Taxes Consolidation Act 1997

803.—(1) Where the personal representatives of a deceased person have as such a right in relation to the estate of another deceased person such that, if that right were vested in them for their own benefit, they would have an absolute interest or a limited interest in the residue of that estate or in part of the residue of that estate, the personal representatives shall be deemed to have that interest notwithstanding that that right is not vested in them for their own benefit, and any amount deemed to be paid to them as income by virtue of this Chapter shall be treated as part of the aggregate income of the estate of the person whose personal representatives they are.

(2) Where different persons have successively during the administration period absolute interests in the residue of the estate of a deceased person or in a part of the residue of that estate, sums paid during that period in respect of the residue or of that part of the residue, as the case may be, shall be treated for the purpose of this Chapter as having been paid in respect of the interest of the person who first had an absolute interest in that residue or that part of that residue up to the amount of—

(a) in the case of an Irish estate, the aggregate for all years of that person's residuary income less income tax at the standard rate of tax, or

(b) in the case of a foreign estate, the aggregate for all years of that person's residuary income,

and, as to any balance up to a corresponding amount, in respect of the interest of the person who next had an absolute interest in that residue or that part of that residue, as the case may be, and so on.

(3) Where on the exercise of a discretion any of the income of the residue of the estate of a deceased person for any period (being the administration period or a part of the administration period) would, if the residue had been ascertained at the commencement of that period, be properly payable to any person, or to another person in that person's right, for that person's benefit, whether directly by the personal representatives or indirectly through a trustee or other person—

(a) the amount of any sum paid pursuant to an exercise of the discretion in favour of that person shall be deemed for the purposes of the Income Tax Acts to have been paid to that person as income for the year of assessment in which it was paid, and

(b) subsections (4) to (6) of section 800 shall apply in relation to an amount deemed to have been paid as income by virtue of paragraph (a).

804 Adjustments and information. [ITA67 s455]

804.—(1) Where on the completion of the administration of an estate any amount is deemed by virtue of this Chapter to have been paid to any person as income for any year of assessment and—

(a) that amount is greater than the amount previously deemed to have been paid to that person as income for that year by virtue of this Chapter, or

(b) no amount has previously been so deemed to have been paid to that person as income for that year,

an assessment or additional assessment may be made on that person for that year and tax charged accordingly or, on a claim being made for the purpose, any relief or additional relief to which that person may be entitled shall be allowed accordingly.

(2) Where on the completion of the administration of an estate any amount is deemed by virtue of this Chapter to have been paid to any person as income for any year of assessment and that amount is less than the amount that has previously been so deemed to have been paid to that person, then—

(a) if an assessment has already been made on that person for that year, such adjustments shall be made in that assessment as may be necessary for the purpose of giving effect to the provisions of this Chapter which take effect on the completion of the administration, and any tax overpaid shall be repaid, and

(b) if—

(i) any relief has been allowed to that person by reference to the amount previously deemed by virtue of this Chapter to have been paid to that person as income for that year, and

(ii) the amount of that relief exceeds the amount of relief which could have been given by reference to the amount which, on the completion of the administration, is deemed to have been paid to that person as income for that year,

the relief so given in excess may, if not otherwise made good, be charged under Case IV of Schedule D and recovered from that person accordingly.

(3) Notwithstanding anything in the Income Tax Acts, the time within which—

(a) an assessment or additional assessment may be made for the purposes of this Chapter,

(b) an assessment may be adjusted for those purposes, or

(c) a claim for relief may be made by virtue of this Chapter,

shall not expire before the end of the third year following the year of assessment in which the administration of the estate in question was completed.

(4) The Revenue Commissioners may by notice in writing require any person, being or having been a personal representative of a deceased person, or having or having had an absolute interest or a limited interest in the residue of the estate of a deceased person or in a part of the residue of that estate, to furnish them within such time as they may direct (not being less than 28 days) with such particulars as they think necessary for the purposes of this Chapter.

CHAPTER 2 Surcharge on certain income of trustees

805 Surcharge on certain income of trustees. [FA76 s13; FA90 s8]

805.—(1) (a) In this section—

“personal representative” has the same meaning as in section 799(1);

“trustees” does not include personal representatives, but where personal representatives, on or before the completion of the administration of the estate of a deceased person, pay to trustees any sum representing income which, if the personal representatives were trustees, would be income to which this section applies, that sum shall be deemed to be paid to the trustees as income and to have borne income tax at the standard rate.

(b) This subsection shall be construed together with Chapter 1 of this Part.

(2) This section shall apply to income arising to trustees in any year of assessment in so far as it—

(a) is income which is to be accumulated or which is payable at the discretion of the trustees or any other person, whether or not the trustees have power to accumulate the income,

(b) is neither, before being distributed, the income of any person other than the trustees nor treated for any purpose of the Income Tax Acts as the income of a settlor,

(c) is not income arising under a trust established for charitable purposes only or income from investments, deposits or other property held for the purposes of a fund or scheme established for the sole purpose of providing relevant benefits within the meaning of section 770,

(d) exceeds the income applied in defraying the expenses of the trustees in that year which are properly chargeable to income, or would be so chargeable but for any express provisions of the trust, and

(e) is not distributed to one or more persons within that year of assessment or within 18 months after the end of that year of assessment in such circumstances that the income distributed is to be treated for the purposes of the Income Tax Acts as the income of the person or persons to whom it is distributed.

(3) (a) Income to which this section applies shall, in addition to being chargeable to income tax at the standard rate for the year of assessment for which it is so chargeable, be charged to an additional duty of income tax (in this section referred to as a “surcharge”) at the rate of 20 per cent.

(b) A surcharge to be made on trustees under this section in respect of income arising in a year of assessment (in this subsection referred to as “the first year of assessment”) shall—

(i) be charged on the trustees for the year of assessment in which a period of 18 months beginning immediately after the end of the first year of assessment ends, and

(ii) be treated as income tax chargeable for the year of assessment for which it is so charged.

(c) Subject to subsection (4), the Income Tax Acts shall apply in relation to a surcharge made under this section as they apply to income tax charged otherwise than by virtue of this section.

(4) Where income in respect of which a surcharge is made is distributed, no relief from or repayment in respect of the surcharge shall be allowed or made to the person to whom the income is distributed.

(5) A notice given to trustees under any provision specified in column 1 or 2 of Schedule 29 may require that a return of the income arising to them shall include particulars of the manner in which the income has been applied, including particulars as to the exercise by them of any discretion and of the persons in whose favour that discretion has been so exercised.

PART 33 Anti-Avoidance

CHAPTER 1 Transfer of assets abroad

806 Charge to income tax on transfer of assets abroad. [FA74 s57 preamble and (1) to (7) and (8)(a), (b), (c), (e) and (f)]

806.—(1) In this section—

“assets” includes property or rights of any kind;

“associated operation”, in relation to any transfer, means an operation of any kind effected by any person in relation to any of the assets transferred or any assets representing whether directly or indirectly any of the assets transferred, or to the income arising from any such assets, or to any assets representing whether directly or indirectly the accumulations of income arising from any such assets;

“benefit” includes a payment of any kind;

“company” means any body corporate or unincorporated association;

“transfer”, in relation to rights, includes the creation of those rights.

(2) For the purposes of this section—

(a) any body corporate incorporated outside the State shall be treated as if it were resident out of the State whether it is so resident or not,

(b) a reference to an individual shall be deemed to include the husband or wife of the individual, and

(c) references to assets representing any assets, income or accumulations of income include references to shares in or obligations of any company to which, or obligations of any other person to whom, those assets, that income or those accumulations are or have been transferred.

(3) This section shall apply for the purpose of preventing the avoidance by individuals ordinarily resident in the State of liability to income tax by means of transfers of assets by virtue or in consequence of which, either alone or in conjunction with associated operations, income becomes payable to persons resident or domiciled out of the State.

(4) Where by virtue or in consequence of any such transfer, either alone or in conjunction with associated operations, such an individual has power to enjoy (within the meaning of this section), whether forthwith or in the future, any income of a person resident or domiciled out of the State which, if it were income of that individual received by that individual in the State, would be chargeable to tax by deduction or otherwise, that income shall, whether it would or would not have been chargeable to tax apart from this section, be deemed to be income of that individual for the purposes of the Income Tax Acts.

