Finance Act 2003

“Relieving provision to section 1035.

1035A.—(1) In this section— ‘authorised agent’ means— (a) a person acting as an investment business firm, or an authorised member firm— (i) under an authorisation given by the Central Bank of Ireland under section 10(1) of the Investment Intermediaries Act 1995 or, as the case may be, section 18 of the Stock Exchange Act 1995 and not subsequently revoked, or (ii) under an authorisation, which corresponds to either of the authorisations referred to in subparagraph (i), given by a competent authority in another Member State for the purpose of Council Directive 93/22/EEC of 10 May 19931 as amended or extended from time to time, and not subsequently revoked, or (b) a credit institution duly authorised by virtue of Directive No. 2000/12/EC of 20 March 20002 which provides investment business services and in so doing does not exceed the terms of its authorisation and that authorisation has not been revoked, and ‘authorisation’ shall be construed accordingly; ‘authorised member firm’ has the meaning assigned to it by section 3 of the Stock Exchange Act 1995; ‘competent authority’ has the meaning assigned to it by section 2 of the Investment Intermediaries Act 1995; ‘financial trade’ means a trade exercised in the State by a non-resident person through an authorised agent under and within the terms of the authorised agent's authorisation; ‘investment business firm’ has the meaning assigned to it by section 2 of the Investment Intermediaries Act 1995; ‘investment business services’ has the meaning assigned to it by section 2 of the Investment Intermediaries Act 1995. (2) For the purposes of this section— (a) an authorised agent, through whom a non-resident person exercises a financial trade in the State, is independent in relation to the non-resident person for a chargeable period if throughout the chargeable period— (i) the authorised agent does not otherwise act on behalf of the non-resident person, (ii) the authorised agent, when acting on behalf of the non-resident person, does so in an independent capacity, (iii) the authorised agent, when acting on behalf of the non-resident person, does so in the ordinary course of the authorised agent's business, and (iv) the requirements referred to in subsection (4), in relation to the financial trade, are satisfied, (b) an authorised agent shall not be regarded as acting in an independent capacity when acting on behalf of a non-resident person unless, having regard to its legal, financial and commercial characteristics, the relationship between them is a relationship between persons carrying on independent businesses that deal with each other at arm's length, and (c) references to an amount of profits or gains of a trade, exercised in the State by a non-resident person, to which another person has a beneficial entitlement are references to the amount of profits or gains of the trade to which the other person has, or may acquire, a beneficial entitlement by virtue of— (i) any interest of the other person (whether or not an interest giving a right to an immediate payment of a share of the profits or gains of the trade) in property in which the whole or any part of the profits or gains of the trade are represented, or (ii) any interest of the other person in, or other rights in relation to, the non-resident person. (3) Notwithstanding section 18, a non-resident person shall not be assessable and chargeable to income tax in respect of any profits or gains arising or accruing for a chargeable period to the non-resident person from a financial trade exercised in the State solely through an authorised agent who throughout the chargeable period is independent in relation to the non-resident person. (4) The requirements of this subsection are satisfied, at any time, in relation to a financial trade exercised in the State by a non-resident person through an authorised agent where at that time— (a) the aggregate of the amount of the profits or gains of the trade, to which the authorised agent and persons, who are both resident in the State and connected with the authorised agent, have a beneficial entitlement, does not exceed 20 per cent of the amount of the profits or gains of the trade, or (b) the Revenue Commissioners are satisfied that it is the intention of the authorised agent, that the aggregate of the amount of the profits or gains of the trade, to which the authorised agent and persons who are resident in the State and connected with the authorised agent have beneficial entitlement, does not exceed 20 per cent of the amount of the profits or gains of the trade and that the reasons for the failure to fulfill that intention, at that time, are of a temporary nature. (5) The Revenue Commissioners may nominate any of their officers to perform any acts and discharge any functions authorised by this section to be performed or discharged by them.”.

• (2) This section is deemed to have applied in respect of chargeable periods commencing on or after 1 January 2002.

52 Cessation of special investment business as separate business.

52.—(1) The Principal Act is amended in Chapter 1 of Part 26—

• (a) in section 707—

• (i) subsection (2)—

• (I) by substituting the following for paragraph (a):

• “(a) Where the life assurance business of an assurance company includes more than one of the following classes of business—

  • (i) pension business,

  • (ii) general annuity business, and

  • (iii) life assurance business (excluding such pension business and general annuity business),

  then, for the purposes of the Corporation Tax Acts, the business of each such class shall be treated as though it were a separate business, and subsection (1) shall apply separately to each such class of business as if it were the only business of the company.”,

• (II) by inserting the following after paragraph (b):

• “(c) Any amount of excess referred to in section 83(3) in relation to special investment business, which is available to be carried forward from an accounting period ending in 2002, may for the purposes of that section, be carried forward to the succeeding accounting period and treated as relating to life assurance business, other than new basis business (within the meaning of section 730A(1)).”,

and

• (ii) by deleting subsection (5)(a)(iii),

• (b) in section 708 by inserting the following after subsection (6):

• “(6A) Acquisition expenses for any accounting period ending on or before 31 December 2002 which relate to special investment business shall, for the purposes of subsection (6), be treated as acquisition expenses which relate to life assurance business (excluding pension business and general annuity business).”,

• (c) in section 711—

• (i) in subsection (1)(c) by deleting “, otherwise than in respect of the special investment fund,”,

• (ii) in subsection (4) by substituting “(excluding pension business and general annuity business)” for “(excluding pension business, general annuity business and special investment business)”,

• (d) in section 713(3) by deleting “, other than special investment business,”,

• (e) in section 719—

• (i) in subsection (1), in the definition of “life business fund” by deleting “other than its special investment business”,

• (ii) in subsection (3)—

• (I) in paragraph (b) by deleting “or special investment business”,

• (II) by substituting “(excluding pension business and general annuity business)” for “(excluding pension business, general annuity business and special investment business)”,

• (iii) in subsection (4)—

• (I) in paragraph (a)(i) by substituting the following for clause (I):

• “(I) assets linked solely to life assurance business (excluding pension business and general annuity business), or pension business, and”,

and

• (II) in paragraph (b)(i)(I) by deleting “or special investment business”,

• (iv) in subsection (5)(a) by deleting “or special investment business”,

• (v) in subsection (6) by substituting “(excluding pension business or general annuity business)” for “(excluding pension business, general annuity business or special investment business)”, and

• (vi) by substituting the following for subsection (7)—

• “(7) For the purposes of this section, assets of the foreign life assurance fund and liabilities of the foreign life assurance business shall be disregarded in determining the investment reserve.”,

• (f) in section 723—

• (i) in subsection (1)—

• (I) by substituting the following for the definition of “special investment fund”:

“ ‘special investment fund’ means a fund in respect of which the conditions specified in subsection (2) are satisfied as respects accounting periods ending on or before 31 December 2002, of the assurance company concerned;”,

and

• (II) in the definition of “special investment policy” by substituting the following for paragraph (a):

