Finance (No. 2) Act 2008

Type Act

Publication 2008-12-24

State In force

Source Irish Statute Book

articles 102

380W.— (1) Where an allowance under section 380T(1)(b) or 380U(1)(b) has been made to any person in respect of expenditure incurred on the provision of machinery or plant or on the construction of a building or structure and the machinery or plant or building or structure is sold by that person without the machinery or plant or building or structure having been used by that person for the purposes of a relevant trade or before the expiration of the period of 2 years from the day on which the machinery or plant or, as the case may be, the building or structure, began to be so used, then the allowance under those sections shall be withdrawn and all such additional assessments and adjustments of assessments shall be made as may be necessary for or in consequence of the withdrawal of the allowance.

(2) For the purposes of this Part, capital expenditure does not include any expenditure which is allowed to be deducted in computing for the purposes of tax the profits or gains of a trade carried on by the person incurring the expenditure.

(3) Where relief is given by any provision of this Part in relation to relocation expenditure, then relief shall not be given in respect of that expenditure under any other provision of the Taxes Acts.

(4) Chapter 4 of Part 9 shall apply as if this Part were contained in that Part.

Restrictions on relief — non-application of relief in certain cases.

380X.— Notwithstanding any other provision of this Part, no allowances under sections 380R, 380S, 380T and 380U shall be made in relation to expenditure—

(a) where any part of such expenditure has been or is to be met, directly or indirectly, by grant assistance or any other assistance which is granted by or through the State, any board established by statute, any public or local authority or any other agency of the State,

(b) unless the potential allowances in relation to that expenditure comply with—

(i) the requirements of the Guidelines on National Regional Aid for 2007-2013 prepared by the Commission of the European Communities and issued on 4 March 2006 [^1],

(ii) the National Regional Aid Map for Ireland for the period 1 January 2007 to 31 December 2013 which was approved by the Commission of the European Communities on 24 October 2006 [^2], and

(iii) the requirements of the Community Guidelines on State Aid for Environmental Protection prepared by the Commission of the European Communities and issued on 1 April 2008 [^3],

(c) where the person who is entitled to the allowances in relation to that expenditure is subject to an outstanding recovery order following a previous decision of the Commission of the European Communities declaring aid in favour of that person to be illegal and incompatible with the common market,

(d) where the person who is entitled to the allowances is a person in difficulty under the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty [^4].”.

(2) Subsection (1) comes into operation on the making of an order to that effect by the Minister for Finance.

22. Amendment of section 268 (meaning of “industrial building or structure”) of Principal Act.

22.— Section 268 of the Principal Act is amended—

(a) in subsection (12)(c) by inserting “, or part thereof,” after “potential capital allowances involved”, and

(b) by inserting the following after subsection (12):

“(12A) (a) Where the National Tourism Development Authority gives a certificate in writing to the person who has incurred the capital expenditure on the construction or refurbishment of the building or structure stating that the approval referred to in subsection (12)(c) has been received, the building or structure shall, for the purposes of this Part, be treated as an industrial building or structure from the date on which it was first used for the purposes of the trade of hotel-keeping, and tax shall be discharged or repaid accordingly in giving effect to the allowances to be made under this Part.

(b) Where the Commission of the European Communities has approved an amount—

(i) which is lower than the amount of capital expenditure actually incurred on the construction or refurbishment of the building or structure, then, for the purposes of this Part, that lower amount shall be substituted for the amount actually incurred, or

(ii) which is lower than the amount of the net price paid within the meaning of section 279, that section shall apply as if the reference to the net price paid in subsection (2)(b) were a reference to the lower amount so approved.”.

23. Amendment of section 81 (general rule as to deductions) of Principal Act.

23.— (1) Section 81 of the Principal Act is amended in subsection (2) by substituting “capital gains tax;” for “capital gains tax.” in paragraph (n), and by inserting the following after paragraph (n):

“(o) any sum paid or payable under any agreement or understanding whereby a person is obliged to make a payment to a connected person resident in any territory outside the State for an adjustment made, or to be made, to the profits of the connected person for which relief may be afforded under the terms of an arrangement entered into by virtue of subsection (1) or (1B) of section 826, or for a similar adjustment made to the profits of a connected person resident in any other territory.”.

(2) (a) Subsection (1) applies in respect of any sum paid or payable—

(i) in an accounting period ending on or after 20 November 2008, or

(ii) in a basis period for a year of assessment where that basis period ends on or after 20 November 2008.

(b) For the purposes of this subsection “basis period” means the period on the profits or gains of which income tax for the year of assessment is to be finally computed under the Income Tax Acts.

24. Amendment of section 81B (equalisation reserves for credit insurance and reinsurance business of companies) of Principal Act.

24.— (1) Section 81B of the Principal Act is amended—

(a) in subsection (1) by inserting the following before the definition of “ Reinsurance Regulations ”:

“ ‘ credit insurance risks ’ means risks included in class 14 of Section A of the Annex to the First Council Directive 73/239/EEC of 24 July 1973 [^1];

‘ Principal Regulations ’ means the European Communities (Non-Life Insurance) Regulations 1976 (S.I. No. 115 of 1976) as amended from time to time;”,

(b) by inserting the following after subsection (1):

“(1A) This section applies to—

(a) an insurance company whose business has at any time been, or included, business in respect of which it was required, by virtue of Regulation 24 of the Reinsurance Regulations, to establish and maintain an equalisation reserve, or

(b) an insurance company which is underwriting credit insurance risks and which is required by Article 14(8) of the Principal Regulations to set up an equalisation reserve.”,

“(2) Subject to the following provisions of this section, full account shall be taken of all amounts in accordance with the rules in subsection (3) in making any computation, for the purposes of Case I of Schedule D, of the profits or losses for any accounting period of an insurance company to which this section applies.”,

(d) in subsection (3)(c) by inserting “or the Principal Regulations” after “the Reinsurance Regulations”,

(e) in subsection (4)—

(i) by inserting “or Article 14(8) of the Principal Regulations” after “Regulation 24 of the Reinsurance Regulations”, and

(ii) in paragraph (b) by inserting “or the Principal Regulations” after “Reinsurance Regulations”,

(f) in subsection (5) by inserting “or the Principal Regulations” after “Reinsurance Regulations” in both places where it occurs, and

(g) in subsection (7) by inserting “or the Principal Regulations” after “Reinsurance Regulations”.

