4) Where—

• (a) in accordance with section 508, relief is due in respect of an amount subscribed as nominee for a qualifying individual by the managers of a designated fund, and

• (b) the eligible shares in respect of which the amount is subscribed are issued in the year of assessment following the year of assessment in which that amount was subscribed to the designated fund,

the individual may elect by notice in writing to the inspector to have the relief due given as a deduction from his or her total income for the year of assessment in which the amount was subscribed to the designated fund, instead of (as provided for in subsection (3)) as a deduction from his or her total income for the year of assessment in which the shares are issued.

• (5)
• (a) Subject to this subsection, a specified individual may, in relation to a relevant investment made by such individual (being that individual's first such investment), elect by notice in writing to the inspector to have the relief due given as a deduction from such individual's total income for any one of the 5 years of assessment immediately before the year of assessment in which the eligible shares in respect of that investment are issued which such individual nominates for the purpose, instead of (as provided for in subsection (3)) as a deduction from the specified individual's total income for the year of assessment in which the shares are issued, and accordingly, subject to section 490 and paragraphs (c) and (d), for the purpose of granting such relief (but for no other purpose of this Part) the shares shall be deemed to have been issued in the year of assessment so nominated.

• (b) Where the specified individual makes a subsequent relevant investment (being that individual's second such investment)—

• (i) in the same company as such individual's first such investment, and

• (ii) within either the year of assessment following the end of the year of assessment in which such individual's first such investment was made or the year of assessment subsequent to that year,

then, the specified individual may, in relation to such individual's second such investment, elect by notice in writing to the inspector to have the relief due given as a deduction from such individual's total income for any one of the 5 years of assessment immediately before the year of assessment in which the eligible shares in respect of such individual's first such investment were issued which such individual nominates for the purpose, instead of (as provided for in subsection (3)) as a deduction from such individual's total income for the year of assessment in which the eligible shares in respect of such individual's second such investment are issued, and accordingly, subject to section 490 and paragraphs (c) and (d), for the purpose of granting such relief (but for no other purpose of this Part) the shares issued in respect of the second such investment shall be deemed to have been issued in the year of assessment so nominated.

• (c) Where any of the years of assessment following the year of assessment nominated under paragraph (a) or (b), as the case may be, precede the year of assessment in which the eligible shares in respect of the specified individual's first relevant investment are in fact issued, subsections (3) to (5) of section 490 shall operate to give relief in such years of assessment as may be nominated by such individual for that purpose.

• (d) To the extent that the amount of the relief which would be due in respect of the specified individual's first relevant investment or second relevant investment, as the case may be, has not been given in accordance with paragraphs (a) to (c) it shall, subject to subsections (3) to (5) of section 490, be given for the year of assessment in which the eligible shares in respect of the first such investment or the second such investment, as the case may be, are in fact issued or, if appropriate, a subsequent year of assessment.

• (e) This subsection shall apply in respect of not more than 2 relevant investments made by a specified individual on or after the 2nd day of June, 1995.

• (6) References in this Part to the amount of the relief are references to the amount of the deduction given under subsection (3), (4) or (5) (as may be appropriate).

• (7)
• (a) Subject to paragraphs (b) and (c), the relief shall be given on a claim and shall not be allowed—

• (i) (I) in the case of a relevant investment, unless and until the company commences to carry on the relevant trading operations, and

• (II) in any other case, unless and until the company has carried on the trade for 4 months, and

• (ii) if the company is not carrying on that trade at the time when the shares are issued, unless the company—

• (I) expends not less than 80 per cent of the money subscribed for the shares on research and development work which is connected with and undertaken with a view to the carrying on of the trade, and begins to carry on the trade within 3 years after that time,

or

• (II) otherwise begins to carry on the trade within 2 years after that time.

• (b) In the case of qualifying trading operations referred to in section 496(2)(a)(ix), for the purposes of paragraph (a), the trade shall be deemed to have commenced on the date on which the construction of the advance factory building commenced.

• (c) In the case of qualifying trading operations referred to in section 496(2)(a)(x), for the purposes of paragraph (a), the trade shall be deemed to have commenced on the date on which the certificate referred to in subsection (2)(c) was issued.

• (8) Subject to subsection (7)(a)(i), a claim for relief may be allowed at any time if the conditions for the relief are then satisfied.