(5) (a) In this subsection, “capital sum” means—

(i) any sum paid or payable by means of loan or repayment of a loan, and

(ii) any other sum paid or payable otherwise than as income, being a sum not paid or payable for full consideration in money or money's worth.

(b) Where, whether before or after any such transfer, such an individual receives or is entitled to receive any capital sum the payment of which is in any way connected with the transfer or any associated operation, any income which, by virtue or in consequence of the transfer, either alone or in conjunction with associated operations, has become the income of a person resident or domiciled out of the State shall, whether it would or would not have been chargeable to tax apart from this section, be deemed to be the income of that individual for the purposes of the Income Tax Acts.

(6) An individual shall for the purposes of this section be deemed to have power to enjoy income of a person resident or domiciled out of the State where—

(a) the income is in fact so dealt with by any person as to be calculated, at some point of time and whether in the form of income or not, to enure for the benefit of the individual,

(b) the receipt or accrual of the income operates to increase the value to the individual of any assets held by the individual or for the individual's benefit,

(c) the individual receives or is entitled to receive at any time any benefit provided or to be provided out of that income or out of moneys which are or will be available for the purpose by reason of the effect or successive effects of the associated operations on that income and on any assets which directly or indirectly represent that income,

(d) the individual has power, by means of the exercise of any power of appointment or power of revocation or otherwise, to obtain for himself or herself, whether with or without the consent of any other person, the beneficial enjoyment of the income, or may in the event of the exercise of any power vested in any other person become entitled to the beneficial enjoyment of the income, or

(e) the individual is able, in any manner whatever and whether directly or indirectly, to control the application of the income.

(7) In determining whether an individual has power to enjoy income within the meaning of this section, regard shall be had to the substantial result and effect of the transfer and any associated operations, and all benefits which may at any time accrue to the individual (whether or not the individual has rights at law or in equity in or to those benefits) as a result of the transfer and any associated operations shall be taken into account irrespective of the nature or form of the benefits.

(8) Subsections (4) and (5) shall not apply where the individual shows in writing or otherwise to the satisfaction of the Revenue Commissioners—

(a) that the purpose of avoiding liability to taxation was not the purpose or one of the purposes for which the transfer or associated operations or any of them was effected, or

(b) that the transfer and any associated operations were bona fide commercial transactions and were not designed for the purpose of avoiding liability to taxation.

(9) In any case where a person is aggrieved by a decision taken by the Revenue Commissioners in exercise of their functions under subsection (8), the person shall be entitled to appeal to the Appeal Commissioners against the decision of the Revenue Commissioners and the Appeal Commissioners shall hear and determine the appeal as if it were an appeal against an assessment to tax, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

807 Deductions and reliefs in relation to income chargeable to income tax under section 806. [FA74 s58]

807.—(1) Income tax chargeable by virtue of section 806 shall be charged under Case IV of Schedule D.

(2) In computing the liability to income tax of an individual chargeable by virtue of section 806, the same deductions and reliefs shall be allowed as would have been allowed if the income deemed to be income of the individual by virtue of that section had actually been received by the individual.

(3) Where an individual has been charged to income tax on any income deemed to be income of the individual by virtue of section 806 and that income is subsequently received by the individual, it shall be deemed not to form part of the individual's income again for the purposes of the Income Tax Acts.

(4) In any case where an individual has for the purposes of section 806 power to enjoy income of a person abroad by reason of receiving any such benefit referred to in subsection (6)(c) of that section, the individual shall be chargeable to income tax by virtue of that section under Case IV of Schedule D for the year of assessment in which the benefit is received on the whole of the amount or value of that benefit, except in so far as it is shown that the benefit derives directly or indirectly from income on which the individual has already been charged to income tax for that or a previous year of assessment.

808 Power to obtain information. [FA74 s59(1) to (5); FA77 s3; FA97 s146(1) and Sch9 PtI par8(2)]

808.—(1) In this section, “settlement” and “settlor” have the same meanings respectively as in section 10.

(2) The Revenue Commissioners or such officer as the Revenue Commissioners may appoint may by notice in writing require any person to furnish them within such time as they may direct (not being less than 28 days) with such particulars as they think necessary for the purposes of sections 806, 807 and 809.

(3) The particulars which a person shall furnish under this section, if required by such a notice to do so, shall include particulars as to—

(a) transactions with respect to which the person is or was acting on behalf of others;

(b) transactions which in the opinion of the Revenue Commissioners, or of such officer as the Revenue Commissioners may appoint, it is proper that they should investigate for the purposes of sections 806, 807 and 809, notwithstanding that in the opinion of the person to whom the notice is given no liability to tax arises under those sections;

(c) whether the person to whom the notice is given has taken or is taking any (and if so what) part in any (and if so what) transactions of a description specified in the notice.

(4) Notwithstanding anything in subsection (3), a solicitor shall not be deemed for the purposes of paragraph (c) of that subsection to have taken part in a transaction by reason only that the solicitor has given professional advice to a client in connection with that transaction, and shall not, in relation to anything done by the solicitor on behalf of a client, be compellable under this section, except with the consent of the client, to do more than state that the solicitor is or was acting on behalf of a client, and specify the name and address of the client and also—

(a) in the case of anything done by the solicitor in connection with the transfer of any asset by or to an individual ordinarily resident in the State to or by any body corporate mentioned in subsection (5), or in connection with any associated operation in relation to any such transfer, to specify the names and addresses of the transferor and the transferee or of the persons concerned in the associated operation, as the case may be;

(b) in the case of anything done by the solicitor in connection with the formation or management of any body corporate mentioned in subsection (5), to specify the name and address of the body corporate;

(c) in the case of anything done by the solicitor in connection with the creation, or with the execution of the trusts, of any settlement by virtue or in consequence of which income becomes payable to a person resident or domiciled out of the State, to specify the names and addresses of the settlor and of that person.

(5) The bodies corporate referred to in subsection (4) are bodies corporate resident or incorporated outside the State which are, or if resident in the State would be, close companies within the meaning of sections 430 and 431.

(6) Nothing in this section shall impose on any bank the obligation to furnish any particulars of any ordinary banking transactions between the bank and a customer carried out in the ordinary course of banking business, unless the bank has acted or is acting on behalf of the customer in connection with the formation or management of any body corporate mentioned in subsection (4)(b) or in connection with the creation, or with the execution of the trusts, of any settlement mentioned in subsection (4)(c).

809 Saver. [FA74 s60]

809.—Where any income of any person is by virtue of the Income Tax Acts, and in particular, but without prejudice to the generality of the foregoing, by virtue of section 806, to be deemed to be income of any other person, that income shall not be exempt from tax either—

(a) as being derived from any stock or other security to which section 43, 47, 49 or 50 applies, or

(b) by virtue of section 35 or 63,

by reason of the first-mentioned person not being resident, or not being ordinarily resident, or being neither domiciled nor ordinarily resident, in the State.

810 Application of Income Tax Acts. [FA74 s61]

810.—The provisions of the Income Tax Acts relating to the charge, assessment, collection and recovery of tax, to appeals against assessments and to cases to be stated for the opinion of the High Court shall apply to income tax chargeable by virtue of section 806 subject to any necessary modifications.

CHAPTER 2 Miscellaneous

811 Transactions to avoid liability to tax. [FA89 s86]

811.—(1) (a) In this section—

“the Acts” means—

(i) the Tax Acts,

(ii) the Capital Gains Tax Acts,

(iii) the Value-Added Tax Act, 1972, and the enactments amending or extending that Act,

(iv) the Capital Acquisitions Tax Act, 1976, and the enactments amending or extending that Act,

(v) Part VI of the Finance Act, 1983, and the enactments amending or extending that Part, and

(vi) the statutes relating to stamp duty,

and any instruments made thereunder;

“business” means any trade, profession or vocation;

“notice of opinion” means a notice given by the Revenue Commissioners under subsection (6);

“tax” means any tax, duty, levy or charge which in accordance with the Acts is placed under the care and management of the Revenue Commissioners and any interest, penalty or other amount payable pursuant to the Acts;

“tax advantage” means—

(i) a reduction, avoidance or deferral of any charge or assessment to tax, including any potential or prospective charge or assessment, or

(ii) a refund of or a payment of an amount of tax, or an increase in an amount of tax, refundable or otherwise payable to a person,

including any potential or prospective amount so refundable or payable,

arising out of or by reason of a transaction, including a transaction where another transaction would not have been undertaken or arranged to achieve the results, or any part of the results, achieved or intended to be achieved by the transaction;

“tax avoidance transaction” has the meaning assigned to it by subsection (2);

“tax consequences”, in relation to a tax avoidance transaction, means such adjustments and acts as may be made and done by the Revenue Commissioners pursuant to subsection (5) in order to withdraw or deny the tax advantage resulting from the tax avoidance transaction;

“transaction” means—

(i) any transaction, action, course of action, course of conduct, scheme, plan or proposal,

(ii) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable or intended to be enforceable by legal proceedings, and

(iii) any series of or combination of the circumstances referred to in paragraphs (i) and (ii),

whether entered into or arranged by one person or by 2 or more persons—

(I) whether acting in concert or not,

(II) whether or not entered into or arranged wholly or partly outside the State, or

(III) whether or not entered into or arranged as part of a larger transaction or in conjunction with any other transaction or transactions.