(2) This section is deemed to have effect as on and from 15 July 2006.

25. Amendment of section 198 (certain interest not to be chargeable) of Principal Act.

25.— (1) Section 198 of the Principal Act is amended in subsection (1)(c)—

(a) in subparagraph (iii) by inserting “, an interest payment to which section 246A applies” after “to which section 64(2) applies” and by deleting “and” where it last occurs,

(b) in subparagraph (iv), by substituting “assets of the qualifying company, and” for “assets of the qualifying company.”, and

“(v) a person shall not be chargeable to income tax in respect of discounts arising on securities issued by a relevant person (within the meaning of section 246) in the ordinary course of a trade or business carried on by that person if the first mentioned person is not a resident of the State and is regarded as being a resident of a relevant territory for the purposes of this subsection.”.

(2) This section applies as respects interest paid or discounts arising on or after 1 January 2009.

26. Amendment of Part 8 (annual payments, charges and interest) of Principal Act.

26.— (1) The Principal Act is amended—

(a) in section 256(1) in the definition of “appropriate tax”—

(i) in paragraph (a) by substituting “23 per cent” for “20 per cent”,

(ii) by substituting the following for paragraph (b):

“(b) subject to paragraph (c), in the case of interest paid in respect of any other relevant deposit, at a rate determined by the formula—

(S + 3) per cent

where S is the standard rate per cent (within the meaning of section 4(1)) in force at the time of payment, and”,

and

(iii) in paragraph (c), by substituting “(S + 6) per cent” for “(S + 3) per cent”,

(b) in section 261(c)(i) by substituting the following for clause (II):

“(II) where the taxable income of that person includes relevant interest which comes within paragraph (b) of the definition of ‘appropriate tax’ in section 256(1) of the Principal Act, the part of taxable income, equal to that relevant interest, shall be chargeable to tax at the rate at which tax was deducted from that relevant interest.”,

“(2) Notwithstanding section 15, where the taxable income of that person includes specified interest, the part of taxable income, equal to that specified interest, shall be chargeable to tax at the rate at which tax would have been deducted, from that interest, if a declaration under subsection (1A) or (1B) of section 256 had not been made.”,

(d) in section 267B—

(i) in subsection (2)(b) by substituting “23 per cent” for “20 per cent”, and

(ii) in subsection (3)(b) by substituting “23 per cent” for “20 per cent”,

and

(e) in section 267M, by substituting the following for paragraph (a) of subsection (2):

“(a) Notwithstanding section 15 and subject to paragraph (b), where the taxable income of that person includes specified interest, the part of taxable income, equal to that specified interest, shall be chargeable to tax at the rate specified in paragraph (b) of the definition of ‘appropriate tax’ in subsection 256(1).”,

(2) (a) Paragraphs (a) and (d) of subsection (1) apply as respects any payment or crediting of relevant interest (within the meaning of Chapter 4 of Part 8 of the Principal Act) made on or after 1 January 2009.

(b) Paragraphs (b), (c) and (e) of subsection (1) apply for the year of assessment 2009 and subsequent years of assessment.

27. Life assurance policies and investment funds.

27.— (1) The Principal Act is amended—

(a) in section 730F(1)—

(i) in paragraph (a) by substituting “(S + 6) per cent” for “(S + 3) per cent”, and

(ii) in paragraph (b) by substituting “(S + 26) per cent” for “(S + 23) per cent”,

(b) in Chapter 6 of Part 26—

(i) in section 730J(a)—

(I) by substituting the following for clause (I) of subparagraph (i):

“(I) where the payment is a relevant payment, at the rate determined by the formula—

(S + 3) per cent

where S is the standard rate per cent for the year of assessment in which the payment is made, and”,

(II) in subparagraph (i)(II)(A) by substituting “(S + 26) per cent” for “(S + 23) per cent”,

(III) in subparagraph (i)(II)(B) by substituting “(S + 6) per cent” for “(S + 3) per cent”, and

(IV) in subparagraph (ii)(I) by substituting “(H + 23) per cent” for “(H + 20) per cent”,

and

(ii) in section 730K(1)—

(I) in paragraph (a) by substituting “(S + 26) per cent” for “(S + 23) per cent”, and

(II) in paragraph (b) by substituting “(S + 6) per cent” for “(S + 3) per cent”,

(i) in the formula in section 739D(5A) by substituting“(S + 6)” for “(S + 3)”,

(ii) in section 739E—

(I) in subsection (1)—

(A) by substituting the following for paragraph (a):

“(a) subject to paragraph (ba), where the amount of the gain is provided by section 739D(2)(a), at a rate determined by the formula—

(S + 3) per cent

where S is the standard rate per cent for the year of assessment in which the gain arises,”,

(B) in paragraph (b) by substituting “(S + 6) per cent” for “(S + 3) per cent,”, and

and

(II) in subsection (1A) in the definition of “first tax” by substituting “section 739F or, as the case may be, in accordance with subsection (2A)(b)(iii) and section 739G(2A)” for “section 739F”,

and

(iii) in section 739G(2)(c) by substituting “at the rate determined in accordance with section 739E(1)(a),” for “at the standard rate,”,

and

(d) in Chapter 4 of Part 27—

(i) in section 747D—

(I) in paragraph (a)(i)(I)—

(A) by substituting “(S + 26) per cent” for “(S + 23) per cent,” in subclause (A), and

(B) by substituting the following for subclause (B):

“(B) in any other case, at the rate determined by the formula—

(S + 3) per cent

where S is the standard rate per cent for the year of assessment in which the relevant payment is made,”,

(II) in paragraph (a)(i)(II)(A) by substituting “(S + 26) per cent” for “(S + 23) per cent,”,

(III) in paragraph (a)(i)(II)(B) by substituting “(S + 6) per cent” for “(S + 3) per cent,”, and

(IV) in paragraph (a)(ii)(I) by substituting “(H + 23) per cent” for “(H + 20) per cent,”,

and

(ii) in section 747E(1)—

(I) in paragraph (b)(i) by substituting “(S + 26) per cent” for “(S + 23) per cent,”, and

(II) in paragraph (b)(ii) by substituting “(S + 6) per cent” for “(S + 3) per cent,”.