• (9) In the case of a claim allowed before the end of the relevant period, the relief shall be withdrawn if by reason of any subsequent event it appears that the claimant was not entitled to the relief allowed.

• (10) In the case of a claim allowed before a specified individual commences a relevant employment with the company in which that individual has made a relevant investment (being that individual's first such investment), the relief shall be withdrawn if the specified individual fails to commence such employment—

• (a) within the year of assessment in which the investment is made, or

• (b) if later, within 6 months of the date of—

• (i) where the investment consists of the subscription of only one amount for eligible shares, that subscription, or

• (ii) where the investment consists of the subscription of more than one amount for eligible shares, the last such subscription.

• (11) Where by reason of its being wound up, or dissolved without winding up, the company carries on the qualifying trade for a period shorter than 4 months, subsection (7)(a)(i) shall apply as if it referred to that shorter period but only if it is shown that the winding up or dissolution was for bona fide commercial reasons and not as part of a scheme or arrangement the main purpose or one of the main purposes of which was the avoidance of tax.

• (12) Subject to section 506, no account shall be taken of the relief, in so far as it is not withdrawn, in determining whether any sums are excluded by virtue of section 554 from the sums allowable as a deduction in the computation of gains and losses for the purposes of the Capital Gains Tax Acts.

• (13) Where an individual is entitled to relief under this section in respect of a subscription by him or her for eligible shares in a company, he or she shall not be entitled to relief in respect of that subscription under section 479.

• (14)
• (a) In this subsection, “distribution” has the same meaning as in the Corporation Tax Acts.

• (b) For the purposes of this subsection, an amount specified or implied shall include an amount specified or implied in a foreign currency.

• (c) This subsection shall apply to shares in a company where any agreement, arrangement or understanding exists which could reasonably be considered to eliminate the risk that the person beneficially owning those shares—

• (i) 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

• (ii) might not receive an amount so specified or implied of distributions in respect of those shares.

• (d) The reference in this subsection to the person beneficially owning shares shall be deemed to be a reference to both that person and any person connected with that person.

• (e) Relief from income tax shall not be allowed under this Part in respect of the amount subscribed for any shares to which this subsection applies.

• (15) This section shall apply only where the shares concerned are issued in the period commencing on the 6th day of April, 1984, and ending on the 5th day of April, 1999.

490 Limits on the relief. [ITA67 s195B(3) and (6); FA84 s13(1) to (2C); FA87 s9; FA93 s10(1) and s25(c)(i); FA96 s18]

490.—(1) (a) Subject to section 508 and paragraph (b), the relief shall not be given in respect of any amount subscribed by an individual for eligible shares issued to the individual by any company in any year of assessment unless the amount or total amount subscribed by the individual for the eligible shares issued to the individual by the company in that year is £200 or more.

• (b) In the case of an individual who is a married person assessed to tax for a year of assessment in accordance with section 1017, any amount subscribed by the individual's spouse for eligible shares issued to that spouse 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.

• (2) The relief shall not be given to the extent to which the amount or total amount subscribed by an individual for eligible shares issued to the individual in any year of assessment (whether or not by the same company) exceeds £25,000.

• (3)
• (a) Where in any year of assessment a greater amount of relief would be given to an individual in respect of the amount or the total amount subscribed by the individual for eligible shares (in this subsection referred to as “the relevant subscription”) issued to the individual in that year or, where section 489(4) applies, in the following year of assessment but for either or both of the following reasons—

• (i) an insufficiency of total income, or

• (ii) the operation of subsection (2),

the amount of the relief which would be given but for those reasons less the amount or the aggregate amount of any relief in respect of the relevant subscription which is given in that year of assessment shall be carried forward to the next year of assessment, and shall be treated for the purposes of the relief as an amount subscribed directly by the individual for eligible shares issued to the individual in that next year.

• (b) This subsection shall not apply for any year of assessment subsequent to the year 1998-99.

• (4)
• (a) If and in so far as an amount once carried forward to a year of assessment under subsection (3) (and treated as an amount subscribed directly by an individual for eligible shares issued to the individual in that year of assessment) is not deducted from his or her total income for that year of assessment, it shall be carried forward again to the next year of assessment (and treated as an amount subscribed directly by the individual for eligible shares issued to the individual in that next year), and so on for succeeding years of assessment.