(b) In subsections (2) and (3), for the purposes of the hearing or rehearing under subsection (8) of an appeal made under subsection (7) or for the purposes of the determination of a question of law arising on the statement of a case for the opinion of the High Court, the references to the Revenue Commissioners shall, subject to any necessary modifications, be construed as references to the Appeal Commissioners or to a judge of the Circuit Court or, to the extent necessary, to a judge of the High Court, as appropriate.

(2) For the purposes of this section and subject to subsection (3), a transaction shall be a “tax avoidance transaction” if having regard to any one or more of the following—

(a) the results of the transaction,

(b) its use as a means of achieving those results, and

(c) any other means by which the results or any part of the results could have been achieved,

the Revenue Commissioners form the opinion that—

(i) the transaction gives rise to, or but for this section would give rise to, a tax advantage, and

(ii) the transaction was not undertaken or arranged primarily for purposes other than to give rise to a tax advantage,

and references in this section to the Revenue Commissioners forming an opinion that a transaction is a tax avoidance transaction shall be construed as references to the Revenue Commissioners forming an opinion with regard to the transaction in accordance with this subsection.

(3) (a) Without prejudice to the generality of subsection (2), in forming an opinion in accordance with that subsection and subsection (4) as to whether or not a transaction is a tax avoidance transaction, the Revenue Commissioners shall not regard the transaction as being a tax avoidance transaction if they are satisfied that—

(i) notwithstanding that the purpose or purposes of the transaction could have been achieved by some other transaction which would have given rise to a greater amount of tax being payable by the person, the transaction—

(I) was undertaken or arranged by a person with a view, directly or indirectly, to the realisation of profits in the course of the business activities of a business carried on by the person, and

(II) was not undertaken or arranged primarily to give rise to a tax advantage,

or

(ii) the transaction was undertaken or arranged for the purpose of obtaining the benefit of any relief, allowance or other abatement provided by any provision of the Acts and that the transaction would not result directly or indirectly in a misuse of the provision or an abuse of the provision having regard to the purposes for which it was provided.

(b) In forming an opinion referred to in paragraph (a) in relation to any transaction, the Revenue Commissioners shall have regard to—

(i) the form of that transaction,

(ii) the substance of that transaction,

(iii) the substance of any other transaction or transactions which that transaction may reasonably be regarded as being directly or indirectly related to or connected with, and

(iv) the final outcome and result of that transaction and any combination of those other transactions which are so related or connected.

(4) Subject to this section, the Revenue Commissioners as respects any transaction may at any time—

(a) form the opinion that the transaction is a tax avoidance transaction,

(b) calculate the tax advantage which they consider arises, or which but for this section would arise, from the transaction,

(c) determine the tax consequences which they consider would arise in respect of the transaction if their opinion were to become final and conclusive in accordance with subsection (5)(e), and

(d) calculate the amount of any relief from double taxation which they would propose to give to any person in accordance with subsection (5)(c).

(5) (a) Where the opinion of the Revenue Commissioners that a transaction is a tax avoidance transaction becomes final and conclusive, they may, notwithstanding any other provision of the Acts, make all such adjustments and do all such acts as are just and reasonable (in so far as those adjustments and acts have been specified or described in a notice of opinion given under subsection (6) and subject to the manner in which any appeal made under subsection (7) against any matter specified or described in the notice of opinion has been finally determined, including any adjustments and acts not so specified or described in the notice of opinion but which form part of a final determination of any such appeal) in order that the tax advantage resulting from a tax avoidance transaction shall be withdrawn from or denied to any person concerned.

(b) Subject to but without prejudice to the generality of paragraph (a), the Revenue Commissioners may—

(i) allow or disallow in whole or in part any deduction or other amount which is relevant in computing tax payable, or any part of such deduction or other amount,

(ii) allocate or deny to any person any deduction, loss, abatement, relief, allowance, exemption, income or other amount, or any part thereof, or

(iii) recharacterize for tax purposes the nature of any payment or other amount.

(c) Where the Revenue Commissioners make any adjustment or do any act for the purposes of paragraph (a), they shall afford relief from any double taxation which they consider would but for this paragraph arise by virtue of any adjustment made or act done by them pursuant to paragraphs (a) and (b).

(d) Notwithstanding any other provision of the Acts, where—

(i) pursuant to subsection (4)(c), the Revenue Commissioners determine the tax consequences which they consider would arise in respect of a transaction if their opinion that the transaction is a tax avoidance transaction were to become final and conclusive, and

(ii) pursuant to that determination, they specify or describe in a notice of opinion any adjustment or act which they consider would be, or be part of, those tax consequences,

then, in so far as any right of appeal lay under subsection (7) against any such adjustment or act so specified or described, no right or further right of appeal shall lie under the Acts against that adjustment or act when it is made or done in accordance with this subsection, or against any adjustment or act so made or done that is not so specified or described in the notice of opinion but which forms part of the final determination of any appeal made under subsection (7) against any matter specified or described in the notice of opinion.

(e) For the purposes of this subsection, an opinion of the Revenue Commissioners that a transaction is a tax avoidance transaction shall be final and conclusive—

(i) if within the time limited no appeal is made under subsection (7) against any matter or matters specified or described in a notice or notices of opinion given pursuant to that opinion, or

(ii) as and when all appeals made under subsection (7) against any such matter or matters have been finally determined and none of the appeals has been so determined by an order directing that the opinion of the Revenue Commissioners to the effect that the transaction is a tax avoidance transaction is void.

(6) (a) Where pursuant to subsections (2) and (4) the Revenue Commissioners form the opinion that a transaction is a tax avoidance transaction, they shall immediately on forming such an opinion give notice in writing of the opinion to any person from whom a tax advantage would be withdrawn or to whom a tax advantage would be denied or to whom relief from double taxation would be given if the opinion became final and conclusive, and the notice shall specify or describe—

(i) the transaction which in the opinion of the Revenue Commissioners is a tax avoidance transaction,

(ii) the tax advantage or part of the tax advantage, calculated by the Revenue Commissioners which would be withdrawn from or denied to the person to whom the notice is given,

(iii) the tax consequences of the transaction determined by the Revenue Commissioners in so far as they would refer to the person, and

(iv) the amount of any relief from double taxation calculated by the Revenue Commissioners which they would propose to give to the person in accordance with subsection (5)(c).

(b) Section 869 shall, with any necessary modifications, apply for the purposes of a notice given under this subsection or subsection (10) as if it were a notice given under the Income Tax Acts.

(7) Any person aggrieved by an opinion formed or, in so far as it refers to the person, a calculation or determination made by the Revenue Commissioners pursuant to subsection (4) may, by notice in writing given to the Revenue Commissioners within 30 days of the date of the notice of opinion, appeal to the Appeal Commissioners on the grounds and, notwithstanding any other provision of the Acts, only on the grounds that, having regard to all of the circumstances, including any fact or matter which was not known to the Revenue Commissioners when they formed their opinion or made their calculation or determination, and to this section—

(a) the transaction specified or described in the notice of opinion is not a tax avoidance transaction,

(b) the amount of the tax advantage or the part of the tax advantage, specified or described in the notice of opinion which would be withdrawn from or denied to the person is incorrect,

(c) the tax consequences specified or described in the notice of opinion, or such part of those consequences as shall be specified or described by the appellant in the notice of appeal, would not be just and reasonable in order to withdraw or to deny the tax advantage or part of the tax advantage specified or described in the notice of opinion, or

(d) the amount of relief from double taxation which the Revenue Commissioners propose to give to the person is insufficient or incorrect.