(2) (a) Paragraph (a) of subsection (1) applies and has effect as respects the happening of a chargeable event in relation to a life policy (within the meaning of Chapter 5 of Part 26) on or after 1 January 2009.

(b) Paragraph (b)(i) of subsection (1) applies and has effect as respects the receipt by any person of a payment in respect of a foreign life policy (within the meaning of Chapter 6 of Part 26) on or after 1 January 2009.

(c) Paragraph (b)(ii) of subsection (1) applies and has effect as respects the disposal in whole or in part of a foreign life policy (within the meaning of Chapter 6 of Part 26) on or after 1 January 2009.

(d) Paragraph (c) of subsection (1) applies and has effect as respects the happening of a chargeable event in relation to an investment undertaking (within the meaning of section 739B(1)) on or after 1 January 2009.

(e) Paragraph (d)(i) of subsection (1) applies and has effect as respects the receipt by any person of a payment in respect of a material interest in an offshore fund (within the meaning of Chapter 4 of Part 27) on or after 1 January 2009.

(f) Paragraph (d)(ii) of subsection (1) applies and has effect as respects the disposal in whole or in part by a person of a material interest in an offshore fund (within the meaning of Chapter 4 of Part 27) on or after 1 January 2009.

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

28.— (1) The Principal Act is amended in section 481—

(a) in subsection (1), in the definition of “relevant deduction”, by substituting “100 per cent” for “80 per cent”, and

(b) in subsection (7) by substituting “€50,000” for “€31,750”.

(2) This section comes into operation on such day or days as the Minister for Finance may by order or orders appoint and different days may be appointed for different purposes or different provisions.

29. Amendment of section 503 (claims) of Principal Act.

29.— (1) Section 503 of the Principal Act is amended by substituting the following for subsection (1):

“(1) A claim for the relief in respect of eligible shares issued by a company in any year of assessment shall be made—

(a) not earlier than—

(i) in the case of a relevant investment, the date on which the company commences to carry on the relevant trading operations, and

(ii) in any other case, the end of the period of 4 months mentioned in section 489(7)(a)(i)(II),

and

(b) not later than—

(i) 2 years after the end of that year of assessment or, if that period of 4 months mentioned in section 489(7)(a)(i)(II) ended after the end of that year, 2 years after the end of that 4 month period, whichever last occurs, or

(ii) 3 months after the date the statement referred to in subsection (3) is furnished, where such statement is furnished within the 3 months prior to the expiry of the time specified in subparagraph (i).”.

(2) Subsection (1) applies and has effect as on and from 1 January 2009.

30. Amendment of section 768 (allowance for know-how) of Principal Act.

30.— (1) Section 768 of the Principal Act is amended—

(a) by substituting the following for subsection (3):

“(3) (a) Where a person acquires a trade or part of a trade and, together with the trade or the part of the trade, know-how used in the trade or part of the trade, then no amount shall be allowed to be deducted under this section in respect of expenditure incurred on the acquisition of the know-how.

(b) Subject to paragraph (c), where—

(i) a person acquires a trade or part of a trade, and

(ii) a person connected (within the meaning of section 10) with the person acquires know-how used in the trade or the part of the trade,

then—

(I) the amount of expenditure incurred on the know-how by the person referred to in subparagraph (ii) shall be allowed as a deduction against profits of the trade, carried on by that person, in which the know-how is used (in this subsection referred to as a ‘relevant trade’) but not against any other income or profits of whatever description,

(II) no amount of any royalty or other sum paid by the person referred to in subparagraph (i), or by any person connected (within the meaning of section 10) with that person, for the know-how acquired by the person referred to in subparagraph (ii) shall be allowed to be deducted in computing the profits of any description, or to be treated as a charge on income, of the person making such payment, and

(III) no amount shall be allowed to be deducted under this section where, at any time, the trade or part of the trade referred to in subparagraph (i) is transferred to the person referred to in subparagraph (ii).

(c) Where as respects any chargeable period of a person carrying on a relevant trade, the amount by which a deduction available to be made under paragraph (b)(I) exceeds the profits of the relevant trade but for that deduction, the excess shall be carried forward and treated as an amount deductible under paragraph (b)(I) for succeeding chargeable periods and (so long as the person continues to carry on the trade) its profits from the trade in any succeeding chargeable period shall then be treated as reduced by the amount of the excess, or by so much of that excess as cannot be relieved against profits of the trade of an earlier chargeable period.”,

and

(b) by inserting the following after subsection (5):

“(6) Where any relief has been claimed under this section which is subsequently found not to have been due, that relief shall be withdrawn by making an assessment to tax, under Case IV of Schedule D, for the chargeable period or chargeable periods in which relief was claimed and, notwithstanding anything in the Tax Acts, such an assessment may be made at any time.”.

(2) This section applies as respects any chargeable period (within the meaning of section 321(2) of the Principal Act) ending on or after 31 December 2008.