• (b) This subsection shall not apply for any year of assessment subsequent to the year 1998-99.

• (5) The relief shall be given to an individual for any year of assessment in the following order—

• (a) in the first instance, in respect of an amount carried forward from an earlier year of assessment in accordance with subsection (3) or (4) and, in respect of such an amount so carried forward, for an earlier year of assessment in priority to a later year of assessment, and

• (b) only thereafter, in respect of any other amount for which relief is to be given in that year of assessment.

491 Restriction on relief where amounts raised exceed permitted maximum. [FA84 s13A; FA89 s9; FA91 s15(1)(c) and s17(1)(b) and (c); FA93 s25(d)(i)(II) and FA96 s19(1) and (2); FA97 s146(1) and Sch9 par13(2)]

491.—(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) Subject to this section, where a company raises any amount through the issue of eligible shares (in this section referred to as “the relevant issue”), relief shall not be given in respect of the excess of the amount over the amount determined by the formula—

£1,000,000 – A

where A is the lesser of—

• (i) £1,000,000, and

• (ii) an amount equal to the aggregate of all amounts raised by the company through the issue of eligible shares at any time before the relevant issue.

• (b) Notwithstanding paragraph (a), in the case of a company which, or whose qualifying subsidiary, either carries on or intends to carry on qualifying trading operations referred to in section 496(2) (a) (iv), this section shall apply, in relation to that company and money raised or intended to be raised by it under this Part by virtue of section 496(2) (a) (iv) (II), as if in the formula in paragraph (a) and in the formula in subsection (3) “£100,000” were substituted for “£1,000,000” in each place where it occurs.

• (3) Where a company raises any amount through a relevant issue and that company is associated (within the meaning of this section) with one or more other companies, then, as respects that company, relief shall not be given in respect of the excess of the amount so raised over the amount determined by the formula—

£1,000,000 – B

where B is an amount equal to so much as does not exceed £1,000,000 of the aggregate of all amounts raised through the issue of eligible shares at any time before or on the date of the relevant issue (other than the amount raised through the relevant issue) by all of the companies (including that company) which are associated within the meaning of this section.

• (4) For the purposes of this section, a company shall be associated with another company where—

• (a) in the case of that company, or a company which is, or was at any time, its qualifying subsidiary, and

• (b) that other company, or a company which is, or was at any time, its qualifying subsidiary,

it could reasonably be considered that—

• (i) both companies act in pursuit of a common purpose,

• (ii) any person or any group of persons or groups of persons having a reasonable commonality of identity have or had the means or power, either directly or indirectly, to determine the trading operations carried on or to be carried on by both companies, or

• (iii) both companies are under the control of any person or group of persons or groups of persons having a reasonable commonality of identity;

but for the purposes of this section a company shall not be considered as associated with another company by reason only of the fact that a subscription for eligible shares in both companies is made by a person or persons having the management of an investment fund designated under section 508 as nominee for any person or group or groups of persons.

• (5) In determining for the purposes of the formula in subsection (2)(a) or, as the case may be, the formula in subsection (3) the amount to which paragraph (ii) of the definition of “A” in subsection (2)(a) or, as the case may be, the amount to which the definition of “B” in subsection (3) relates, account shall not be taken of any amount—

• (a) which is subscribed by a person other than an individual who qualifies for relief, or

• (b) in respect of which relief is precluded by virtue of section 490.

• (6) Where as a consequence of subsection (2) or (3) the giving of relief would be precluded on claims in respect of shares issued to 2 or more individuals, the available relief shall be divided between them respectively in proportion to the amounts which have been subscribed by them for the shares to which their claims relate and which apart from this section would be eligible for relief.

492 Certification in respect of an issue of eligible shares where aggregate of amounts raised by a company exceeds £250,000. [FA84 s13B; FA96 s20; FA97 s146(1) and Sch9 par13(3)]

492.—(1) (a) In this section, “relevant certificate” means a certificate from an authority (within the meaning of this section) given to a company in relation to a relevant issue, certifying, on the basis of a business plan of the company and any other information which the company supplies to the authority or which the authority may reasonably request the company to furnish to it, that, having regard to the amount of money raised or to be raised by the relevant issue, the authority is satisfied that—

• (i) the purpose or purposes specified in section 489(1)(c)(i) for which the money raised or to be raised is intended to be used has or have the potential to create a reasonable level of additional sustainable employment in the company, or

• (ii) the money raised or to be raised is necessary to secure the survival of the company and maintain a reasonable level of sustainable employment.