• “(a) the conditions specified in subsection (3) are satisfied as respects accounting periods ending on or before 31 December 2002, of the assurance company concerned, and”,

and

• (III) by deleting subsections (6) and (7),

• (g) in section 724 by substituting “Where, in an accounting period ending on or before 31 December 2002, an assurance company transfers” for “Where an assurance company transfers”,

• (h) in section 725—

• (i) in subsection (1) by substituting “at any particular time on or before 31 December 2002,” for “at any particular time”, and

• (ii) in subsection (2) by substituting “at any time on or before 31 December 2002,” for “at any time”,

and

• (i) in section 839—

• (i) in subsection (1) by deleting paragraph (b),

• (ii) in subsection (2)(a) by substituting “paragraph (c) or (d)” for “paragraph (b), (c) or (d)”,

• (iii) in subsection (2)(a)(ii) by substituting “section 737(3)(a)(ii) or 838(2)(b)” for “section 723(3)(b), 737(3)(a)(ii) or 838(2)(b)”,

• (iv) in subsection (2)(b)(i) by substituting “paragraph (c) or (d)” for “paragraph (b), (c) or (d)”,

• (v) in subsection (2)(b)(ii) by substituting “paragraph (c) or (d)” for “paragraph (b), (c) or (d)”,

• (vi) in subsection (2)(b)(ii)(II) by substituting “section 737(3)(a)(ii) or 838(2)(b)” for “section 723(3)(b), 737(3)(a)(ii) or 838(2)(b)”, and

• (vii) in subsection (3) by deleting “723,”.

• (2) This section applies as respects accounting periods ending in 2003 and subsequent years.

53 Amendment of Chapter 1A (investment undertakings) of Part 27 of Principal Act.

53.—The Principal Act is amended in Chapter 1A of Part 27—

• (a) in section 739B—

• (i) in subsection (1)—

• (I) by inserting the following after the definition of “collective investor”:

“ ‘credit union’ has the meaning assigned to it in section 2 of the Credit Union Act 1997;”,

• (II) by inserting the following after the definition of “investment undertaking”:

“ ‘money market fund’ has the same meaning as it has in Regulation (EC) No. 2423/2001 of the European Central Bank of 22 November 2001¹;”,

• (III) by substituting the following for the definition of “relevant Regulations”:

“ ‘relevant Regulations’ means the European Communities (Undertaking for Collective Investment in Transferable Securities) Regulations 1989 (S.I. No. 78 of 1989) as amended or extended from time to time and any other regulations that may be construed as one with those Regulations;”, and

• (IV) by inserting the following after the definition of “return”:

“ ‘Service’ means the Courts Service;”,

and

• (ii) by inserting the following after subsection (2):

• “(2A)

  • (a) Where money under the control or subject to the order of any Court is applied to acquire units (in this section referred to as ‘relevant units’) in an investment undertaking, subsections (2) and (3) of section 739E, section 739F and section 904D shall apply as if references in those sections and subsections to the investment undertaking were to read as references to the Service.

  • (b) The Service shall in respect of each year of assessment, on or before 28 February in the year following the year of assessment, make a return (including where it is the case, a nil return) to the Revenue Commissioners in electronic format approved by them, which in respect of each year of assessment—

    • (i) specifics the total amount of gains (in this section referred to as the ‘total gains’) arising to the investment undertaking in respect of relevant units, and

    • (ii) specifies in respect of each person who is or was beneficially entitled to those units—

      • (I) where available, the name and address of the person,

      • (II) the amount of the total gains to which the person has beneficial entitlement, and

      • (III) such other information as the Revenue Commissioners may require.”,

• (b) in section 739C by substituting the following for subsection (1):

• “(1) Notwithstanding anything in the Acts, an investment undertaking shall, subject to subsection (1A), not be chargeable to tax in respect of relevant profits otherwise than to the extent provided for in this Chapter.

• (1A)

  • (a) An investment undertaking that is an investment undertaking within the meaning of paragraph (b) of the definition of investment undertaking shall not be chargeable to tax in respect of relevant profits where—

    • (i) it is constituted otherwise than under trust law or statute law, and

    • (ii) each of the units of the investment undertaking—

      • (I) is beneficially owned by a pension fund, or

      • (II) is held by a custodian or trustee for the benefit of a pension fund.

  • (b) For the purposes of the Acts, relevant income and relevant gains in relation to an investment undertaking to which paragraph (a) applies, shall be treated as arising or, as the case may be, accruing, to each unit holder of the investment undertaking in proportion to the value of the units beneficially owned by the unit holder, as if the relevant income and relevant gains had arisen or, as the case may be, accrued, to the unit holders in the investment undertaking without passing through the hands of the investment undertaking.”,

• (c) in section 739D(6)—

• (i) in paragraph (h) by substituting “Schedule 2B,” for “Schedule 2B, or”, and

• (ii) by inserting the following after paragraph (i) (inserted by section 4(1)(c) of the Pensions (Amendment) Act 2002):

• “(j) is a credit union that has made a declaration to the investment undertaking in accordance with paragraph 9B of Schedule 2B, or

• (k) (I) is a company that—

  • (A) is or will be within the charge to corporation tax in accordance with section 739G(2), in respect of payments made to it by the investment undertaking,

  • (B) has made a declaration to that effect and has provided the investment undertaking with the company's tax reference number (within the meaning of section 885),

  and

  - (II) the investment undertaking is a money market fund,”,
  

• (d) in section 739D(9A)(b), in subparagraph (iii) by substituting “paragraphs (a) to (k)” for “paragraphs (a) to (h)”,

and

• (e) in section 739G(2) by substituting the following for paragraph (b):

• “(b) where the unit holder is not a company and the payment is a payment from which appropriate tax has not been deducted, the payment shall be treated as if it were a payment from an offshore fund to which the provisions of Chapter 4 of this Part apply, and the provisions of section 747D, or section 747E apply as appropriate,”.

54 Amendment of section 706 (interpretation and general (Part 26)) of Principal Act.

54.—Section 706 of the Principal Act is amended in subsection (3)—

• (a) in paragraph (a) by substituting “an individual who, at the time the contract is made, is” for “an individual who is”, and

• (b) by substituting the following for paragraph (d):

• “(d) (i) any PRSA contract (within the meaning of Chapter 2A of Part 30), and

• (ii) any contract with a PRSA provider (within that meaning) being a contract which was entered into for the purposes only of the PRSA concerned;”.

55 Amendment of section 747E (disposal of an interest in offshore funds) of Principal Act.

55.—(1) Section 747E of the Principal Act is amended in subsection (1) by substituting the following for paragraph (a):

• “(a) be treated as an amount of income chargeable to tax under Case IV of Schedule D, and the rate of corporation tax to be charged on that income shall, notwithstanding section 21A(3), be the rate of income tax chargeable on income referred to in paragraph (b), and”.

• (2) Subsection (1) is deemed to have applied as on and from 1 January 2001.