Chapter 5 Corporation Tax

31. Relief from tax for certain start-up companies.

31.— (1) The Principal Act is amended by inserting the following after section 486B—

“486C.— (1) (a) In this section—

‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993;

‘ EEA state ’ means a State, other than the State, which is a Contracting Party to the EEA Agreement;

‘ excepted trade ’ has the same meaning as in section 21A;

‘ net chargeable gains ’ means chargeable gains less allowable losses;

‘ new company ’ means a company incorporated in the State or in an EEA State other than the State on or after 14 October 2008;

‘qualifying assets’, in relation to a qualifying trade, means relevant assets of the qualifying trade which are disposed of in the relevant period in relation to that trade;

‘qualifying trade’ has the meaning assigned to it in subsection (2);

‘relevant asset’, in relation to a qualifying trade means, an asset (including goodwill but not including shares or securities or other assets held as investments) which is, or is an interest in, an asset used for the purposes of that trade other than an asset on the disposal of which no gain accruing would be a chargeable gain or an asset the consideration for the acquisition of which is determined by section 617 or section 631;

‘ relevant corporation tax ’, in relation to an accounting period, means the corporation tax which, apart from this section, sections 239, 241, 440, 441, 644B and 827 and paragraph 18 of Schedule 32, would be chargeable for the accounting period exclusive of—

(i) the corporation tax chargeable on the profits of the company attributable to chargeable gains for that period, and

(ii) the corporation tax chargeable on the part of the company’s profits which are charged to tax at the rate specified in section 21A;

‘ relevant period ’, in relation to a qualifying trade, means the period beginning on the day the company commences to carry on the qualifying trade and ending 3 years after that date;

‘ total corporation tax ’, in relation to an accounting period, means the corporation tax which, apart from this section, sections 239 and 241 would be chargeable for the accounting period;

‘ trade ’ means a trade the profits or gains of which are charged to tax under Case I of Schedule D.

(b) For the purposes of this section, the profits of a company attributable to chargeable gains for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne exclusive of the part of the profits attributable to income. That part shall be taken to be the amount brought into the company’s profits for that period for the purposes of corporation tax in respect of income after any deduction for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of more than one description.

(2) (a) In this section ‘ qualifying trade ’ means a trade which is set up and commenced by a new company in 2009 other than a trade—

(i) which was previously carried on by another person and to which the company has succeeded,

(ii) the activities of which were previously carried on as part of another person’s trade or profession,

(iii) which is an excepted trade, or

(iv) the activities of which if carried on by a close company with no other source of income, would result in that company being a service company for the purposes of section 441.

(b) Where a trade consists partly of excepted operations and partly of other operations or activities, then section 21A(2) shall apply for the purposes of this section as it applies for the purposes of section 21A.

(3) Where a company carries on a qualifying trade in an accounting period falling partly within the relevant period in relation to that qualifying trade, then the income from the qualifying trade for that accounting period shall, for the purpose of this section, be the amount of the income of the qualifying trade for that part of the accounting period and the amount of the income of the qualifying trade for that part shall be determined as if that part were a separate accounting period.

(4) (a) Where an accounting period of a company falls wholly or partly within a relevant period in relation to a qualifying trade and the total corporation tax payable by the company for that accounting period does not exceed the lower relevant maximum amount, then—

(i) corporation tax payable by the company for that accounting period, so far as it is referable to income from the qualifying trade for that accounting period, and

(ii) corporation tax payable by the company so far as it is referable to chargeable gains on the disposal of qualifying assets in relation to the trade,

shall be reduced to nil.

(b) Where an accounting period of a company falls wholly or partly within a relevant period in relation to a qualifying trade and the total corporation tax payable by the company for that accounting period exceeds the lower relevant maximum amount but does not exceed the upper relevant maximum amount, then the aggregate of corporation tax payable by the company for that accounting period so far as it is referable to income from the qualifying trade for that accounting period and corporation tax payable by the company for that accounting period so far as it is referable to chargeable gains on the disposal of qualifying assets in relation to the trade, shall be reduced to an amount determined by the following formula:

3 (T — M) A + B

where—

T is the total corporation tax payable by the company for that accounting period,

M is the lower relevant maximum amount,

A is the corporation tax payable by the company for the accounting period so far as is referable to income from the qualifying trade for that accounting period, and

B is the corporation tax payable by the company for that accounting period so far as is referable to chargeable gains on the disposal of qualifying assets of the qualifying trade.

(c) For the purposes of this subsection, the corporation tax referable to income from a qualifying trade in an accounting period is such an amount as bears to the relevant corporation tax the same proportion as the income from the qualifying trade bears to the total income brought into charge to corporation tax for that accounting period.

(d) For the purposes of this subsection, the corporation tax referable to chargeable gains on the disposal of qualifying assets is such amount as bears to the corporation tax payable on the profits of the company attributable to the chargeable gains for the accounting period the same proportion as the net chargeable gains on qualifying assets disposed of in the accounting period bears to net chargeable gains on all chargeable assets disposed of in the accounting period.

(5) Subject to subsection (6), the lower relevant maximum amount and the upper relevant maximum amount mentioned in subsection (4) are €40,000 and €60,000 respectively.

(6) For an accounting period of less than 12 months the relevant maximum amounts determined in accordance with subsection (5) shall be proportionately reduced.

(7) The aggregate of all reductions in corporation tax to which a company is entitled under subsection (4) in respect of a qualifying trade, the activities of which consist wholly or mainly of the conveyance by road of persons or goods or the haulage by road of other vehicles, shall not exceed €100,000.

(8) (a) Where, on a person ceasing to carry on a trade or part of a trade, a company (in this subsection referred to as the ‘successor’) begins—

(i) to carry on the activities of the trade as part of its trade, or

(ii) to carry on the activities of that part as part of its trade,

then that part of the trade carried on by the successor shall for the purposes of this section be treated as a separate trade.

(b) Where under paragraph (a) any activities of a company’s trade are to be treated as a separate trade, then any necessary apportionment shall be made of receipts or expenses.