• (b) In considering whether to give a relevant certificate to a company, an authority shall have regard only to such guidelines for that purpose as may from time to time be agreed—

• (i) with the consent of the Minister for Finance, between the certifying agency and the Minister for Arts, Heritage, Gaeltacht and the Islands or the Minister for Enterprise, Trade and Employment or the Minister for the Marine and Natural Resources or the Minister for Tourism, Sport and Recreation (as may be appropriate in the circumstances), or

• (ii) between the certifying Minister and the Minister for Finance,

and those guidelines may, without prejudice to the generality of the foregoing, include provision—

• (I) for the submission to the authority by the company concerned, in relation to its business plan, of an annual progress report in a form to be specified by the authority,

• (II) to ensure that money raised through a relevant issue is used by a company or its qualifying subsidiary only for one or more of the purposes specified in section 489(1)(c)(i) and for no other purposes,

• (III) that the issue of the certificate does not represent any form of approval by the authority of the commercial viability of the qualifying trading operations carried on or to be carried on by the company concerned, and

• (IV) for regarding as null and void from its date of issue a relevant certificate where the company concerned fails to comply with its business plan or any modification of that plan which may be agreed between it and the authority.

• (2) In this section, “combined certificate” means a certificate given by an authority to a company which comprises—

• (a) (i) a certificate referred to in section 489(2)(c),

• (ii) an approval of a development and marketing plan referred to section 495(6)(a),

• (iii) (I) an approval of a development and marketing plan referred to in section 495(4)(a), and

• (II) a certificate referred to in section 496(7),

or

• (iv) a certificate referred to in section 496(8),

and

• (b) a relevant certificate.

• (3) In this section, “authority” means—

• (a) in respect of qualifying trading operations referred to in subparagraph (i), (ii), (vi) or (x) of section 496(2)(a), Forbairt, the Industrial Development Agency (Ireland), the Shannon Free Airport Development Company Limited or Údarás na Gaeltachta (as may be appropriate); but, for the purposes of qualifying trading operations referred to in subparagraph (i) of section 496(2)(a), “authority” shall mean Bord Iascaigh Mhara in the case of those qualifying trading operations in respect of which Bord Iascaigh Mhara administers a scheme of assistance to grant aid,

• (b) in respect of qualifying trading operations referred to in subparagraph (vii), (viii) or (xi) of section 496(2)(a), the Minister for Agriculture and Food,

• (c) in respect of qualifying trading operations referred to in subparagraph (xii) of section 496(2)(a), the Minister for Arts, Heritage, Gaeltacht and the Islands,

• (d) in respect of qualifying trading operations referred to in subparagraph (xiii) of section 496(2)(a), Bord Fáilte Éireann, and

• (e) in respect of qualifying trading operations referred to in subparagraph (xiv) of section 496(2)(a), An Bord Tráchtála.

• (4) An authority shall not issue a combined certificate unless and until all necessary conditions have been satisfied for the issue of—

• (a) in the first instance (as may be appropriate)—

• (i) the certificate referred to in subparagraph (i) or (iv), as the case may be, of subsection (2)(a),

• (ii) the approval referred to in subsection (2)(a)(ii), or

• (iii) the approval and certificate referred to in subsection (2)(a)(iii),

and

• (b) only thereafter, the relevant certificate.

• (5)
• (a) Subject to this section, where on or after the 23rd day of January, 1996, a company raises any amount through the issue of eligible shares (in this section referred to as “the relevant issue”) for the purpose of qualifying trading operations other than those operations referred to in section 496(2)(a)(ix), relief shall not be given in respect of the excess of the amount over the amount determined by the formula set out in the Table to this subsection unless the company produces to the Revenue Commissioners a relevant certificate or a combined certificate.

• (b) Where the company referred to in paragraph (a) is associated with one or more other companies within the meaning of section 491, then, A in the formula set out in the Table to this subsection shall include the aggregate of the amounts raised through the issue of eligible shares at any time before or on the date of the relevant issue (other than the amount raised through the relevant issue) by all the companies so associated (including that company).