(8) The Appeal Commissioners shall hear and determine an appeal made to them under subsection (7) as if it were an appeal against an assessment to income tax and, subject to subsection (9), the provisions of the Income Tax Acts relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications; but on the hearing or rehearing of the appeal—

(a) it shall not be lawful to enquire into any grounds of appeal other than those specified in subsection (7), and

(b) at the request of the appellants, 2 or more appeals made by 2 or more persons pursuant to the same opinion, calculation or determination formed or made by the Revenue Commissioners pursuant to subsection (4) may be heard or reheard together.

(9) (a) On the hearing of an appeal made under subsection (7), the Appeal Commissioners shall have regard to all matters to which the Revenue Commissioners may or are required to have regard under this section, and—

(i) in relation to an appeal made on the grounds referred to in subsection (7)(a), the Appeal Commissioners shall determine the appeal, in so far as it is made on those grounds, by ordering, if they or a majority of them—

(I) consider that the transaction specified or described in the notice of opinion or any part of that transaction is a tax avoidance transaction, that the opinion or the opinion in so far as it relates to that part is to stand,

(II) consider that, subject to such amendment or addition thereto as the Appeal Commissioners or the majority of them deem necessary and as they shall specify or describe, the transaction, or any part of it, specified or described in the notice of opinion, is a tax avoidance transaction, that the transaction or that part of it be so amended or added to and that, subject to the amendment or addition, the opinion or the opinion in so far as it relates to that part is to stand, or

(III) do not so consider as referred to in clause (I) or (II), that the opinion is void,

(ii) in relation to an appeal made on the grounds referred to in subsection (7)(b), they shall determine the appeal, in so far as it is made on those grounds, by ordering that the amount of the tax advantage or the part of the tax advantage specified or described in the notice of opinion be increased or reduced by such amount as they shall direct or that it shall stand,

(iii) in relation to an appeal made on the grounds referred to in subsection (7)(c), they shall determine the appeal, in so far as it is made on those grounds, by ordering that the tax consequences specified or described in the notice of opinion shall be altered or added to in such manner as they shall direct or that they shall stand, or

(iv) in relation to an appeal made on the grounds referred to in subsection (7)(d), they shall determine the appeal, in so far as it is made on those grounds, by ordering that the amount of the relief from double taxation specified or described in the notice of opinion shall be increased or reduced by such amount as they shall direct or that it shall stand.

(b) This subsection shall, subject to any necessary modifications, apply to the rehearing of an appeal by a judge of the Circuit Court and, to the extent necessary, to the determination by the High Court of any question or questions of law arising on the statement of a case for the opinion of the High Court.

(10) The Revenue Commissioners may at any time amend, add to or withdraw any matter specified or described in a notice of opinion by giving notice (in this subsection referred to as “the notice of amendment”) in writing of the amendment, addition or withdrawal to each and every person affected thereby, in so far as the person is so affected, and subsections (1) to (9) shall apply in all respects as if the notice of amendment were a notice of opinion and any matter specified or described in the notice of amendment were specified or described in a notice of opinion; but no such amendment, addition or withdrawal may be made so as to set aside or alter any matter which has become final and conclusive on the determination of an appeal made with regard to that matter under subsection (7).

(11) Where pursuant to subsections (2) and (4) the Revenue Commissioners form the opinion that a transaction is a tax avoidance transaction and pursuant to that opinion notices are to be given under subsection (6) to 2 or more persons, any obligation on the Revenue Commissioners to maintain secrecy or any other restriction on the disclosure of information by the Revenue Commissioners shall not apply with respect to the giving of those notices or to the performance of any acts or the discharge of any functions authorised by this section to be performed or discharged by them or to the performance of any act or the discharge of any functions, including any act or function in relation to an appeal made under subsection (7), which is directly or indirectly related to the acts or functions so authorised.

(12) The Revenue Commissioners may nominate any of their officers to perform any acts and discharge any functions, including the forming of an opinion, authorised by this section to be performed or discharged by the Revenue Commissioners, and references in this section to the Revenue Commissioners shall with any necessary modifications be construed as including references to an officer so nominated.

(13) This section shall apply as respects any transaction where the whole or any part of the transaction is undertaken or arranged on or after the 25th day of January, 1989, and as respects any transaction undertaken or arranged wholly before that date in so far as it gives rise to, or would but for this section give rise to—

(a) a reduction, avoidance or deferral of any charge or assessment to tax, or part thereof, where the charge or assessment arises by virtue of any other transaction carried out wholly on or after a date, or

(b) a refund or a payment of an amount, or of an increase in an amount, of tax, or part thereof, refundable or otherwise payable to a person where that amount or increase in the amount would otherwise become first so refundable or otherwise payable to the person on a date,

which could not fall earlier than the 25th day of January, 1989.

812 Taxation of income deemed to arise from transfers of right to receive interest from securities. [ITA67 s449; CTA76 s140(1) and Sch2 PtI par22]

812.—(1) In this section—

“interest” includes dividends, annuities and shares of annuities;

“securities” include stocks and shares of all descriptions.

(2) Where in any year of assessment or accounting period an owner (in this section referred to as “the owner”) of any securities sells or transfers the right to receive any particular interest payable (whether before or after such sale or transfer) in respect of those securities without selling or transferring those securities, then, and in every such case, the following provisions shall apply:

(a) for the purposes of the Tax Acts that interest (whether it would or would not be chargeable to tax if this section had not been enacted)—

(i) shall be deemed to be the income of the owner or, where the owner is not the beneficial owner of the securities and some other person (in this section referred to as “the beneficiary”) is beneficially entitled to the income arising from the securities, the income of the beneficiary,

(ii) shall be deemed to be income of the owner or the beneficiary, as the case may be, for that year of assessment or accounting period, as the case may be,

(iii) shall not be deemed to be income of any other person, and

(iv) shall, where the proceeds of the sale or transfer are chargeable to tax under Schedule C or under Chapter 2 of Part 4, be deemed to be equal in amount to the amount of those proceeds;

(b) where the right to receive that particular interest is subsequently sold, transferred or otherwise realised, the proceeds of such subsequent sale, transfer or other realisation shall not be deemed for any of the purposes of the Tax Acts to be income of the person by or on whose behalf such subsequent sale, transfer or other realisation is made or effected;

(c) where the securities are of such character that the interest payable in respect of the securities may be paid without deduction of tax, then, unless the owner or beneficiary, as the case may be, shows that the proceeds of any sale or other realisation of the right to receive the interest, which is deemed to be income of the owner or of the beneficiary, as the case may be, by virtue of this section, have been charged to tax under Schedule C or under Chapter 2 of Part 4, the owner or beneficiary, as the case may be, shall be chargeable to tax under Case IV of Schedule D in respect of that interest, but shall be entitled to credit for any tax which that interest is shown to have borne;

(d) where in any case to which paragraph (c) applies the computation of the tax in respect of the interest which is made chargeable under Case IV of Schedule D by that paragraph would, if that interest had been chargeable under Case III of Schedule D, have been made by reference to the amount received in the State, the tax chargeable pursuant to paragraph (c) shall be computed on the full amount of the sums received in the State in the year of assessment or in any subsequent year of assessment in which the owner remains the owner of the securities;

(e) nothing in this subsection shall affect any provision of the Tax Acts authorising or requiring the deduction of tax from any interest which is deemed by virtue of this subsection to be income of the owner or of the beneficiary or from the proceeds of any subsequent sale, transfer or other realisation mentioned in this subsection of the right to receive that particular interest.

(3) In relation to corporation tax—

(a) subsection (2)(c) shall apply (subject to the provisions of the Corporation Tax Acts relating to distributions) to any interest, whether or not the securities are of such character that the interest may be paid without deduction of tax, and as if “, but shall be entitled to credit for any tax which that interest is shown to have borne” were deleted, and

(b) subsection (2)(d) shall not apply.

(4) The Revenue Commissioners may by notice in writing require any person to furnish them, within such time (not being less than 28 days from the service of the notice) as shall be specified in the notice, with such particulars in relation to all securities of which such person was the owner at any time during the period specified in the notice as the Revenue Commissioners may consider to be necessary for the purposes of this section or for the purpose of discovering whether—

(a) tax has been borne in respect of the interest payable in respect of those securities, or

(b) the proceeds of any sale, transfer or other realisation of the right to receive the interest in respect of those securities has been charged to tax under Schedule C or under Chapter 2 of Part 4.