(9) Notwithstanding section 4(4)(b), the income of a company, referred to in the expression ‘total income brought into charge to corporation tax’, for the accounting period for the purposes of subsection (2) is the sum determined by section 4(4)(b) for that period reduced by an amount equal to so much of the profits of the company for the accounting period as are charged to tax in accordance with section 21A.

(10) Where in an accounting period a company transfers to a connected person part of a qualifying trade, then the company shall not be entitled to relief under this section in respect of that trade for that or any subsequent accounting periods.

(11) Where a company is entitled to relief under this section in respect of any accounting period, then it shall specify the amount of relief due in its return required under section 951 for that accounting period.”.

(2) This section comes into operation on such day as the Minister for Finance may appoint by order.

32. Amendment of section 448 (relief from corporation tax) of Principal Act.

32.— (1) Section 448 of the Principal Act is amended—

(a) by substituting the following for paragraph (b) of subsection (3):

“(b) then, deducting from the relevant sum—

(i) the amount of any charges on income paid for the purposes of the sale of goods in the relevant accounting period,

(ii) the amount of any loss from the sale of goods incurred by the company in the relevant accounting period, and

(iii) the amount of any excess of charges on income paid for the purpose of the sale of goods or the amount of any loss from the sale of goods, incurred by a surrendering company and allowed under section 420A,

allowed against income of the trade in the relevant accounting period.”,

and

(b) by substituting the following for paragraph (a) of subsection (5B) (inserted by the Finance Act 2008):

“(a) by any amounts in respect of—

(i) any charges on income paid for the purposes of the sale of goods in the relevant accounting period,

(ii) any loss from the sale of goods incurred by the company in the relevant accounting period, and

(iii) any excess of charges on income paid for the purpose of the sale of goods or the amount of any loss from the sale of goods, incurred by a surrendering company and allowed under section 420A,

allowed against income of the trade in the relevant accounting period, and”.

(2) This section has effect for accounting periods ending on or after 20 November 2008.

33. Relevant territory.

33.— The Principal Act is amended—

(a) in the definition of “ relevant territory ” in section 21B(1)(a)—

(i) in subparagraph (i) by deleting “or” and in subparagraph (ii) by substituting “have been made, or” for “have been made;”, and

(ii) by inserting the following after subparagraph (ii):

“(iii) not being a territory referred to in subparagraph (i) or (ii), a territory with the government of which arrangements have been made which on completion of the procedures set out in section 826(1) will have the force of law;”,

(b) in the definition of “ relevant territory” in section 153(1)—

(i) in paragraph (a) by deleting “or” and in paragraph (b) by substituting “have been made, or” for “have been made;”, and

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

“(c) not being a territory referred to in paragraph (a) or (b), a territory with the government of which arrangements have been made which on completion of the procedures set out in section 826(1) will have the force of law;”,

(i) in subparagraph (i) by deleting “or” and in subparagraph (ii) by substituting “have been made, or” for “have been made;”, and

(ii) by inserting the following after subparagraph (ii):

(d) in the definition of “ relevant territory ” in section 198(1)(a)—

(i) in subparagraph (i) by deleting “or” and in subparagraph (ii) by substituting “have been made, or” for “have been made;”, and

(ii) by inserting the following after subparagraph (ii):

(e) in the definition of “ relevant territory ” in section 246(1)—

(i) in paragraph (a) by deleting “or” and in paragraph (b) by substituting “have been made, or” for “have been made;”, and

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

(f) in section 452—

(i) by inserting in subsection (1)(a) the following after “section 826(1)” in the definition of “ arrangements ”:

“or arrangements made with the government of a territory which on completion of the procedures set out in section 826(1) will have the force of law”,

and

(ii) by inserting in subsection (1)(b)(i) “and have effect in accordance with the provisions of those arrangements” after “have been made”,

(g) in the definition of “ relevant territory ” in section 626B(1)(a)—

(i) in subparagraph (i) by deleting “or” and in subparagraph (ii) by substituting “have been made, or” for “have been made;”, and

(ii) by inserting the following after subparagraph (ii):

and

(h) in paragraph 9F of Schedule 24 by inserting the following after clause (b) of subparagraph (1):

“(c) (i) In this clause ‘arrangements’ means arrangements made with the government of a territory which on completion of the procedures set out in section 826(1) will have the force of law.

(ii) A territory not otherwise within subparagraph (1)(b)(i)(II) shall for the purposes of this paragraph be so treated if it is a territory with the government of which arrangements have been made.”.

34. Amendment of section 766 (tax credit for research and development expenditure) of Principal Act.

34.— (1) The Principal Act is amended in section 766—

(a) in subsection (1)(a) by substituting the following for the definition of “ threshold amount ”:

“ ‘threshold amount’, in relation to a relevant period of a group of companies, means the aggregate of the amounts of expenditure on research and development incurred in the period of one year ending on a date in the year 2003, which corresponds with the date on which the relevant period ends by all companies which are members of the group in the threshold period, in relation to the relevant period concerned: but expenditure incurred by a company which is a member of the group for a part of the threshold period shall only be included in the threshold amount if the expenditure is incurred at a time when the company is a member of the group;”,

(b) in subsection (2) by substituting “25 per cent” for “20 per cent”,

(d) by inserting the following after subsection (4):

“(4A) (a) Where as respects any accounting period of a company the amount by which the company is entitled to reduce corporation tax of the accounting period exceeds the corporation tax of the company for the accounting period, the company may make a claim requiring the corporation tax of the preceding accounting period ending within the time specified in paragraph (b) to be reduced by the amount of the excess.

(b) The time referred to in paragraph (a) shall be a time immediately preceding the accounting period first mentioned in that paragraph, equal in length to that accounting period, but the amount of the reduction which may be made under paragraph (a) in the corporation tax of an accounting period falling partly before that time shall not exceed the corporation tax referable to the part of those profits proportionate to the part of the period falling within that time.