56 Amendment of Schedule 2B (investment undertaking declarations) of Principal Act.

56.—Schedule 2B of the Principal Act is amended—

• (a) by inserting the following after paragraph 9A:

“Declaration of Credit Union

9B. The declaration referred to in section 739D(6)(j) is a declaration in writing to the investment undertaking which—

• (a) is made by the person (in this paragraph referred to as the ‘declarer’) entitled to the units in respect of which the declaration is made,

• (b) is signed by the declarer,

• (c) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

• (d) contains the name and address of the declarer,

• (e) declares that, at the time when the declaration is made the person entitled to the units is a credit union,

• (f) contains such other information as the Revenue Commissioners may reasonably require for the purposes of Chapter 1A of Part 27.”,

and

• (b) in paragraph 14(d), in clause (i) by substituting “paragraphs (a) to (k)” for “paragraphs (a) to (h)”.

57 Amendment of Part 26 (life assurance companies) of Principal Act.

57.—The Principal Act is amended in Part 26—

• (a) in section 730A(1)—

• (i) by inserting the following after the definition of “assurance company”:

“ ‘credit union’ has the meaning assigned to it in section 2 of the Credit Union Act 1997;

‘financial institution’ means—

• (a) a person who holds a licence under section 9 of the Central Bank Act 1971,

• (b) a person referred to in section 7(4) of the Central Bank Act 1971, or

• (c) a credit institution duly authorised by virtue of Directive No. 2000/12/EC of 20 March 2000¹;”,

and

• (ii) by inserting the following after the definition of “new basis business”:

“ ‘Service’ means the Courts Service;”,

• (b) in section 730B by inserting the following after subsection (3):

• “(4) For the purposes of this Chapter—

  • (a) where a policyholder is a person entrusted to pay all premiums (in this subsection referred to as ‘group premiums’) in respect of a life policy (in this subsection referred to as a ‘group policy’), out of money under the control or subject to the order of any Court, this Chapter shall apply as if the group policy comprised separate life policies (in this subsection referred to as ‘separate life policies’),

  • (b) each person beneficially entitled to any part of the rights conferred by the group policy shall be treated as being the policyholder of a separate life policy,

  • (c) the premiums paid in respect of each separate life policy shall be such amount of the said money included in group premiums paid, which is beneficially owned by the policyholder of the separate life policy,

  • (d) a gain which, but for the provisions of section 730D(2), would have arisen on the happening of a chargeable event in relation to the group policy shall be treated as if it were a gain arising on a chargeable event in relation to any separate policy where, and to the extent that, the gain is beneficially owned by the policyholder of that separate policy,

  • (e) subsections (2), (3) and (4) of section 730F, sections 730G and 730GA and section 904C apply as if references in those subsections and sections to an assurance company were to read as references to the Service, and

  • (f) the Service shall in respect of each year of assessment, on or before 28 February in the year following the year of assessment, make a return (including where it is the case, a nil return) to the Revenue Commissioners in electronic format approved by them, which in respect of each year of assessment—

    • (i) specifies the total amount of gains (in this section referred to as the ‘total gains’) arising in respect of the group policy, and

    • (ii) specifies in respect of each policyholder of a separate policy—

      • (I) where available, the name and address of the policyholder,

      • (II) the amount of the total gains to which the person has beneficial entitlement, and

      • (III) such other information as the Revenue Commissioners may require.”,

• (c) in section 730C(2)(a) by deleting “(within the meaning of section 906A)”,

• (d) in section 730D—

• (i) in subsection (2) by substituting the following for paragraph (b):

• “(b) immediately before the chargeable event, the policyholder is—

  • (i) a company carrying on life business,

  • (ii) an investment undertaking (within the meaning of section 739B),

  • (iii) (I) a person who is entitled to exemption from income tax under Schedule D by virtue of section 207(1)(b), or

    • (II) a person who is entitled to exemption from corporation tax by virtue of section 207(1)(b) as it applies for the purposes of corporation tax under section 76(6),

  • (iv) a PRSA provider (which has the same meaning as that assigned to it in Chapter 2A (inserted by the Pensions (Amendment) Act 2002) of Part 30),

  • (v) a credit union, or

  • (vi) a person entrusted to pay all premiums payable, in respect of the life policy, out of money under the control or subject to the order of any Court,

  and the assurance company which commenced the life policy is in possession of a declaration, in relation to the life policy, of a kind referred to in section 730E(3), or”,

• (e) in section 730E(3)—

• (i) by substituting the following for paragraphs (e) and (f):

• “(e) declares that the policyholder, at the time the declaration is made, is—

  • (i) a company carrying on life business,

  • (ii) an investment undertaking (which has the same meaning as that assigned to it in section 739B),

  • (iii) (I) a person who is entitled to exemption from income tax under Schedule D by virtue of section 207(1)(b), or

    • (II) a person who is entitled to exemption from corporation tax by virtue of section 207(1)(b) as it applies for the purposes of corporation tax under section 76(6),

  • (iv) a PRSA provider (which has the same meaning as that assigned to it in Chapter 2A (inserted by the Pensions (Amendment) Act 2002) of Part 30),

  • (v) a credit union, or

  • (vi) a person entrusted to pay all premiums payable, in respect of the life policy, out of money under the control or subject to the order of any Court,

• (f) contains an undertaking that should the policyholder cease to be a person referred to in subparagraph (i) to (v), or (vi) of paragraph (e), the assurance company will be advised accordingly, and”,

• (ii) by inserting the following after subsection (4):

• “(5) An insurance company shall keep and retain declarations referred to in this section for a period of 6 years from the time the life policy in respect of which the declaration was made ceases.”,

and

• (f) by substituting the following for section 730GB:

“Capital acquisitions tax: setoff.

730GB.—Where on the death of a person, an assurance company is liable to account for appropriate tax (within the meaning of section 730F(1)) in connection with a gain arising on a chargeable event in relation to a life policy, the amount of such tax, in so far as it does not exceed the amount of appropriate tax to which the assurance company would be liable if that tax was calculated in accordance with section 730F(1)(a), shall be treated as an amount of capital gains tax paid for the purposes of section 63 of the Finance Act 1985.”.

58 Amendment of section 481 (relief for investment in films) of Principal Act.

58.—(1) Section 481 of the Principal Act is amended—

• (a) in subsection (1) in the definition of “qualifying period” by substituting “31 December 2004” for “5 April 2005”,

	(11 × E)
(b) in subsection (2)(c)(ii) by substituting “66 -	_____	” for
	€1,270,000

the formula,

• (c) in subsection (8) by substituting “the year of assessment 2004” for “the year 1999-2000”,

• (d) in subsection (9) by substituting “the year of assessment 2004” for “the year 1999-2000”, and

• (e) by substituting the following for subsection (14):

• “(14)

  • (a) A certificate referred to in subsection (12) shall not be issued without the approval in writing of the authorised officer and where the authorised officer has not received the information sought under subsection (13)(d), or has reason to believe that the conditions for the relief are not, or will not be, satisfied, the authorised officer shall not give such approval.

  • (b) Where, in accordance with paragraph (a), the authorised officer does not give the approval referred to in that paragraph, the officer shall issue a determination to that effect and the provisions of section 949 shall apply to such determination as if it were a determination made on a matter referred to in section 864.”.