813 Taxation of transactions associated with loans or credit. [FA74 s41(1) to (6); CTA76 s140(1) and Sch2 PtI par45 and s164 and Sch3 PtII]

813.—(1) This section shall apply as respects any transaction effected with reference to the lending of money or the giving of credit, or the varying of the terms on which money is loaned or credit is given, or which is effected with a view to enabling or facilitating any such arrangement concerning the lending of money or the giving of credit.

(2) Subsection (1) shall apply whether the transaction is effected between the lender or creditor and the borrower or debtor, or between either of them and a person connected with the other or between a person connected with one and a person connected with the other.

(3) Where the transaction provides for the payment of any annuity or other annual payment, not being interest but being a payment chargeable to tax under Schedule D, the payment shall be treated for the purposes of the Tax Acts as if it were a payment of annual interest.

(4) Where the transaction is one by which an owner of any securities or other property carrying a right to income (in this subsection referred to as “the owner”) agrees to sell or transfer the property, and by the same or any collateral agreement—

(a) the purchaser or transferee (in this subsection referred to as “the buyer”) or a person connected with the buyer agrees to sell or transfer at a later date the same or any other property to the owner or a person connected with the owner, or

(b) the owner or a person connected with the owner acquires an option, which the owner or the person connected with the owner subsequently exercises, to buy or acquire the same or any other property from the buyer or a person connected with the buyer,

then, without prejudice to the liability of any other person, the owner shall be chargeable to tax under Case IV of Schedule D on an amount equal to any income which arises from the first-mentioned property at any time before the repayment of the loan or the termination of the credit.

(5) Where under the transaction a person assigns, surrenders or otherwise agrees to waive or forego income arising from any property (without a sale or transfer of the property), then, without prejudice to the liability of any other person, the first-mentioned person shall be chargeable to tax under Case IV of Schedule D on a sum equal to the amount of income assigned, surrendered, waived or foregone.

(6) Where credit is given for the purchase price of any property and the rights attaching to the property are such that during the subsistence of the debt the purchaser's rights to income from the property are suspended or restricted, the purchaser shall be treated for the purposes of subsection (5) as having surrendered a right to income of an amount equivalent to the income which the purchaser has in effect foregone by obtaining the credit.

(7) The amount of any income payable subject to deduction of tax at the standard rate shall be taken for the purposes of subsection (5) as the amount before deduction of that tax.

814 Taxation of income deemed to arise from transactions in certificates of deposit and assignable deposits. [FA74 s55; CTA76 s140(1) and Sch2 PtI par47; FA77 s42 and Sch1 PtIV par5]

814.—(1) In this section—

“assignable deposit” means a deposit of money in any currency, which has been deposited with any person, whether it is to be repaid with or without interest and which at the direction of the depositor may be assigned with or without interest to another person;

“certificate of deposit” means a document relating to money in any currency, which has been deposited with the issuer or some other person, being a document which recognises an obligation to pay a stated amount to bearer or to order, with or without interest, and being a document by the delivery of which, with or without endorsement, the right to receive that stated amount, with or without interest, is transferable.

(2) This section shall apply to any right—

(a) to receive from any person an amount of money, with or without interest, which is stated in a certificate of deposit issued to the person who has deposited the money or to any other person, or

(b) to receive from any person an amount of money, with or without interest, being a right arising from an assignable deposit which may be assigned or transferred to another person by the person who has deposited the money or by any person who has acquired the right to do so.

(3) Where after the 3rd day of April, 1974, a person acquires a right to which this section applies, any gain arising to the person from the disposal of that right or, except in so far as it is a right to receive interest, from its exercise shall, if not to be taken into account as a trading receipt, be deemed for the purposes of the Tax Acts to be annual profits or gains chargeable to tax under Case IV of Schedule D and shall be charged to tax accordingly.

(4) Where on or before the 3rd day of April, 1974, a person acquired a right to which this section applies and disposes or disposed of, or exercises or exercised, the right after that date, so much of any gain arising to the person from that disposal, or, except in so far as it is a right to receive interest, from that exercise, as bears to the total amount of the gain the same proportion as the number of days from the 3rd day of April, 1974, to the date of the disposal or exercise bears to the total number of days from the date of the acquisition to the date of the disposal or exercise, shall, if not to be taken into account as a trading receipt, be deemed for the purposes of the Tax Acts to be annual profits or gains chargeable to tax under Case IV of Schedule D and shall be charged to tax accordingly.

(5) Where a person sustains a loss in a transaction which if profits had arisen from it would be chargeable to tax by virtue of subsection (3) or (4), then, if the person is chargeable to tax under Schedule C or D in respect of the interest payable on the amount of money the right to which has been disposed of, the amount of that interest shall be included in the amounts against which the person may claim to set off the amount of the loss under section 383 or 399, as the case may be.

(6) For the purposes of this section, profits or gains shall not be treated as falling to be taken into account as a trading receipt by reason only that they are included in the computation required by section 707.

815 Taxation of income deemed to arise on certain sales of securities. [FA84 s29(1) to (3)(a) and (4) to (5); FA91 s27; FA93 s21; FA94 s26]

815.—(1) In this section—

“owner”, in relation to securities, means at any time the person who would be entitled, if the securities were redeemed at that time by the person who issued them, to the proceeds of the redemption;

“securities” includes—

(a) assets which are not chargeable assets for the purposes of capital gains tax by virtue of section 607, and

(b) stocks, bonds and obligations of any government, municipal corporation, company or other body corporate, whether creating or evidencing a charge on assets or not,

but does not include shares (within the meaning of the Companies Act, 1963) of a company (within the meaning of that Act) or similar body.

(2) (a) Subject to paragraphs (b) to (d) and subsection (3), where the owner of a security (in this subsection referred to as “the owner”) sells or transfers, or causes or authorises to be sold or transferred, the security and where any interest payable in respect of the security is receivable otherwise than by the owner, then, for the purposes of this section—

(i) interest payable in respect of the security shall be deemed for the purposes of the Tax Acts to have accrued on a day to day basis from the date on which the owner acquired the security, and

(ii) the owner shall be chargeable under Case IV of Schedule D on interest so deemed to have accrued from that date up to the date of the contract for sale or transfer of the security or the date of payment of the consideration in respect of the sale or transfer, whichever is the later.

(b) Where during the owner's period of ownership of the security the owner has received interest in respect of the security in respect of which the owner is chargeable to tax under any other provision of the Tax Acts, the amount of interest on which the owner is chargeable under this section shall be reduced by the amount in respect of which the owner is so chargeable under that other provision.

(c) Where under the terms of the sale or transfer of the security or an associated agreement, arrangement, understanding, promise or undertaking, whether express or implied, the owner—

(i) agrees to buy back or reacquire the security, or

(ii) acquires an option which the owner subsequently exercises to buy back or reacquire the security,

the charge to tax imposed under this section shall be based on the interest deemed to have accrued up to the next date after that sale or transfer on which interest is payable in respect of the security.

(d) Where the owner subsequently resells or retransfers, or causes or authorises to be resold or retransferred, the security, any further charge to tax under this section in respect of that subsequent resale or retransfer shall be based on interest deemed to have accrued from a date not earlier than that next payment date.

(3) This section shall not apply—

(a) where the security has been held by the same owner for a continuous period of at least 2 years immediately before the date of such contract for sale or transfer or the date of such payment of consideration, whichever is the later, as is referred to in subsection (2)(a), the personal representatives of a deceased person whose estate is in the course of administration and the deceased person being regarded for the purposes of this paragraph as being the same owner,

(b) where the owner is a person carrying on a trade which consists wholly or partly of dealing in securities, the profits of which are chargeable to income tax or corporation tax under Case I of Schedule D for the year of assessment or, as the case may be, the accounting period in respect of which the consideration for the sale is taken into account in computing for the purposes of assessment to income tax or corporation tax for that year or accounting period the profits of the trade,

(c) where—

(i) the owner is an undertaking for collective investment (within the meaning of section 738), and

(ii) any gain or loss accruing to the owner on the sale or transfer is a chargeable gain or an allowable loss, as the case may be,

(d) where the sale or transfer is a sale or transfer by a wife to her husband at a time when she is treated as living with him for income tax purposes as provided in section 1015, or a sale or transfer by a husband to a wife at such time, the husband and the wife being regarded for the purposes of paragraph (a), in the case of such a transaction or in the case of a sale or transfer by the husband or the wife to any other person after such a transaction or transactions, as being the same owner, or

(e) where the security is a security the interest on which is treated as a distribution for the purposes of the Corporation Tax Acts.