(4B) (a) Where a claim under subsection (4A)(a) has been made, and the amount of the excess referred to in subsection (4A)(a) exceeds the corporation tax of the preceding accounting periods ending within the time specified in subsection (4A)(b) or where no corporation tax arises for those preceding accounting periods, the company may make a claim to have any excess remaining paid to the company by the Revenue Commissioners.

(b) Subject to section 766B, on receipt of a claim the Revenue Commissioners shall pay any excess remaining to the company, in 3 instalments—

(i) the first instalment shall be paid by the Revenue Commissioners not earlier than the date provided for in paragraph (b) of the definition of ‘specified return date for the chargeable period’ as defined in section 950(1), for the accounting period in which the expenditure on research and development was incurred and shall equal 33 per cent of the excess remaining,

(ii) in respect of the second instalment—

(I) the excess remaining, as reduced by the first instalment under subparagraph (i), shall be first treated as an amount by which the corporation tax of the accounting period next succeeding the accounting period in which the expenditure giving rise to the claim under this subsection was incurred, is reduced in accordance with subsection (4), and

(II) the second instalment shall be paid by the Revenue Commissioners not earlier than 12 months immediately following the date referred to in subparagraph (i) and shall equal 50 per cent of the amount by which the excess remaining is reduced by the aggregate of the first instalment under subparagraph (i) and the amount treated as reducing the corporation tax of an accounting period under clause (I),

and

(iii) in respect of the last instalment—

(I) the excess remaining, as reduced by the first and second instalments and by the amount treated as reducing the corporation tax of an accounting period under clause (I) of subparagraph (ii), shall be first treated as an amount by which the corporation tax of the accounting period next succeeding the accounting period referred to in clause (I) of subparagraph (ii) is reduced in accordance with subsection (4), and

(II) the last instalment shall be paid by the Revenue Commissioners not earlier than 24 months immediately following the date referred to in subparagraph (i) and shall equal the amount by which the excess remaining is reduced by the first and second instalments and by the total of the amounts by which the corporation tax of an accounting period is reduced under clause (I) of subparagraph (ii) and under clause (I) of this subparagraph.”,

(e) by substituting for subsection (5):

“(5) Any claim under this section shall be made within 12 months from the end of the accounting period in which the expenditure on research and development, giving rise to the claim, is incurred.”,

and

(f) by inserting the following after subsection (7):

“(7A) Any amount payable by virtue of subsection (4B) shall not be income of the company or another company for any tax purpose.

(7B) Any amount payable by the Revenue Commissioners to the company or another company by virtue of subsection (4B) shall be deemed to be an overpayment of corporation tax, for the purposes only of section 1006A (2).”.

(2) (a) Paragraph (e) of subsection (1) applies to claims under section 766 of the Principal Act made on or after 1 January 2009.

(b) Except where otherwise expressly provided, this section applies to expenditure incurred in accounting periods commencing on or after 1 January 2009.

35. Amendment of section 766A (tax credit on expenditure on buildings or structures used for research and development) of Principal Act.

35.— (1) The Principal Act is amended in section 766A—

(a) in subsection (1)(a)—

(i) by inserting the following definition before the definition of “ refurbishment ” :

“ ‘ qualifying building ’ means a building or structure, which is to be used for the purpose of the carrying on by the company of research and development activities in a relevant Member State, where, for the specified relevant period in relation to that building or structure, the proportion of use of the building or structure attributable to the research and development activities carried on by the company, as calculated in accordance with subsection (6), is not less than 35 per cent;”,

(ii) in the definition of “ relevant expenditure ” by substituting “qualifying building” for “building or structure which is to be used wholly and exclusively for the purpose of the carrying on by the company of research and development activities in a relevant Member State”, and

(iii) by inserting the following definitions after the definition of “relevant expenditure”:

“ ‘ specified relevant expenditure ’ means the same proportion of relevant expenditure as the research and development activities carried on in the qualifying building by the company for the specified relevant period bears to the total of all activities carried on by the company in that building for that period;

‘ specified relevant period ’ means—

(i) in the case of the construction of a qualifying building, the period of 4 years, commencing with the date on which the building or structure is first brought into use for the purposes of a trade,

(ii) in the case of the refurbishment of a qualifying building, the period of 4 years, commencing with the date on which the refurbishment is completed or, such earlier period of 4 years, as the company may elect, beginning not earlier than the date on which the refurbishment commences;”,

(b) by substituting for subsection (2):

“(2) Where in an accounting period a qualified company incurs relevant expenditure, the corporation tax of the company for that accounting period shall be reduced by an amount equal to 25 per cent of the specified relevant expenditure.”,

“(3) Where—

(a) in an accounting period a company incurs relevant expenditure on a building or structure,

(b) in relation to that expenditure the corporation tax of the company or another company is reduced under subsection (2) or (4A), or a payment has been made to the company or another company by the Revenue Commissioners by virtue of subsection (4B), and

(c) at any time in the period of 10 years commencing at the beginning of that accounting period the building or structure is sold or ceases to be used by the company for the purpose of research and development activities or for the purpose of the same trade that was carried on by the company at the beginning of the specified relevant period, in connection with which the research and development activities were carried on,

then the company—

(i) and in relation to that expenditure, another company, shall not be entitled to reduce corporation tax under subsection (2) for any accounting period ending after the time specified in paragraph (c), and

(ii) shall be charged to tax under Case IV of Schedule D for the accounting period in which the building or structure is sold or ceases to be used for the purpose of research and development activities or for the purpose of the trade, in an amount equal to 4 times the aggregate amount by which, in respect of the company or in relation to that expenditure, another company, the corporation tax payable is reduced under subsections (2), (4) and (4A), and payments are made under subsection (4B).”,

(d) in subsection (4)(a) by inserting “and subsections (4A) and (4B),” after “(c)”,

(e) by inserting the following after subsection (4):

“(4A) (a) Where as respects any accounting period of a company the amount by which the company is entitled to reduce corporation tax of the accounting period exceeds the corporation tax of the company for the accounting period, the company may make a claim requiring the corporation tax of the preceding accounting periods ending within the time specified in paragraph (b) to be reduced by the amount of the excess.