• (2)
• (a) Paragraphs (a) and (e) of subsection (1) shall apply with effect from the date of the passing of this Act.

• (b) Paragraph (b) of subsection (1) is deemed to have applied as on and from 1 January 2002.

• (c) Paragraphs (c) and (d) of subsection (1) are deemed to have applied as on and from 20 July 2000.

Chapter 4 Corporation Tax

59 Provisions relating to loss relief.

59.—(1) The Principal Act is amended—

• (a) in section 243B(4)(b) (inserted by the Finance Act 2002), by substituting “The” for “Subject to paragraph (c), the”,

• (b) in section 396A (inserted by the Finance Act 2001), by inserting the following after subsection (4):

• “(5) A claim under subsection (3) shall be made within 2 years from the end of the accounting period in which the loss is incurred.”,

• (c) in section 396B (inserted by the Finance Act 2002)—

• (i) in subsection (2) by substituting “amounts which could, if a timely claim for such set off had been made by the company, have been set off” for “amounts set off”, and

• (ii) by inserting the following after subsection (5):

• “(6) A claim under subsection (2) shall be made within 2 years from the end of the accounting period in which the loss is incurred.”,

• (d) in section 420B (inserted by the Finance Act 2002) by substituting the following for subsection (2):

• “(2) Where in any accounting period the surrendering company has incurred a relevant trading loss, computed as for the purposes of section 396(2), or an excess of relevant trading charges on income, in carrying on a trade in respect of which the company is within the charge to corporation tax, and the amount of the loss or excess is greater than an amount equal to the aggregate of the amounts which could, if timely claims had been made for such set off, have been set off in respect of that loss or excess for the purposes of corporation tax against—

  • (a) the income of the company in accordance with section 243A or section 396A,

  • (b) the income of the company from the sale of goods in accordance with section 454 or 455, and

  • (c) income of any other company in accordance with section 420A or 456,

  the claimant company may claim relief under this section for its corresponding accounting period in respect of the amount (in this section referred to as the ‘relievable loss’) by which the loss or excess is greater than that aggregate.”,

and

• (e) in section 1085 in subsection (2)—

• (i) in paragraph (a) by inserting “, 396A(3)” after “396(2)”,

• (ii) by inserting the following after paragraph (b):

• “(ba) the total amount of the relevant trading loss referred to in subsection (2) of section 396B for the chargeable period shall be treated for the purposes of that section as reduced by 50 per cent,”,

and

• (iii) by inserting the following after paragraph (c):

• “(ca) the total amount of the loss or excess referred to in subsection (3) of section 420A for the chargeable period shall be treated for the purposes of Chapter 5 of Part 12 as reduced by 50 per cent,

• (cb) the total amount of the relevant trading loss referred to in subsection (2) of section 420B for the chargeable period shall be treated for the purposes of Chapter 5 of Part 12 as reduced by 50 per cent,”.

• (2) This section applies—

• (a) subject to paragraph (b), as respects accounting periods ending on or after 6 February 2003, and

• (b) in the case of paragraphs (c)(i) and (d) of subsection (1), as respects a claim under section 396B, or as the case may be section 420B, made on or after 6 February 2003.

60 Unilateral credit relief.

60.—(1) The Principal Act is amended in section 449(2)—

• (a) in paragraph (a) by inserting “reduced by the relevant foreign tax” after “the amount so receivable”, and

• (b) in paragraph (b), by inserting “increased by the amount of the relevant foreign tax,” after “for the relevant accounting period”.

• (2) Schedule 24 to the Principal Act is amended—

• (a) in paragraph (9D)(1)(a) by substituting the following for the definition of relevant interest:

“ ‘relevant interest’ means interest receivable by a company—

• (a) which falls to be taken into account in computing the trading income of a trade carried on by the company, and

• (b) from which relevant foreign tax is deducted.”,

and

• (b) in paragraph (9D)(1)(b)—

• (i) in subclause (i) by inserting “reduced by the relevant foreign tax” after “the amount of the relevant interest”, and

• (ii) in subclause (ii) by inserting “increased by the amount of the relevant foreign tax” after “for the accounting period”.

• (3) This section applies as respects accounting periods ending on or after 6 February.

61 Amendment of section 130 (matters to be treated as distributions) of Principal Act.

61.—(1) Section 130 of the Principal Act is amended by inserting the following after subsection (2A):

• “(2B) Subsection (2)(d)(iv) shall not apply as respects interest, other than interest to which section 452 or 845A applies, paid to a company which is a resident of a Member State of the European Communities other than the State and, for the purposes of this subsection, a company is a resident of a Member State of the European Communities if the company is by virtue of the law of that Member State resident for the purposes of tax (being any tax imposed in the Member State which corresponds to corporation tax in the State) in such Member State.”.

• (2) This section applies as respects any interest paid or other distribution made on or after 6 February 2003.

62 Amendment of Part 24A (tonnage tax) of Principal Act.

62.—(1) The Principal Act is amended in Part 24A—

• (a) in section 697A(1)—

• (i) by substituting the following for the definition of “commencement date”:

“ ‘commencement date’ means the date of the passing of the Finance Act 2003;”,

and

• (ii) in the definition of “relevant shipping income”—

• (I) by the deletion of the following from paragraph (a):

“, including income in respect of which the conditions set out in section 697I are met”,

• (II) by the deletion of the following from paragraph (b):

“, including income in respect of which the conditions set out in section 697I are met”,

• (III) by substituting the following for paragraph (c):

• “(c) towage, salvage or other marine assistance by a qualifying ship operated by the company, but does not include income from any such work undertaken in a port or an area under the jurisdiction of a port authority,”,

• (IV) by substituting the following for paragraph (e):

• “(e) the provision on board a qualifying ship operated by the company of goods or services ancillary to the carriage of passengers or cargo, but only to the extent that such goods or services are provided for consumption on board the qualifying ship,”,

and

• (V) by deleting paragraphs (h) and (m),

• (b) by deleting section 697I,

• (c) in section 697L, by inserting the following after subsection (2):

• “(3) A company to which subsection (1) applies shall, as respects any activities which are treated by virtue of that subsection as a separate trade distinct from all other activities carried on by that company as part of its trade, comply with all the requirements of the Tax Acts and the Capital Gains Tax Acts as respects those activities regarding the computation of tax and the keeping of records separate from any other activity carried on by that company.”,

and

• (d) by the insertion of the following after section 697L:

“Transactions between associated persons and between tonnage tax trade and other activities of same company.	697LA.—(1) In this section—
“Transactions between associated persons and between tonnage tax trade and other activities of same company.	‘control’ shall be construed in accordance with section 11; ‘losses’ includes amounts in respect of which relief may be given in accordance with section 83(3) and Part 12; ‘transaction’ includes any agreement, arrangement or understanding of any kind (whether or not it is, or is intended to be, legally enforceable). (2) Where— (a) provision is made or imposed as between a tonnage tax company and another company by means of a transaction, (b) the results of the transaction are taken into account in computing the tonnage tax company's relevant shipping income, (c) at the time of the transaction— (i) one of the companies is directly or indirectly under the control of the other, or (ii) both of the companies are, directly or indirectly, under the control of the same person or persons, and (d) the relevant shipping income of the tonnage tax company is greater than it would be if the parties to the transaction had been independent parties dealing at arm's length, then, the income or losses of both companies shall be computed for any purpose of the Tax Acts as if the consideration in the transaction had been that which would have obtained if the transaction had been a transaction between independent persons dealing at arm's length. (3) Subsection (2) shall apply in relation to a tonnage tax company where provision is made or imposed as between the company's tonnage tax trade and other activities carried on by the company as if— (a) that trade and those other activities were carried on by two different persons, (b) those persons had entered into a transaction, and (c) the two persons were both controlled by the same person at the time of the making or imposition of the provision. (4) A company to which subsection (2) or (3) applies shall keep for a period not less than 6 years sufficient documentation to prove how prices and terms have been determined in a transaction to which that subsection applies, including a written and detailed explanation of the pricing principles it has applied in relation to any such business transaction. (5) An officer of the Revenue Commissioners may by notice in writing require a company to which subsection (2) or (3) applies to furnish him or her with such information, particulars or documentation as may be necessary for that officer to establish whether or not the company has complied with this section. (6) Section 1052 shall apply to a failure to comply with subsection (5) as it applies to a failure to deliver a return referred to in that section. (7) Sections 900 and 901 shall apply to records under this section as if they were books, records or documents within the meaning of section 900. (8) Nothing in this section is to be construed as affecting the computation of a company's tonnage tax profits.
Treatment of finance costs.	697LB.—(1) (a) In this section—
	‘deductible finance costs outside the tonnage tax trade’ means— (i) in relation to a tonnage tax company, the total of the amounts that may be taken into account in respect of finance costs in calculating for the purpose of corporation tax the company's profits other than relevant shipping profits, and (ii) in relation to a group of companies, so much of the group's finance costs as may be taken into account in calculating for the purposes of corporation tax— (I) in the case of a group member which is a tonnage tax company, the company's profits other than relevant shipping profits, and (II) in the case of a group member which is not a tonnage tax company, the company's profits; ‘finance costs’, in relation to a company, means the cost of debt finance for that company, including— (i) any interest expense which gives rise to a deduction under section 81 or relief under Part 8, (ii) any gain or loss referred to in section 79 in relation to debt finance, (iii) the finance cost implicit in a payment under a finance lease, (iv) the finance cost payable on debt factoring or on any similar transaction, and (v) any other costs arising from what would be considered on generally accepted accounting practice to be a financing transaction; ‘finance lease’, in relation to finance costs, means any arrangements that provide for machinery or plant to be leased or otherwise made available by a person (in this definition referred to as the ‘lessor’) to another person such that, in cases where the lessor and persons connected with the lessor are all companies resident in the State— (i) the arrangements, or (ii) the arrangements in which they are comprised, fall, in accordance with generally accepted accounting practice, to be treated in the accounts, including any consolidated group accounts relating to two or more companies of which that company is one, of one or more of those companies as a finance lease or as a loan; ‘total finance costs’ means— (i) in relation to a tonnage tax company, so much of the company's finance costs as could, if there were no tonnage tax election, be taken into account in calculating the company's profits for the purposes of corporation tax, and (ii) in relation to a group of companies, so much of the group's finance costs as could, if there were no tonnage tax election, be taken into account in calculating for the purposes of corporation tax the profits of any group member. (b) For the purposes of this section, where, in the case of a group of companies, an accounting period of a company does not coincide with the corresponding accounting period of another group company or companies, then the periods shall be matched on whatever basis appears to be just and reasonable. (2) Where it appears, in relation to an accounting period of a tonnage tax company (not being a member of a group of companies) which carries on tonnage tax activities and which also carries on other activities, that the company's deductible finance costs outside the tonnage tax trade exceed a fair proportion of the company's total finance costs, then an adjustment as determined in accordance with subsection (3) shall be made in computing the company's profits for corporation tax purposes for that accounting period. (3) (a) The proportion of the company's deductible finance costs outside the tonnage tax trade which are to be treated as exceeding a fair proportion of the company's total finance costs shall be determined on a just and reasonable basis. (b) The just and reasonable determination referred to in paragraph (a) shall be made by reference to the extent to which the debt finance of the company, in respect of which the company's total finance costs are incurred, is applied in such a way that any profits arising, directly or indirectly, would be relevant shipping profits. (4) Where an adjustment is to be made under subsection (2), an amount equal to the excess determined in accordance with subsection (3) shall be taken into account in computing the trading income of the company's non-tonnage tax activities for the accounting period in respect of which the adjustment arises. (5) Where it appears, in relation to an accounting period of a tonnage tax company (being a member of a tonnage tax group) where the activities carried on by the members of the group include activities other than the carrying on of a tonnage tax trade or tonnage tax trades, that the group's deductible finance costs outside the tonnage tax trade exceed a fair proportion of the group's total finance costs, then an adjustment as determined in accordance with subsection (6) shall be made in computing the company's profits for corporation tax purposes for that accounting period. (6) (a) The proportion of the group's deductible finance costs outside the tonnage tax trade which are to be treated as exceeding a fair proportion of the company's total finance costs shall be determined on a just and reasonable basis. (b) The just and reasonable determination referred to in paragraph (a) shall be made by reference to the extent to which the debt finance of the group, in respect of which the group's total finance costs are incurred, is applied in such a way that any profits arising, directly or indirectly, would be relevant shipping profits. (7) Where an adjustment is to be made under subsection (5), an amount equal to the proportion of the excess determined in accordance with subsection (6) which the company's tonnage tax profits bears to the tonnage tax profits of all the members of the group shall be taken into account in computing the trading income of the company's non-tonnage tax activities for the accounting period in respect of which the adjustment arises. (8) No adjustment shall be made under this section if— (a) in calculating for a period a company's deductible finance costs outside the tonnage tax trade of the company, or (b) in calculating for a period a group's deductible finance costs outside the tonnage tax trades of the group, the amount taken into account in respect of costs and losses is exceeded by the amount taken into account in respect of profits and gains.”.

• (2) Section 53 of the Finance Act 2002 is amended by substituting the following for subsection (5):

• “(5) This section shall come into operation as on and from the date of passing of the Finance Act 2003.”.

• (3) This section shall apply as on and from the date of the passing of this Act.

63 Amendment of section 430 (meaning of “close company”) of Principal Act.

63.—Section 430 of the Principal Act is amended—

• (a) in subsection (1) by—

• (i) the deletion of “or” in the second place in which it occurs in paragraph (d), and

• (ii) the insertion of the following after paragraph (d):

• “(da) a company controlled by or on behalf of—

  • (i) a Member State of the European Communities (other than the State) or,

  • (ii) the government of a territory, with which government, arrangements having the force of law by virtue of section 826 have been made,

  and which company is not otherwise a close company, or”,

and

• (b) by the insertion of the following after subsection (2):

• “(2A) For the purposes of this section—

  • (a) a company shall be treated as controlled by or on behalf of a Member State of the European Communities (other than the State) or the government of a territory with which arrangements having the force of law by virtue of section 826 have been made only if it is under the control of that Member State or the government of that territory, or of persons acting on behalf of that Member State or the government of that territory, independently of any other person, and

  • (b) where a company is so controlled, it shall not be treated as being otherwise a close company unless it can be treated as a close company by virtue of being under the control of persons acting independently of that Member State or the government of that territory.”.