(4) The reference in subsection (2)(c) to buying back or reacquiring the security shall be deemed to include references to buying or acquiring a similar security, and securities shall be so deemed to be similar if they entitle their holders to the same rights against the same persons as to capital and interest and the same remedies for the enforcement of those rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred.

(5) (a) For the purposes of identifying securities acquired by an owner with securities included in a sale or transfer by the owner, in so far as the securities are of the same class, securities acquired at a later date shall be deemed to be so included before securities acquired at an earlier date.

(b) Securities shall be regarded as being of the same class where they entitle their owners to the same rights against the same person as to capital and interest and the same remedies for the enforcement of those rights.

(6) (a) Without prejudice to any other provision of the Tax Acts requiring the disclosure of information, an inspector may by notice in writing require any person to whom paragraph (b) applies to furnish within the time specified in the notice such particulars as the inspector considers necessary for the purposes of this section and for the purpose of determining whether a charge to tax arises under this section.

(b) This paragraph shall apply to—

(i) a person who issues a security,

(ii) any agent of such a person, and

(iii) an owner of a security.

816 Taxation of shares issued in place of cash dividends. [FA74 s56(1), (2), (3)(b) and (c) and (4); FA93 s36]

816.—(1) In this section—

“company” means any body corporate;

“quoted company” means a company whose shares or any class of whose shares—

(a) are listed in the official list of the Irish Stock Exchange or any other stock exchange, or

(b) are dealt in on the smaller companies market, the unlisted securities market or the exploration securities market of the Irish Stock Exchange or on any similar or corresponding market of any other stock exchange;

“share” means share in the share capital of a company and, other than in the definition of “quoted company”, includes stock and any other interest in the company.

(2) Where any person as a consequence of the exercise (whether before, on or after the declaration of a distribution of profits by a company which is not a quoted company) of an option to receive in respect of shares in the company either a sum in cash or additional share capital of the company receives such additional share capital, that person shall be deemed for the purposes of the Tax Acts to have received from the company, instead of such share capital, income equal to the sum that person would have received if that person had received the distribution in cash.

(3) Any income deemed under subsection (2) to have been received from a company by a person shall—

(a) if the company is resident outside the State, be treated as income from securities and possessions outside the State and be assessed and charged to tax under Case III of Schedule D;

(b) if the company is resident in the State, be treated as profits or gains not within any other Case of Schedule D and not charged by virtue of any other Schedule and be assessed and charged to tax under Case IV of Schedule D.

(4) For the purposes of this section, an option to receive either a dividend in cash or additional share capital shall be conferred on a person not only where that person is required to choose one or the other, but also where that person is offered the one subject to a right, however expressed, to choose the other instead, and a person's abandonment of, or failure to exercise, such a right shall be treated for those purposes as an exercise of the option.

817 Schemes to avoid liability to tax under Schedule F. [FA89 s88(1) to (7)]

817.—(1) (a) In this section—

“appeal” means an appeal made in accordance with section 933;

“close company” has the same meaning as it has, by virtue of sections 430 and 431, for the purposes of the Corporation Tax Acts;

“market value” shall be construed in accordance with section 548;

“new consideration” has the same meaning as in section 135;

“shares” includes loan stock, debentures and any interest or rights in or over, or any option in relation to, shares, loan stock or debentures, and references to “shareholder” shall be construed accordingly.

(b)(i) For the purposes of this section, there shall be a disposal of shares by a shareholder where the shareholder disposes of shares or is treated under the Capital Gains Tax Acts as disposing of shares, and references to a disposal of shares shall include references to a part disposal of shares within the meaning of those Acts.

(ii) Where under any arrangement between a close company (in this subparagraph referred to as “the first-mentioned company”) and its, or some of its, shareholders (being any arrangement similar to an arrangement entered into for the purposes of or in connection with a scheme of reconstruction or amalgamation) another close company issues shares to those shareholders in respect of or in proportion to (or as nearly as may be in proportion to) their holdings of shares in the first-mentioned company, but the shares in the first-mentioned company are either retained by the shareholders or are cancelled, then, those shareholders shall for the purposes of this section be treated as making a disposal or a part disposal, as the case may be, of the shares in the first-mentioned company in exchange for those shares held by them in consequence of such arrangement.

(c) For the purposes of this section, the interest of a shareholder in a trade or business shall not be significantly reduced following a disposal of shares, or the carrying out of a scheme or arrangement of which the disposal of shares is a part, only if at any time after the disposal the percentage of—

(i) the ordinary share capital of the close company carrying on the trade or business at such time which is beneficially owned by the shareholder at such time,

(ii) any profits, which are available for distribution to equity holders, of the close company carrying on the trade or business at such time to which the shareholder is beneficially entitled at such time, or

(iii) any assets, available for distribution to equity holders on a winding up, of the close company carrying on the trade or business at such time to which the shareholder would be beneficially entitled at such time on a winding up of the close company, is not significantly less than the percentage of that ordinary share capital or those profits or assets, as the case may be, of the close company carrying on the trade or business at any time before the disposal—

(I) which the shareholder beneficially owned, or

(II) to which the shareholder was beneficially entitled,

at such time before the disposal, and sections 413 to 415 and section 418 shall apply, but without regard to section 411(1)(c) in so far as it relates to those sections, with any necessary modifications, to the determination for the purposes of this paragraph of the percentage of share capital or other amount which a shareholder beneficially owns or is beneficially entitled to, as they apply to the determination for the purposes of Chapter 5 of Part 12 of the percentage of any such amount which a company so owns or is so entitled to.

(d) The value of any amount received in money's worth shall for the purposes of this section be the market value of the money's worth at the time of its receipt.

(2) This section shall apply for the purposes of counteracting any scheme or arrangement undertaken or arranged by a close company, or to which the close company is a party, being a scheme or arrangement the purpose of which, or one of the purposes of which, is to secure that any shareholder in the close company avoids or reduces a charge or assessment to income tax under Schedule F by converting into a capital receipt of the shareholder any amount which would otherwise be available for distribution by the close company to the shareholder by means of a dividend.

(3) Subject to subsection (7), this section shall apply to a disposal of shares in a close company by a shareholder if, following the disposal or the carrying out of a scheme or arrangement of which the disposal is a part, the interest of the shareholder in any trade or business (in this section referred to as “the specified business”) which was carried on by the close company at the time of the disposal, whether or not the specified business continues to be carried on by the close company after the disposal, is not significantly reduced.

(4) Subject to subsection (5) and notwithstanding section 130(1) or any provision of the Capital Gains Tax Acts, the amount of—

(a) the proceeds in either or both money and money's worth received by a shareholder in respect of a disposal of shares in a close company to which this section applies, or

(b) if it is less than those proceeds, the excess of those proceeds over any consideration, being consideration which—

(i) is new consideration received by the close company for the issue of those shares, and

(ii) has not previously been taken into account for the purposes of this subsection, shall be treated for the purposes of the Tax Acts as a distribution (within the meaning of the Corporation Tax Acts) made at the time of the disposal by the close company to the shareholder.

(5) (a) In this subsection, “capital receipt” means, as appropriate in the circumstances, any amount of either or both money and money's worth (other than shares issued by a close company carrying on the specified business) which—

(i) is received by a shareholder in respect of a disposal of shares or by reason of any act done pursuant to a scheme or arrangement of which the disposal is a part, and

(ii) apart from this section is not chargeable to income tax in the hands of the shareholder.

(b) The amount which at any time may be treated under subsection (4) as a distribution made by a close company to a shareholder in respect of any disposal of shares in the close company shall not exceed the amount of the capital receipt, or the aggregate of the amounts of the capital receipts, which at such time has or have been received by the shareholder—

(i) in respect of the disposal, or

(ii) by reason of any act done pursuant to a scheme or arrangement of which the disposal is a part.

(c) A capital receipt received by a shareholder at any time on or after the disposal shall in respect of such time result in so much of the amount mentioned in subsection (4) being treated as a distribution (which is made by the close company to the shareholder at the time of the disposal) as does not exceed the amount of the capital receipt, or the aggregate of the amounts of such capital receipts, which at such time on or after the disposal has or have been received by the shareholder.