(b) The time referred to in paragraph (a) shall be a time immediately preceding the accounting period first mentioned in that paragraph, equal in length to that accounting period, but the amount of the reduction which may be made under that paragraph in the corporation tax of an accounting period falling partly before that time shall not exceed the corporation tax referable to the part of those profits proportionate to the part of the period falling within that time.

(b) Subject to section 766B, on receipt of a claim the Revenue Commissioners shall pay any excess remaining to the company, in 3 instalments—

(ii) in respect of the second instalment—

(II) the second instalment shall be paid by the Revenue Commissioners not earlier than 12 months immediately following the date referred to in sub- subparagraph (i) and shall equal 50 per cent of the amount by which the excess remaining is reduced by the aggregate of the first instalment under subparagraph (i) and the amount treated as reducing the corporation tax of an accounting period under clause (I),

and

(iii) in respect of the last instalment—

(f) by substituting for subsection (5):

“(5) Any claim under this section shall be made within 12 months from the end of the accounting period in which the relevant expenditure, giving rise to the claim, is incurred.”,

and

(g) by inserting the following after subsection (5):

“(6) (a) Where expenditure is incurred by a company on a building or structure and the building or structure will not be used by the company wholly and exclusively for the purposes of research and development, the proportion of the use of the building or the amount of the expenditure, attributable to research and development shall be such portion of the use of the building or the expenditure as appears to the inspector (or on appeal the Appeal Commissioners) to be just and reasonable.

(b) Where, at any time, any apportionment referred to in paragraph (a), or a further apportionment made under this paragraph, ceases to be just and reasonable, then—

(i) such further apportionment shall be made at that time as appears to the inspector (or on appeal the Appeal Commissioners) to be just and reasonable,

(ii) any such further apportionment shall supersede any earlier apportionment, and

(iii) any such adjustments, assessments or repayments of tax shall be made as are necessary to give effect to any apportionment under this subsection.

(7) Any amount payable by virtue of subsection (4B) shall not be income of the company or another company, for any tax purpose.

(8) Any amount payable by the Revenue Commissioners to the company or another company by virtue of subsection (4B) shall be deemed to be an overpayment of corporation tax, for the purposes only of section 1006A (2).”.

(2) (a) Paragraph (f) of subsection (1) applies to claims under section 766A of the Principal Act made on or after 1 January 2009.

(b) Except where otherwise expressly provided, this section comes into operation on such day or days as the Minister for Finance may by order or orders appoint, and different days may be appointed for different purposes or different provisions.

36. Limitation of tax credits to be paid under section 766 or 766A of Principal Act.

36.— The Principal Act is amended in Part 29 by inserting the following after section 766A:

“Limitation of tax credits to be paid under section 766 or 766A.

766B.— (1) In this section ‘ payroll liabilities ’ means—

(a) the amount of income tax which the company is required, by or under Chapter 4 of Part 42, to remit to the Collector-General for that period in respect of emoluments, as defined in section 983, paid to, or on account of, all employees and directors,

(b) the amount of Pay Related Social Insurance Contributions in respect of the reckonable earnings and reckonable emoluments of all directors and employees which the company is required to remit to the Collector-General for that period by or under the Social Welfare Acts, and

(c) any other levies the company is required to remit to the Collector-General, for that period, in respect of directors and employees.

(2) For the purpose of subsection (1), Pay Related Social Insurance includes Pay Related Social Insurance Contributions payable under the Social Welfare Acts, Health Contributions payable under the Health Contributions Act 1979, and levies payable under the National Training Fund Act 2000.

(3) Where in respect of expenditure in an accounting period a company makes a claim under section 766(4B) or 766A(4B), then the aggregate amount payable by the Revenue Commissioners to that company under those sections shall not exceed the greater of—

(a) the aggregate of the corporation tax paid by the company in respect of accounting periods ending in the 10 years immediately preceding the time specified in subsection (4A)(b) of section 766, in relation to the accounting period in which the expenditure was incurred, as reduced by any amounts payable to the company in respect of claims made under section 766(4B) or 766A(4B), as the case may be, in respect of expenditure in a previous accounting period, or

(b) the aggregate of the amounts payable by the company in respect of payroll liabilities for the accounting period in which the expenditure was incurred.”.

37. Acceleration of wear and tear allowances for certain energy-efficient equipment.

37.— (1) The Principal Act is amended—

(a) in section 285A by inserting the following after subsection (8):

“(8A) (a) Notwithstanding Part 11C, where an allowance is increased under this section in respect of expenditure incurred in a chargeable period on the provision of any vehicle (being a vehicle to which subsection (1) of section 380K relates) in relation to the class of technology described in column (1) of the Table as ‘Electric and Alternative Fuel Vehicles’, then subsection (2) shall apply as if the reference in paragraph (ad) of section 284(2) to the actual cost were a reference to the lower of the actual cost of the vehicle or the specified amount referred to in section 380K(4).