64 Amendment of Schedule 4 (exemption of specified noncommercial State sponsored bodies from certain tax provisions) to Principal Act.

64.—Schedule 4 to the Principal Act is amended—

• (a) by inserting “57A. The Irish Sports Council.” after “57. The Irish Medicines Board.”,

• (b) by inserting “69A. National Consultative Committee on Racism and Interculturalism.” after “69. The National Concert Hall Company Limited — An Ceoláras Náisiúnta.”,

• (c) by inserting “74AB. National Qualifications Authority of Ireland.” after “74A. The National Milk Agency.” (inserted by the Taxes Consolidation Act 1997 (Amendment of Schedule 4) Order 2001 (S.I. No. 43 of 2001)),

• (d) by inserting “81A. Occupational Safety and Health Institute of Ireland.” after “81. The North Western Regional Fisheries Board.”, and

• (e) by inserting “98A. Tourism Ireland Limited.” after “98. Temple Bar Renewal Limited.”.

Chapter 5 Capital Gains Tax

65 Amendment of section 556 (adjustment of allowable expenditure by reference to consumer price index) of Principal Act.

65.—Section 556 of the Principal Act is amended—

• (a) in subsection (2)(a) by substituting “specified in subsection (5), determined under subsection (6) or specified in subsection (6A), as the case may be.” for “specified in subsection (5) or determined under subsection (6), as the case may be.”,

• (b) in subsection (6)(a) by substituting “in each subsequent year of assessment up to and including the year of assessment 2003.” for “each subsequent year of assessment.”,

• (c) in subsection (6)(b) by substituting “any subsequent year of assessment up to and including the year of assessment 2003,” for “any subsequent year of assessment,”, and

• (d) by inserting the following after subsection (6):

• “(6A) In relation to the disposal of an asset made in the year 2004 or any subsequent year of assessment, the multiplier shall be the figure mentioned in column (2) of the Table to this subsection opposite the mention in column (1) of that Table of the year of assessment in which the deductible expenditure was incurred.

table

Year of assessment in which deductible expenditure incurred	Year of assessment in which deductible expenditure incurred	Year of assessment in which deductible expenditure incurred	Year of assessment in which deductible expenditure incurred	Year of assessment in which deductible expenditure incurred	Year of assessment in which deductible expenditure incurred	Year of assessment in which deductible expenditure incurred	Multiplier
(1)	(1)	(1)	(1)	(1)	(1)	(1)	(2)
1974-75	...	...	...	...	...	...	7.528
1975-76	...	...	...	...	...	...	6.080
1976-77	...	...	...	...	...	...	5.238
1977-78	...	...	...	...	...	...	4.490
1978-79	...	...	...	...	...	...	4.148
1979-80	...	...	...	...	...	...	3.742
1980-81	...	...	...	...	...	...	3.240
1981-82	...	...	...	...	...	...	2.678
1982-83	...	...	...	...	...	...	2.253
1983-84	...	...	...	...	...	...	2.003
1984-85	...	...	...	...	...	...	1.819
1985-86	...	...	...	...	...	...	1.713
1986-87	...	...	...	...	...	...	1.637
1987-88	...	...	...	...	...	...	1.583
1988-89	...	...	...	...	...	...	1.553
1989-90	...	...	...	...	...	...	1.503
1990-91	...	...	...	...	...	...	1.442
1991-92	...	...	...	...	...	...	1.406
1992-93	...	...	...	...	...	...	1.356
1993-94	...	...	...	...	...	...	1.331
1994-95	...	...	...	...	...	...	1.309
1995-96	...	...	...	...	...	...	1.277
1996-97	...	...	...	...	...	...	1.251
1997-98	...	...	...	...	...	...	1.232
1998-99	...	...	...	...	...	...	1.212
1999-00	...	...	...	...	...	...	1.193
2000-01	...	...	...	...	...	...	1.144
2001 ...	...	...	...	...	...	...	1.087
2002 ...	...	...	...	...	...	...	1.049
2003 and subsequent years	2003 and subsequent years	2003 and subsequent years	...	...	...	...	1.000

”.

66 Restriction of relief on issue of debentures etc.

66.—The Principal Act is amended in Chapter 4 of Part 19—

• (a) in section 584—

• (i) in subsection (3) by substituting “Subject to subsections (4) to (9)” for “Subject to subsections (4) to (8)”, and

• (ii) by inserting the following after subsection (8):

• “(9) Subsection (3) shall not apply to the extent that the new holding comprises debentures, loan stock or other similar securities issued or allotted on or after 4 December 2002, unless—

  • (a) they were so issued or allotted pursuant to a binding written agreement made before that date, or

  • (b) this section has application by virtue of section 586.”,

• (b) in section 585(1), in the definition of “conversion of securities”, by substituting the following for paragraph (b):

• “(b) a conversion at the option of the holder of the securities converted as an alternative to the redemption of those securities for cash where the conversion takes place before 4 December 2002, or where the conversion takes place after that date pursuant to a binding written agreement made before that date, and”,

• (c) in section 586(3) by inserting the following after paragraph (b):

• “(c) This section shall not apply where, on or after 4 December 2002, a company issues debentures, loan stock or other similar securities to a person in exchange for shares of another company unless—

• (i) such issue is pursuant to a binding written agreement made before that date, or

• (ii) the company issuing the debentures, loan stock or other similar securities and the person to whom they are issued are members of the same group (within the meaning of section 616) throughout the period commencing one year before and ending one year after the day the debentures, loan stock or other similar securities are issued, or

• (iii) the other company is a company quoted on a recognised stock exchange and its board of directors had, before 4 December 2002, made a public announcement that they had agreed the terms of a recommended offer to be made for the company's entire issued, and to be issued, ordinary share capital.”,

and

• (d) in section 587(4) by inserting the following after paragraph (b):

• “(c) This section shall not apply to any person to whom, under a scheme of reconstruction or amalgamation, a company issues debentures, loan stock or other similar securities on or after 4 December 2002, unless—

• (i) they were issued pursuant to a binding written agreement made before that date, or

• (ii) that person and the company are members of the same group (within the meaning of section 616) throughout the period commencing one year before and ending one year after the day the debentures, loan stock or other similar securities were issued, or

• (iii) they were issued pursuant to a scheme or arrangement, the principal terms of which had been brought to the attention of the Revenue Commissioners and the Revenue Commissioners had acknowledged in writing before 4 December 2002, to the effect that the scheme or arrangement was a scheme of reconstruction and amalgamation.”.