(d) Where as a result of a shareholder having received a capital receipt a close company is treated as having made a distribution to the shareholder under subsection (4), any provision of the Income Tax Acts in respect of interest on unpaid tax shall apply for the purposes of tax due in respect of that distribution as if the tax were due and payable only from the day on which the shareholder received the capital receipt.

(6) Notwithstanding section 136(1), where a shareholder in a close company is treated under this section as having received a distribution from the close company, the shareholder shall only be entitled to a tax credit in respect of the distribution to the extent that the close company has paid advance corporation tax in respect of the distribution in accordance with Chapter 8 of Part 6; but, where a close company would but for the application of section 162 have paid an amount or an additional amount of advance corporation tax in respect of a distribution, the close company shall be treated as having paid such an amount or additional amount of advance corporation tax in respect of the distribution for the purposes of this subsection.

(7) This section shall not apply as respects a disposal of shares in a close company by a shareholder where it is shown to the satisfaction of the inspector or, on the hearing or the rehearing of an appeal, to the satisfaction of the Appeal Commissioners or a judge of the Circuit Court, as the case may be, that the disposal was made for bona fide commercial reasons and not as part of a scheme or arrangement the purpose or one of the purposes of which was the avoidance of tax.

PART 34 Provisions Relating to the Residence of Individuals

818 Interpretation (Part 34). [FA94 s149]

818.—In this Part other than in section 825—

“the Acts” means—

(a) the Tax Acts,

(b) the Capital Gains Tax Acts, and

(c) the Capital Acquisitions Tax Act, 1976, and the enactments amending or extending that Act,

and any instruments made thereunder;

“authorised officer” means an officer of the Revenue Commissioners authorised by them in writing for the purposes of this Part;

“present in the State”, in relation to an individual, means the personal presence of the individual in the State;

“tax” means any tax payable in accordance with any provision of the Acts.

819 Residence. [FA94 s150]

819.—(1) For the purposes of the Acts, an individual shall be resident in the State for a year of assessment if the individual is present in the State—

(a) at any one time or several times in the year of assessment for a period in the whole amounting to 183 days or more, or

(b) at any one time or several times—

(i) in the year of assessment, and

(ii) in the preceding year of assessment,

for a period (being a period comprising in the aggregate the number of days on which the individual is present in the State in the year of assessment and the number of days on which the individual was present in the State in the preceding year of assessment) in the aggregate amounting to 280 days or more.

(2) Notwithstanding subsection (1)(b), where for a year of assessment an individual is present in the State at any one time or several times for a period in the aggregate amounting to not more than 30 days—

(a) the individual shall not be resident in the State for the year of assessment, and

(b) no account shall be taken of the period for the purposes of the aggregate mentioned in subsection (1)(b).

(3) (a) Notwithstanding subsections (1) and, (2), an individual—

(i) who is not resident in the State for a year of assessment, and

(ii) to whom paragraph (b) applies,

may at any time elect to be treated as resident in the State for that year and, where an individual so elects, the individual shall for the purposes of the Acts be deemed to be resident in the State for that year.

(b) This paragraph shall apply to an individual who satisfies an authorised officer that the individual is in the State—

(i) with the intention, and

(ii) in such circumstances,

that the individual will be resident in the State for the following year of assessment.

(4) For the purposes of this section, an individual shall be deemed to be present in the State for a day if the individual is present in the State at the end of the day.

820 Ordinary residence. [FA94 s151]

820.—(1) For the purposes of the Acts, an individual shall be ordinarily resident in the State for a year of assessment if the individual has been resident in the State for each of the 3 years of assessment preceding that year.

(2) An individual ordinarily resident in the State shall not for the purposes of the Acts cease to be ordinarily resident in the State for a year of assessment unless the individual has not been resident in the State in each of the 3 years of assessment preceding that year.

821 Application of sections 17 and 18(1) and Chapter 1 of Part 3. [FA94 s152; FA95 s169(1)]

821.—(1) Where an individual is not resident but is ordinarily resident in the State, sections 17 and 18(1) and Chapter 1 of Part 3 shall apply as if the individual were resident in the State; but this section shall not apply in respect of—

(a) the income of an individual derived from one or more of the following—

(i) a trade or profession, no part of which is carried on in the State, and

(ii) an office or employment, all the duties of which are performed outside the State, and

(b) other income of an individual which in any year of assessment does not exceed £3,000.

(2) In determining for the purposes of subsection (1) whether the duties of an office or employment are performed outside the State, any duties performed in the State, the performance of which is merely incidental to the performance of the duties of the office or employment outside the State, shall be treated as having been performed outside the State.

822 Split year residence. [FA94 s153]

822.—(1) For the purposes of a charge to tax on any income, profits or gains from an employment, where during a year of assessment (in this section referred to as “the relevant year”)—

(a)(i) an individual who has not been resident in the State for the preceding year of assessment satisfies an authorised officer that the individual is in the State—

(I) with the intention, and

(II) in such circumstances,

that the individual will be resident in the State for the following year of assessment, or

(ii) an individual who is resident in the State satisfies an authorised officer that the individual is leaving the State, other than for a temporary purpose—

(I) with the intention, and

(II) in such circumstances,

that the individual will not be resident in the State for the following year of assessment,

and

(b) the individual would but for this section be resident in the State for the relevant year,

subsection (2) shall apply in relation to the individual.

(2) (a) An individual to whom paragraphs (a)(i) and (b) of subsection (1) apply shall be deemed to be resident in the State for the relevant year only from the date of his or her arrival in the State.

(b) An individual to whom paragraphs (a)(ii) and (b) of subsection (1) apply shall be deemed to be resident in the State for the relevant year only up to and including the date of his or her leaving the State.

(3) Where by virtue of this section an individual is resident in the State for part of a year of assessment, the Acts shall apply as if—

(a) income arising during that part of the year or, in a case to which section 71(3) applies, amounts received in the State during that part of the year were income arising or amounts received for a year of assessment in which the individual is resident in the State, and

(b) income arising or, as the case may be, amounts received in the remaining part of the year were income arising or amounts received in a year of assessment in which the individual is not resident in the State.

823 Deduction for income earned outside the State. [FA94 s154; FA95 s170(1)]

823.—(1) In this section—

“qualifying day”, in relation to an office or employment of an individual, means a day which is—

(a) one of at least 14 consecutive days on which the individual is absent from the State for the purposes of the performance of the duties of the office or employment or of those duties and the duties of other offices or employments of the individual outside the State and which (taken as a whole) are substantially devoted to the performance of such duties, and

(b) one on which the individual concerned is absent from the State at the end of the day,

but no day shall be counted more than once as a qualifying day;

“relevant period”, in relation to a year of assessment, means a continuous period of 12 months—

(a) part only of which is comprised in the year of assessment, and

(b) no part of which is comprised in another relevant period;

“the specified amount” means an amount determined by the formula—

D E _ 365

where—

D is the number of qualifying days in the year of assessment concerned, and

E is all the income, profits or gains from an office, employment or pension whether chargeable under Schedule D or E (including income from offices or employments the duties of which are performed in the State) of an individual in that year.

(2) (a) Subject to paragraph (b), this section shall apply to—

(i) an office of director of a company which is within the charge to corporation tax, or would be within the charge to corporation tax if it were resident in the State, and which carries on a trade or profession,

(ii) an employment other than—

(I) an employment the emoluments of which are paid out of the revenue of the State, or

(II) an employment with any board, authority or other similar body established by or under statute.

(b) This section shall not apply in any case where the income from an office or employment—

(i) is chargeable to tax in accordance with section 71(3),

(ii) is subject to section 73, or would be so subject if the employment were deemed to be property situated where the employment is exercised, or

(iii) is income to which section 822 applies.

(3) Where for any year of assessment an individual resident in the State makes a claim in that behalf to and satisfies an authorised officer that—

(a) the duties of an office or employment to which this section applies of the individual are performed wholly or partly outside the State, and

(b) either—

(i) the number of days in that year which are qualifying days in relation to the office or employment (together with any days which are qualifying days in relation to any other such office or employment of the individual), or

(ii) the number of such days referred to in subparagraph (i) in a relevant period in relation to that year,

amounts to at least 90 days,

there shall be deducted from the income, profits or gains from the office or employment to be assessed under Schedule D or E, as may be appropriate, an amount equal to the specified amount.