TABLE

£250,000 – A

where A is the lesser of—

• (i) £250,000, or

• (ii) an amount equal to the aggregate of all amounts raised by the company through the issue of eligible shares before or on the date of the relevant issue (other than the amount raised through the relevant issue).

• (6) Subsections (5) and (6) of section 491 shall, with any necessary modifications, apply for the purposes of this section as they apply for the purposes of that section.

493 Individuals qualifying for relief. [FA84 s14; FA93 s25(e); FA94 s16(1)(b); FA97 s146(1) and Sch9 par13(4)]

493.—(1) (a) An individual shall qualify for relief if he or she subscribes on his or her own behalf for eligible shares in a qualifying company and is not at any time in the relevant period connected with the company.

• (b) For the purposes of this section and paragraph 2 of Schedule 10, any question whether an individual is connected with a company shall be determined in accordance with this section.

• (2) An individual shall be connected with a company if the individual or an associate of the individual is—

• (a) a partner of the company, or

• (b) subject to subsection (3), a director or employee of the company or of another company which is a partner of that company.

• (3) An individual shall not be connected with a company by reason only that the individual or an associate of the individual is a director or employee of the company or of another company which is a partner of that company unless the individual or the individual's associate (or a partnership of which the individual or the individual's associate is a member) receives a payment from either company during the period of 5 years beginning on the date on which the shares are issued or is entitled to receive such a payment in respect of that period or any part of it; but for that purpose there shall be disregarded—

• (a) any payment or reimbursement of travelling or other expenses wholly, exclusively and necessarily incurred by the individual or the individual's associate in the performance of the duties of the individual or of the associate, as the case may be, as such director or employee,

• (b) any interest which represents no more than a reasonable commercial return on money lent to either company,

• (c) any dividend or other distribution paid or made by either company which does not exceed a normal return on the investment,

• (d) any payment for the supply of goods to either company which does not exceed their market value, and

• (e) any reasonable and necessary remuneration which—

• (i) (I) is paid for services rendered to either company in the course of a trade or profession (not being secretarial or managerial services or services of a kind provided by the company itself), and

• (II) is taken into account in computing the profits or gains of the trade or profession under Case I or II of Schedule D or would be so taken into account if it fell in a period on the basis of which those profits or gains are assessed under that Schedule,

or

• (ii) in a case where the individual is a director or an employee of either company and is not otherwise connected with either company, is paid for service rendered to the company of which the individual is a director or an employee in the course of the directorship or the employment.

• (4) An individual shall be connected with a company if he or she directly or indirectly possesses or is entitled to acquire more than 30 per cent of—

• (a) the issued ordinary share capital of the company,

• (b) the loan capital and issued share capital of the company, or

• (c) the voting power in the company.

• (5) For the purposes of subsection (4)(b), the loan capital of a company shall be treated as including any debt incurred by the company—

• (a) for any money borrowed or capital assets acquired by the company,

• (b) for any right to receive income created in favour of the company, or

• (c) for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the amount of the debt (including any premium on the debt).

• (6) An individual shall be connected with a company if he or she directly or indirectly possesses or is entitled to acquire such rights as would, in the event of the winding up of the company or in other circumstances, entitle the individual to receive more than 30 per cent of the assets of the company which would at that time be available for distribution to equity holders of the company, and for the purposes of this subsection—

• (a) the persons who are equity holders of the company, and

• (b) the percentage of the assets of the company to which the individual would be entitled,

shall be determined in accordance with sections 413 and 415, references in section 415 to the first company being construed as references to an equity holder and references to a winding up being construed as including references to any other circumstances in which assets of the company are available for distribution to its equity holders.

• (7) An individual shall be connected with a company if he or she has control of it within the meaning of section 11.

• (8)
• (a) An individual shall not be connected with a company by reason only of subsection (4), (6) or (7)—

• (i) if throughout the relevant period the aggregate of all amounts subscribed for the issued share capital and the loan capital (within the meaning of subsection (5)) of the company does not exceed £250,000, or

• (ii) in the case of a specified individual, by virtue only of a relevant investment in respect of which he or she has been given relief in accordance with section 489(5).