67 Restriction of deferral of capital gains tax.

67.—(1) The Principal Act is amended in Part 19—

• (a) in section 591(2)(a) by substituting “obtains for any material disposal, before 4 December 2002, by” for “obtains for any material disposal by”,

• (b) in section 597(4)(a)(i) by substituting “obtains for the disposal, before 4 December 2002, of,” for “obtains for the disposal of,”,

• (c) in section 600A(2)(a) by substituting “for the disposal, before 4 December 2002, of” for “for the disposal of”, and

• (d) in section 605(1) by substituting “Where a person makes a disposal, before 4 December 2002, of” for “Where a person makes a disposal of”.

• (2) Subsection (1) does not apply—

• (a) as respects paragraph (b), to a disposal by a person, on or after 4 December 2002 and on or before 31 December 2003, of an asset used for the purposes of the person's trade (or any other activity of the person as is referred to in section 597(2) of the Principal Act), where the person claims that, but for the provisions of subsection (1)(b), the person would have been entitled to claim that the chargeable gain accruing on that disposal could not accrue to the person until assets, which were acquired by the person before 4 December 2002 or acquired under an unconditional contract entered into by the person before that date, ceased to be used for the purposes of that trade of the person, or, as the case may be, that other activity of the person,

• (b) as respects paragraph (c), to a disposal by a person, on or after 4 December 2002 and on or before 31 December 2003, of a qualifying premises (within the meaning of section 600A of the Principal Act) where the person claims that, but for the provisions of subsection (1)(c), the person would have been entitled to claim that the chargeable gain accruing on that disposal could not accrue to the person until a replacement premises (within that meaning) which were acquired by the person before 4 December 2002, or acquired by the person under an unconditional contract entered into before that date—

• (i) was disposed of by the person, or

• (ii) ceased to be a replacement premises,

and

• (c) as respects paragraph (d), to a disposal by a person, on or after 4 December 2002 and on or before 31 December 2003, of original assets (within the meaning of section 605 of the Principal Act), where the person claims and proves to the satisfaction of the Revenue Commissioners that, but for the provisions of subsection (1)(d), the person would have been entitled to claim that that disposal would not be treated as a disposal for the purposes of the Capital Gains Tax Acts by virtue of the person having, before 4 December 2002, acquired, or entered into an unconditional contract to acquire, new assets (within that meaning).

68 Amendment of section 598 (disposal of business or farm on “retirement”) of Principal Act.

68.—(1) Section 598 of the Principal Act is amended—

• (a) in subsection (1)(a), by substituting the following for the definition of “the Scheme”:

“ ‘the Scheme’ means the scheme known as—

• (i) the Scheme of Early Retirement From Farming introduced by the Minister for Agriculture and Food for the purpose of implementing Council Regulation (EEC) No. 2079/92 of 30 June 1992¹, or

• (ii) the Scheme of Early Retirement From Farming introduced by the Minister for Agriculture, Food and Rural Development for the purpose of implementing Council Regulation (EC) No. 1257/1999 of 17 May 1999²,”,

• (b) by substituting the following for subsection (1)(d)(i):

• “(i) (I) the period of ownership of an asset by a spouse of an individual as if it were a period of ownership of the asset by the individual, and

  • (II) where a spouse of an individual has died, the period of use of an asset by the spouse as if it were a period of use of the asset by the individual,”,

• (c) by inserting the following after subsection (1)(d)(ii):

• “(iia) the period for which an individual was a director or, as the case may be, a full-time working director of the following companies as if it were a period for which the individual was a director of a ‘relevant company’ (which, for the purposes of this subparagraph, means a company referred to in paragraph (ii) of the definition of qualifying assets in subsection (1)(a)):

  • (I) a company that was treated as being the same company as the relevant company for the purposes of section 586,

  • (II) a company involved in the same scheme of reconstruction or amalgamation under section 587 with the relevant company,”,

and

• (d) by substituting “€500,000” for “€476,250” in each place where it occurs in subparagraphs (i) and (ii) of subsection (2)(a).

• (2) Paragraph (a) of subsection (1) is deemed to have applied as respects a disposal of an asset on or after 27 November 2000 and paragraphs (b), (c) and (d) of that subsection apply as respects a disposal of an asset on or after 6 February 2003.

69 Amendment of Chapter 3 (capital gains tax) of Part 2 of Principal Act.

69.—(1) Chapter 3 of Part 2 of the Principal Act is amended by inserting the following after section 29:

“Temporary non-residents.

29A.—(1) (a) In this section— ‘intervening year’, in relation to an individual, means any year of assessment falling within the period commencing with the first day of the year of assessment immediately following the year of his or her departure and ending with the last day of the year of assessment immediately preceding the year of his or her return; ‘relevant assets’, in relation to an individual, means shares in a company, or rights to acquire shares in a company, being shares or rights which he or she beneficially owned on the last day of the year of his or her departure and the market value of which on that day— (i) is equal to, or exceeds, 5 per cent of the value of the issued share capital of the company, or (ii) exceeds €500,000; ‘year of departure’, in relation to an individual, means the last year of assessment before the year of return, for which the individual is resident in the State, and references to year of his or her departure shall be construed accordingly; ‘year of return’, in relation to an individual, has the meaning assigned to it by subsection (2), and references to year of his or her return shall be construed accordingly. (b) References in this section to an individual being resident in the State for a year of assessment shall be construed as references to an individual— (i) who is resident in the State for the year of assessment, and (ii) who could be taxed in the State for that year in respect of gains on a disposal, on each day of that year, of his or her relevant assets, if such a disposal were made by the individual on that day and gains accrued on the disposal. (c) References in this section to an individual being not resident in the State for a year of assessment shall be construed as references to an individual who could not be taxed in the State for that year in respect of gains on a disposal in that year, or part of that year, of his or her relevant assets, or part of those assets, if the individual had made such a disposal in that year, or, as the case may be, that part of that year, and gains accrued on the disposal. (2) This section applies to an individual where— (a) the individual has relevant assets, (b) the individual is resident in the State for a year of assessment (in this section referred to as the ‘year of return’), (c) the individual was not resident in the State for one or more years of assessment immediately preceding the year of his or her return; but there is a year of assessment before the year of return for which the individual was resident in the State and, at any time during that year, the individual was domiciled in the State, and (d) there are not more than 5 years of assessment falling between the year of his or her departure and the year of his or her return. (3) Where an individual to whom this section applies, disposes of his or her relevant assets or any part of them (as the case may be) in one or more intervening years, the individual shall, for the purposes of the Capital Gains Tax Acts, be deemed to have disposed of and immediately reacquired, the relevant assets or that part of them (as the case may be), on the last day of the year of his or her departure, for a consideration equal to their market value on that day. (4) Where by virtue of subsection (3), an individual is chargeable to capital gains tax in respect of a deemed disposal of his or her relevant assets or any part of them (as the case may be), credit shall be allowed against such tax in respect of tax (in this section referred to as ‘foreign tax’) payable on the subsequent disposal by the individual of those relevant assets or that part of them (as the case may be) under the law of any territory outside the State, the government of which has entered into arrangements having the force of law by virtue of section 826, and the amount of such credit— (a) shall be calculated having regard to the provisions of Schedule 24, and (b) notwithstanding those provisions, shall not exceed the amount by which capital gains tax payable by the individual would be reduced if the individual had not been deemed to have disposed of relevant assets or that part of them (as the case may be). (5) Where by virtue of subsection (3) a chargeable gain accrues to an individual, the provisions of Part 41 shall apply in relation to the chargeable gain, as if the year of his or her departure were the year of his or her return.”.