(4) Notwithstanding anything in the Acts, the income, profits or gains from an office or employment shall for the purposes of this section be deemed not to include any amounts paid in respect of expenses incurred wholly, exclusively and necessarily in the performance of the duties of the office or employment.

824 Appeals. [FA94 s156]

824.—(1) An individual aggrieved by a decision of an authorised officer on any question arising under the provisions of this Chapter which require an individual to satisfy an authorised officer on such a question may, by notice in writing to that effect given to the authorised officer within 2 months from the date on which notice of the decision is given to the individual, make an application to have the question heard and determined by the Appeal Commissioners.

(2) Where an application is made under subsection (1), the Appeal Commissioners shall hear and determine the question concerned in the like manner as an appeal made to them against an assessment, and the provisions of the Acts relating to such an appeal (including the provisions relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law) shall apply accordingly with any necessary modifications.

825 Residence treatment of donors of gifts to the State. [FA77 s53]

825.—(1) In this section—

“the Acts” means—

(a) the Tax Acts,

(b) the Capital Gains Tax Acts, and

(c) the Capital Acquisitions Tax Act, 1976;

“donor” means an individual who makes a gift to the State;

“gift” means a gift of property to the State which, on acceptance of the gift by the Government pursuant to the State Property Act, 1954, becomes vested pursuant to that Act in a State authority within the meaning of that Act;

“Irish tax” means any tax imposed by the Acts;

“property” includes interests and rights of any description;

“relevant date”, in relation to an individual (being a donor or the spouse of a donor), means the date (not being earlier than the 1st day of September, 1974) on which the individual leaves the State for the purpose of residence (other than occasional residence) outside the State;

“tax in that country” means any tax imposed in that country which is identical with or substantially similar to Irish tax;

“visits” means—

(a) in relation to a donor, visits by the donor to the State after the relevant date for the purpose of advising on the management of the property which is the subject of the gift, being visits that are in the aggregate less than 182 days in any year of assessment in which they are made, and

(b) in relation to the spouse of a donor, visits by that spouse when accompanying the donor on visits of the kind referred to in paragraph (a).

(2) Where for any year of assessment a person (being a donor or the spouse of a donor) is resident in a country outside the State for the purposes of tax in that country and is chargeable to that tax without any limitation as to chargeability, then, notwithstanding anything to the contrary in the Tax Acts—

(a) as respects the year of assessment in which the relevant date occurs, that person shall not as from the relevant date be regarded as ordinarily resident in the State for the purposes of Irish tax, and

(b) as respects any subsequent year of assessment, in determining whether that person is resident or ordinarily resident in the State for the purposes of Irish tax, visits shall be disregarded.

PART 35 Double Taxation Relief

CHAPTER 1 Principal reliefs

826 Agreements for relief from double taxation. [ITA67 s361; FA74 s86 and Sch2 PtI; CTA76 s22(2), s23(1) and s166(1) and Sch4 PtI; FA83 s47(4)]

826.—(1) Where the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of—

(a) income tax;

(b) corporation tax in respect of income and chargeable gains;

(c) any taxes of a similar character imposed by the laws of the State or by the laws of that territory; and that it is expedient that those arrangements should have the force of law, then, subject to this section and sections 168 and 833 to 835, the arrangements shall, notwithstanding any enactment other than section 168, have the force of law.

(2) Schedule 24 shall apply where arrangements which have the force of law by virtue of this section provide that tax payable under the laws of the territory concerned shall be allowed as a credit against tax payable in the State.

(3) Any arrangements to which the force of law is given under this section may include provision for relief from tax for periods before the passing of this Act or before the making of the arrangements and provisions as to income or chargeable gains which is or are not subject to double taxation, and subsections (1) and (2) shall apply accordingly.

(4) For the purposes of subsection (1), arrangements made with the head of a foreign state shall be regarded as made with the government of that state.

(5) Any order made under this section may be revoked by a subsequent order, and any such revoking order may contain such transitional provisions as appear to the Government to be necessary or expedient.

(6) Where an order is proposed to be made under this section, a draft of the order shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann.

(7) Where any arrangements have the force of law by virtue of this section, the obligation as to secrecy imposed by any enactment shall not prevent the Revenue Commissioners or any authorised officer of the Revenue Commissioners from disclosing to any authorised officer of the government with which the arrangements are made such information as is required to be disclosed under the arrangements.

(8) The necessary apportionments as respects corporation tax shall be made where arrangements having the force of law by virtue of this section apply to the unexpired portion of an accounting period current at a date specified by the arrangements, and any such apportionment shall be made in proportion to the number of months or fractions of months in the part of the relevant accounting period before that date and in the remaining part of the relevant accounting period respectively.

(9) The Revenue Commissioners may from time to time make regulations generally for carrying out the provisions of this section or any arrangements having the force of law under this section and may in particular, but without prejudice to the generality of the foregoing, by those regulations provide—

(a) for securing that relief from taxation imposed by the laws of the territory to which any such arrangements relate does not enure to the benefit of persons not entitled to such relief, and

(b) for authorising, in cases where tax deductible from any periodical payment has, in order to comply with any such arrangements, not been deducted and it is discovered that the arrangements do not apply to that payment, the recovery of the tax by assessment on the person entitled to the payment or by deduction from subsequent payments.

827 Application to corporation tax of arrangements made in relation to corporation profits tax under old law. [CTA76 s22(1) and s23(1)]

827.—Subject to any express amendments made by the Corporation Tax Acts and except in so far as arrangements made on or after the 31st day of March, 1976, provide otherwise, any arrangements made under section 361 of the Income Tax Act, 1967, or any earlier enactment corresponding to that section, in relation to corporation profits tax shall apply in relation to corporation tax and income and chargeable gains chargeable to corporation tax as they are expressed to apply in relation to corporation profits tax and profits chargeable to corporation profits tax, and not as they apply in relation to income tax; but this section shall not affect the operation, as they apply to corporation tax, of section 826(7) and paragraph 12 of Schedule 24.

828 Capital gains tax: double taxation relief. [CGTA75 s38, s51(1) and Sch1 PtI par3(6); FA97 s146(1) and Sch9 PtI par 9(3)]

828.—(1) For the purposes of giving relief from double taxation in relation to capital gains tax charged under the law of any country outside the State, in section 826 and Schedule 24 as they apply for the purposes of income tax, for references to income there shall be substituted references to chargeable gains, for references to the Income Tax Acts there shall be substituted references to the Capital Gains Tax Acts and for references to income tax there shall be substituted references to capital gains tax meaning, as the context may require, tax charged under the law of the State or tax charged under the law of a country outside the State.

(2) In so far as capital gains tax charged under the law of a country outside the State may by virtue of this section be taken into account under section 826 and Schedule 24 as applied by this section, that tax, whether relief is given by virtue of this section in respect of it or not, shall not be taken into account for the purposes of those provisions as they apply apart from this section.

(3) Section 826(7) shall apply in relation to capital gains tax as it applies in relation to income tax.

(4) Subject to subsections (1) to (3) and the other provisions of the Capital Gains Tax Acts relating to double taxation, the tax chargeable under the law of any country outside the State on the disposal of an asset which is borne by the person making the disposal shall be allowable as a deduction in the computation under Chapter 2 of Part 19 of the gain accruing on the disposal.

829 Treatment for double taxation relief purposes of foreign tax incentive reliefs. [FA70 s57(2) to (4); CTA76 s166(1) and Sch4 PtI]

829.—(1) This section shall apply to any relief given with a view to promoting industrial, commercial, scientific, educational or other development in a territory outside the State.

(2) For the purposes of section 826 and Schedule 24, any amount of tax under the law of a territory outside the State which would have been payable but for a relief to which this section applies given under that law (being a relief with respect to which provision is made in arrangements for double taxation relief which are the subject of an order under section 826(1)) shall be treated as having been payable, and references in section 826 and in Schedule 24 to double taxation, tax payable or chargeable or tax not chargeable directly or by deduction shall be construed accordingly.

(3) The Revenue Commissioners may make regulations generally for carrying out the provisions of this section or any arrangements having the force of law under section 826 and may in particular, but without prejudice to the generality of the foregoing, provide in the regulations—

(a) for the purposes of this section or of the regulations, for the application (with or without modifications) of any provision of the Tax Acts or any regulations made under those Acts, including the provisions relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law, and