• (b) Notwithstanding paragraph (a), relief granted to an individual in respect of a subscription for eligible shares at a time when by virtue of this subsection the individual was not connected with the company shall not be withdrawn by reason only that the individual subsequently becomes connected with the company by virtue of subsection (4), (6) or (7).

• (9) For the purposes of this section, an individual shall be treated as entitled to acquire anything which he or she is entitled to acquire at a future date or will at a future date be entitled to acquire, and there shall be attributed to any person any rights or powers of any other person who is an associate of that person.

• (10) In determining for the purposes of this section whether an individual is connected with a company, no debt incurred by the company by overdrawing an account with a person carrying on a business of banking shall be treated as loan capital of the company if the debt arose in the ordinary course of that business.

• (11) Where an individual subscribes for shares in a company with which the individual is not connected (either within the meaning of this section or by virtue of paragraph 2(2)(b) of Schedule 10), he or she shall nevertheless be treated as connected with it if he or she subscribes for the shares as part of any arrangement which provides for another person to subscribe for shares in another company with which the individual or any other individual who is a party to the arrangement is connected (within the meaning of this section or by virtue of that paragraph).

494 Specified individuals. [FA84 s14A; FA95 s17(1)(d); FA97 s9(b)]

494.—(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)
• (a) Subject to paragraph (b), 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—

• (i) Schedule E, or

• (ii) 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) £15,000.

• (b) Paragraph (a) shall not apply to an individual who makes a subscription for eligible shares in a qualifying company which carries on or intends to carry on qualifying trading operations referred to in section 496(2)(a)(iv).

• (3) The individual shall throughout the relevant period possess at least 15 per cent of—

• (a) as respects a subscription for eligible shares made before the 2nd day of June, 1995, the issued share capital, or

• (b) as respects a subscription for eligible shares made on or after that date, 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 493(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 shall apply to a company which during a period of 5 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 £100,

• (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)—

• (i) “accounting period” means an accounting period determined in accordance with section 27, and

• (ii) a company shall be regarded as a company which carries on wholly or mainly trading operations referred to in paragraph (b)(i) only if in each of the 3 accounting periods referred to in paragraph (b)(ii) the total amount receivable from sales made or services rendered in the course of such trading operations 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 the trade.

• (b) 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 trading operations other than trading operations consisting of dealing in shares, securities, land, currencies, futures or traded options, and

• (ii) where the total amount receivable by that company from sales made and services rendered in the course of that company's trading operations did not exceed £100,000 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.

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)]

495.—(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.

• (3)
• (a) The company shall throughout the relevant period be an unquoted company which is resident in the State and not resident elsewhere, 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 company, or

• (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 trades.

• (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.

• (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, Bord Fáilte Éireann 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, Bord Fáilte Éireann 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 bonafide 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.

• (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).

• (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.

496 Qualifying trades. [FA84 s16(1) to (3); FA87 s11; FA88 s7; FA89 s9(c)(i); FA90 s10(c); FA91 s15(1)(c)(ii) and (iii); FA93 s25(g)(i); FA94 s16(1)(c); FA95 s17(1)(f); FA96 s23; FA97 s9(c)]

496.—(1) A trade shall be a qualifying trade if it complies with the requirements of this section.

• (2) The trade shall throughout the relevant period—

• (a) consist wholly or mainly of one or more of the following trading operations (in this Part referred to as “qualifying trading operations”)—

• (i) the manufacture of goods within the meaning of Part 14; but—

• (I) those trading operations or activities included in the definition, or regarded as the manufacture in the State, of “goods” for the purpose of Part 14 by virtue of subsections (3), (11), (12), (16), (17) and (19) of section 443 and of section 446 shall not, subject to the following provisions of this paragraph, be regarded as qualifying trading operations for the purposes of this Part, and

• (II) the production of a film (within the meaning of section 481) shall not be regarded as qualifying trading operations for the purposes of this Part,

• (ii) the rendering of services (other than relevant trading operations within the meaning of section 446) in the course of a service industry (within the meaning of the Industrial Development Act, 1986) in respect of which—

• (I) (A) a grant towards the employment of persons was made by Forbairt or the Industrial Development Agency (Ireland) under section 12(2) of the Industrial Development Act, 1993, or