• (2)
• (a) Subject to paragraph (b), subsection (1) applies as respects an individual who ceases to be resident in the State for the year of assessment 2003, or a subsequent year of assessment.

• (b) Subsection (1) does not apply as respects an individual who before 24 February 2003 ceases to be resident in the State for the year of assessment 2003, but who would not have so ceased, if paragraph (c) (ii) had not been enacted.

• (c) For the purposes of paragraphs (a) and (b), an individual is resident in the State for a year of assessment so long as he or she—

• (i) is resident in the State for the year of assessment, and

• (ii) could be taxed in the State for that year in respect of gains on a disposal, on each day of that year, of his or her relevant assets, if such a disposal were made by the individual on that day and gains accrued on the disposal.

70 Amendment of Chapter 1 (assets and acquisition and disposal of assets) of Part 19 of Principal Act.

70.—(1) The Principal Act is amended in Chapter 1 of Part 19 by inserting after section 541A the following section:

“Restrictive covenants.	541B.—(1) Where—
	(a) a person gives an undertaking (whether absolute or qualified and whether legally valid or not), the tenor or effect of which is to restrict the person as to the person's conduct or activities, (b) in respect of the giving of that undertaking by the person, or of the total or partial fulfilment of that undertaking by the person, any sum is paid either to the person or to any other person, and (c) that sum is neither— (i) treated, for the purposes of the Tax Acts, as profits or gains chargeable to tax under Schedule D or Schedule E, nor (ii) treated as consideration for the disposal of an asset for the purposes of the Capital Gains Tax Acts, the amount of the sum shall be deemed for the purposes of the Capital Gains Tax Acts to be the amount of a chargeable gain accruing to the person to whom it is paid (for the year of assessment in which it is paid) on the disposal of a chargeable asset. (2) Where valuable consideration otherwise than in the form of money is given in respect of the giving of, or the total or partial fulfilment of, any undertaking, subsection (1) applies as if a sum had instead been paid equal to the value of that consideration.”.

• (2) This section applies as respects the giving of an undertaking by a person on or after 6 February 2003, the tenor or effect of which is to restrict the person as to the person's conduct or activities.

71 Amendment of section 980 (deduction from consideration on disposal of certain assets) of Principal Act.

71.—(1) Section 980 of the Principal Act is amended by substituting the following for subsection (8):

• “(8)

  • (a) A person chargeable to capital gains tax on the disposal of an asset to which this section applies, or another person (in this section referred to as an ‘agent’) acting under the authority of such person, may apply to the inspector for a certificate that tax should not be deducted from the consideration for the disposal of the asset and that the person acquiring the asset should not be required to give notice to the Revenue Commissioners in accordance with subsection (9)(a).

  • (b) If the inspector is satisfied that the person making the application is either the person making the disposal, or an agent, and that—

    • (i) the person making the disposal is resident in the State,

    • (ii) no amount of capital gains tax is payable in respect of the disposal, or

    • (iii) the capital gains tax chargeable for the year of assessment for which the person making the disposal is chargeable in respect of the disposal of the asset and the tax chargeable on any gain accruing in any earlier year of assessment (not being a year ending earlier than the 6th day of April, 1974) on a previous disposal of the asset has been paid,

    the inspector shall issue the certificate to the person making the disposal or, as the case may be, the agent, and shall issue a copy of the certificate to the person acquiring the asset.

  • (c) Where an application is made under this subsection by an agent, it must include the name and address of the person making the disposal and where such person is resident in the State, that person's tax reference number (within the meaning of section 885).”.

• (2) This section applies as respects applications made on or after the date of the passing of this Act.

72 Amendment of Schedule 15 (list of bodies for the purposes of section 610) to Principal Act.

72.—Schedule 15 to the Principal Act is amended in Part 1—

• (a) in paragraph 3 by substituting “section 213 or where the gain is applied solely for the purposes of its registered trade union activities.” for “section 213.”, and

• (b) by adding the following after paragraph 34:

“35. National Development Finance Agency.

1. Tourism Ireland Limited.

2. An approved body (within the meaning of section 235(1)) to the extent that its income is exempt from income tax or, as the case may be, corporation tax.

3. Any body established by statute for the principal purpose of promoting games or sports and any company wholly owned by such a body, where the gain is applied solely for that purpose.”.

PART 2 Excise

Chapter 1 Alcohol Products Tax

73 Interpretation (Chapter 1).

73.—(1) In this Chapter and Schedule 2 except where the context otherwise requires—

“alcohol” means pure ethyl alcohol;

“alcohol product” means beer, wine, other fermented beverage, spirits or intermediate beverage;

“authorised warehousekeeper” means a person authorised by the Commissioners under section 109 of the Finance Act 2001 to produce, process, hold, receive or dispatch alcohol products under a suspension arrangement;

“beer”, subject to section 74, means—

• (a) beer made from malt, and

• (b) any beverage containing a mixture of such beer with any non-alcoholic beverage,

in either case exceeding 0.5% vol;

“beer concentrate” means a product, produced from beer, not exceeding 0.5% vol, which is intended for addition to beer as a flavourant or colourant;

“cider and perry” means a beverage exceeding 1.2% vol but not exceeding 15% vol, obtained from the fermentation of apple or pear juice and without the addition of—

• (a) any other alcoholic beverage, or

• (b) any other beverage or substance which imparts colour or flavour and which, by such addition in the opinion of the Commissioners significantly alters the character of the product;

“CN Code” means a Community subdivision to the combined nomenclature of the European Communities referred to in Article 1 of Council Regulation (EEC) No. 2658/87 of 23 July 1987¹ in force on 19 October 1992;

“Commissioners” means the Revenue Commissioners;

“denature” means to mix an alcohol product with any substance so as to render the mixture unfit for human consumption and includes to methylate and cognate words shall be construed accordingly;

“Directive” means Council Directive No. 92/83/EEC of 19 October 1992²;

“intermediate beverage”, subject to section 74, means any beverage other than beer, wine, or other fermented beverage, the alcoholic content of which is at least partly of fermented origin and which—

• (a) in the case of a still beverage exceeds 10% vol,

• (b) in the case of a sparkling beverage exceeds 13% vol,

and which in either case does not exceed 22% vol;

“materials” means any ingredient or other substance intended to be used in the production of, or for incorporation in, any alcohol product;

“medicinal product” has the same meaning as it has in Article 1 of Council Directive No. 65/65/EEC of 26 January 1965³;

“non-alcoholic beverage” means any beverage not exceeding 0.5% vol;

“officer” means an officer of the Commissioners;