• (B) shares in the qualifying company concerned were purchased or taken by Forbairt or the Industrial Development Agency (Ireland) in accordance with section 31 of the Industrial Development Act, 1986,

• (II) a grant under section 3, or financial assistance under section 4 of the Shannon Free Airport Development Company Limited (Amendment) Act, 1970, was made available by the Shannon Free Airport Development Company Limited, or

• (III) financial assistance was made available by Údarás na Gaeltachta under section 10 of the Údarás na Gaeltachta Act, 1979,

• (iii) in respect of a relevant investment, the rendering of services referred to in subparagraph (ii) in respect of which an employment grant would have been made or a grant or financial assistance would have been made available, as the case may be, by an industrial development agency under one of the provisions referred to in that subparagraph only for the fact that the industrial development agency concerned was or is precluded from making such an employment grant or making available such a grant or financial assistance, as the case may be, by reason of the fact that a grant or financial assistance had already been made by some other person,

• (iv) in respect of—

• (I) a relevant investment, or

• (II) a subscription for eligible shares, other than such a subscription consisting of a relevant investment, made on or before the 5th day of April, 1998, and in respect of which a certificate for the purposes of this Part has been issued in accordance with subsection (5),

and notwithstanding subparagraph (ii), the rendering of relevant trading operations (within the meaning of section 446) carried on for the purposes of or in connection with trading operations on an exchange facility established in the Custom House Docks Area (within the meaning of section 322),

• (v) in respect of a relevant investment, the rendering of services referred to in subparagraph (ii) in respect of which an industrial development agency or, as respects a relevant investment made on or after the 10th day of May, 1997, a County Enterprise Board (being a board referred to in the Schedule to the Industrial Development Act, 1995) has provided financial support of not less than £2,000 towards the undertaking of a feasibility study by a person approved of by the agency or the County Enterprise Board into the potential commercial viability of the services to be rendered,

• (vi) research and development activities within the meaning of subsection (6),

• (vii) the cultivation of horticultural produce within the meaning of subsection (7),

• (viii) the cultivation of plants referred to in section 443(3),

• (ix) the construction and the leasing of an advance factory building,

• (x) the research and development or other similar activity undertaken with a view to the carrying on of trading operations referred to in subparagraphs (i), (ii) and (viii),

• (xi) the cultivation of mushrooms in the State,

• (xii) the production, publication, marketing and promotion of a qualifying recording, or qualifying recordings, within the meaning of subsection (8),

• (xiii) the operation of one or more tourist traffic undertakings within the meaning of subsection (9), and

• (xiv) the sales of export goods by a Special Trading House within the meaning of section 443(12),

and

• (b) where the trade consists wholly or partly of the manufacture of goods referred to in paragraph (a)(i), be a trade in respect of which the company which carries it on has claimed and is entitled, or but for an insufficiency of profits would have claimed and been entitled, to relief from corporation tax under Part 14.

• (3) Notwithstanding subsection (2), a trade which during the relevant period consists partly of qualifying trading operations and partly of other trading operations shall be regarded for the purposes of that subsection as a trade which consists wholly or mainly of qualifying trading operations only if the total amount receivable in the relevant period from sales made and services rendered in the course of qualifying trading operations 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 the trade in the relevant period.

• (4)
• (a) In this subsection—

“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—

• (i) loans, mortgages, leasing, lease rental and hire-purchase, and all similar arrangements,

• (ii) equity investment,

• (iii) the factoring of debts and the discounting of bills, invoices and promissory notes, and all similar instruments,

• (iv) the underwriting of debt instruments and all other kinds of financial securities, and

• (v) the purchase or sale of financial assets;

“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.

• (b) For the purposes of this section—

• (I) the leasing of machinery or plant,

• (II) the leasing of land or buildings (other than the leasing of an advance factory building), or

• (III) the carrying on of financial activities (other than such financial activities as are included in the activities referred to in subsection (2)(a)(iv)), shall not be regarded as qualifying trading operations.

• (5)
• (a) In this subsection, “certification committee” means the committee consisting of a chairperson and 4 other members who from time to time may be appointed by the Minister for Finance for the purposes of this section.

• (b) Subject to paragraph (c), the certification committee may, subject to such conditions as the committee considers proper and specifies in a certificate under this subsection, including a condition as to the maximum amount of money which may be raised by the company under this Part, issue a certificate for the purposes of this Part to a company which carries on or intends to carry on qualifying trading operations referred to in subsection (2)(a)(iv) and in respect of which money is raised or intended to be raised by the company under this Part by virtue of subsection (2)(a)(iv)(II), where—

• (i) on the basis of such information as is supplied to the committee by the company or which the committee may reasonably request the company to furnish to it, and

• (ii) such guidelines for the purpose as may be agreed from time to time between the committee and the Minister for Finance,

the committee is satisfied that—

• (I) the qualifying trading operations carried on or to be carried on by the company will contribute to the development of the exchange facility on which those operations will be carried on, and

• (II) the money raised or to be raised by the company under this Part has the potential to maintain or create a reasonable level of sustainable employment.

• (c) The certification committee shall not give a certificate under this subsection to a company—

• (i) after the 5th day of April, 1998, and

• (ii) to the extent that the aggregate of all subscriptions made or to be made for eligible shares arising out of the issue of such certificates exceeds £2,000,000.

• (6)
• (a) For the purposes of subsection (2)(a)(vi), “research and development activities” means systematic, investigative or experimental activities which—

• (i) are carried on wholly or mainly in the State,

• (ii) involve innovation or technical risk, and

• (iii) are carried on for the purpose of—

• (I) acquiring new knowledge with a view to that knowledge having a specific commercial application or

• (II) creating new or improved materials, products, devices, processes or services,

and other activities that are carried on wholly or mainly in the State for a purpose directly related to the carrying on of activities of the kind referred to in subparagraph (iii).

• (b) Notwithstanding paragraph (a), activities that are carried on by means of—

• (i) market research, market testing, market development, sales promotion or consumer surveys,

• (ii) quality control,

• (iii) prospecting, exploring or drilling for minerals, petroleum or natural gas for the purpose of determining the size or quality of any deposits,

• (iv) the making of cosmetic modifications or stylistic changes to products, processes or production methods,

• (v) management studies or efficiency surveys, or

• (vi) research in social sciences, arts or humanities,

shall not be “research and development activities” for the purposes of subsection (2)(a)(vi).

• (c) For the purposes of paragraph (a), systematic, investigative or experimental activities or other activities shall be regarded as carried on wholly or mainly in the State only if not less than 75 per cent of the total amount expended in the course of such activities in the relevant period is expended in the State.

• (7) For the purposes of subsection (2)(a)(vii), “the cultivation of horticultural produce” means the cultivation in a greenhouse or greenhouses in the State of plants used for food or for the production of food or ornament or of herbaceous plants, and includes the technical procedures in relation to such cultivation necessary for the production and preparation for market of flowers, decorative foliage, fruit, nursery stock, herbs and vegetable crops (including potatoes and seed potatoes), being a greenhouse or greenhouses in respect of which a certificate has been issued by the Minister for Agriculture and Food certifying that—

• (a) the construction, improvement or repair of the greenhouse or greenhouses concerned, or

• (b) the installation or improvement of irrigation or heating facilities in the greenhouse or greenhouses concerned,

may be eligible to be grant-aided under a scheme of assistance administered by that Minister.

• (8)
• (a) For the purposes of subsection (2)(a)(xii), “qualifying recording” means a recording in any recording format in any musical style, including any associated video directly related to such recording, by a new artist, produced in a studio in the State, in respect of which the Minister for Arts, Heritage, Gaeltacht and the Islands (in this subsection referred to as “the Minister”) has, subject to such conditions as the Minister may consider proper and specifies in a certificate under this subsection, including a condition as to the maximum amount of money which may be raised under this Part in relation to a qualifying recording, given a certificate to the company which intends to produce the qualifying recording, stating that the recording and any such associated video may be treated as a qualifying recording for the purposes of this Part.

• (b) In considering whether to give a certificate under this subsection, the Minister shall have regard only to such guidelines as the Minister may from time to time lay down with the consent of the Minister for Finance, and those guidelines may, without prejudice to the generality of the foregoing, include provision for—

• (i) the circumstances in which an artist is to be, and continues to be, regarded as a new artist, and

• (ii) the manner, extent and timing in which the money to be raised under this Part by a company for the production, publication, marketing and promotion of a qualifying recording is to be used.