(b) Subsection (2) shall not apply where an allowance in respect of expenditure incurred on the provision of a vehicle referred to in paragraph (a) is made under section 284(2) as applied by section 380L.”,

(b) in section 380K(1) by inserting “, but this Part shall not apply where an allowance for a vehicle is increased under section 285A” after “so used”, and

“SCHEDULE 4A

TABLE

(Class of Technology)	(Description)	(Minimum Amount)
(1)	(2)	(3)
Motors and Drives	Motor: An asynchronous electric motor with a power rating of 1.1kW or greater, either standalone or as part of other equipment, meeting a specified efficiency standard.	€1,000

	Variable speed drive: A drive that is specifically designed to drive an AC induction motor in a manner that rotates the motor’s drive shaft at a variable speed dictated by an external signal.
Lighting	Lighting units, comprising fittings, lamps, and associated control gear, that meet specified efficiency criteria, or lighting control systems designed to improve the efficiency of lighting units. Includes occupancy sensors and high efficiency signs.	€3,000
Building Energy Management Systems	Computer-based systems, designed primarily to monitor and control building energy use with the aim of optimising energy efficiency and meeting specified efficiency standards.	€5,000
Information and Communications Technology (ICT)	High Efficiency Enterprise ICT Hardware: ICT infrastructure hardware for business applications (such as servers) specifically designed to achieve very high levels of energy efficiency and that meet specified efficiency criteria.	€1,000

	Energy saving ICT Cooling: Equipment designed to achieve very high operational cooling efficiency and that meet specified efficiency criteria.

	Advanced ICT Electrical Management: Systems for power switching control with the aim of achieving optimal energy efficiency, and that meet specified efficiency criteria.
Heating and Electricity Provision	Advanced Heating and Electricity Generation: Equipment for generating heat or electricity or both, with the resulting energy stream intended primarily for on-site use and that meet specified efficiency criteria.	€1,000

	Energy Saving Control Systems: Systems specifically designed to maximise energy efficiency of new or existing efficient heating or electricity generation equipment or both and that meet specified efficiency criteria.
Process and Heating, Ventilation and Air-conditioning (HVAC) Control Systems	Efficient Heat Conservation and Recovery: Equipment or systems or both specially designed to control, conserve or recover any generated heating and cooling energy and that meet specified efficiency criteria.	€1,000
	Advanced Liquid and Gas Handling Equipment: Equipment for energy-efficient on-site transfer of liquid or gas or both, meeting specified efficiency criteria. Includes very high efficiency pumps, fans, blowers and other liquid/gas handling equipment.
Electric and Alternative Fuel Vehicles	Electric Vehicles and Associated Charging Equipment: Electric and part electric vehicles with a motor size >1kW, and relevant required charging equipment, that meet specified efficiency criteria.	€1,000
	Alternative Energy Vehicle Conversions: Equipment for the conversion to 100% bio-fuel for existing commercial diesel vehicles, that meet specified efficiency criteria.

”.

38. Preliminary tax.

38.— (1) Section 958 of the Principal Act is amended—

(a) in subsection (1)—

(i) in paragraph (a)—

(I) by inserting the following definition after “ corres ponding corporation tax for the preceding chargeable period ”:

“ ‘ corresponding income tax for the preceding chargeable period ’, in relation to a chargeable period which is an accounting period of a company, means an amount determined by the formula—

I x C

where—

I is the income tax payable under section 239 or 241 by the chargeable person for the preceding chargeable period,

C is the number of days in the chargeable period, and

P is the number of days in the preceding chargeable period;”,

(II) by substituting the following for the definition of “ tax payable for the initial period ”:

“ ‘ tax payable for the initial period ’, in relation to a chargeable period which is—

(I) a year of assessment for capital gains tax (being the years of assessment 2003 to 2008 inclusive), means the tax which would be payable by the chargeable person if the year of assessment ended on 30 September in that year instead of 31 December in that year, or

(II) a year of assessment for capital gains tax (being the year of assessment 2009 or any subsequent year of assessment), means the tax which would be payable by the chargeable person if the year of assessment ended on 30 November in that year instead of 31 December in that year;”,

and

(III) by inserting the following definition after “ pre- preceding chargeable period ”:

“ ‘ relevant accounting period ’ shall be construed in accordance with paragraph (c);”, and

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

“(c) (i) Subject to subparagraph (ii), a relevant accounting period shall mean an accounting period of a company, other than a small company, which commences on or after 14 October 2008.

(ii) An accounting period shall not be a relevant accounting period where, but for this subparagraph, the final instalment of preliminary tax would, by reason of the dates on which the accounting period commences and ends, be due and payable in accordance with subsection (2BA)(c) on or before the date on which the initial instalment would be due and payable in accordance with subsection (2BA)(b).”,

(b) in subsection (2B)—

(i) in paragraph (a), by substituting “Subject to subsection (2BA), preliminary tax” for “Preliminary tax”, and

(ii) in paragraph (c), by substituting “subsections (4C) and (4CA)” for “subsections (4C) and (4E)”,

“(2BA) (a) Preliminary tax appropriate to a chargeable period which is a relevant accounting period shall be due and payable in 2 instalments.

(b) The first of the 2 instalments referred to in paragraph (a) (in this section referred to as the ‘initial instalment’) shall be due and payable within a period of 6 months from the commencement of the accounting period, but in any event the initial instalment shall be due and payable not later than day 21 of the month in which that period of 6 months ends.

(c) The second of the 2 instalments referred to in paragraph (a) (in this section referred to as the ‘final instalment’) shall be due and payable not later than the day which is 31 days before the day on which the accounting period ends, but where that day is later than day 21 of the month in which the first-mentioned day occurs, the final instalment shall be due and payable not later than day 21 of that month.”,

(d) in subsection (2C)—

(i) in paragraph (b), by inserting “Subject to paragraph (c), references” for “References”, and

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

“(c) References in this Part to the due date for the payment of the initial instalment, or the final instalment, of preliminary tax shall, in the case where that tax is due for a chargeable period which is a relevant accounting period, be construed in accordance with subsection (2BA).”,

(e) in subsection (3)(a)—

(i) by substituting “Subject to subsections (3A), (4), (4B), (4C), (4CA), (4D), (4E), (4F) and (4G)” for “Subject to subsections (3A), (4), (4B), (4C), (4D) and (4E)”, and

(ii) in subparagraph (v) by substituting the following for clause (I):

“(I) as respects tax payable for the initial period—

(A) where the initial period falls in the years of assessment 2003 to 2008 inclusive, on or before 31 October in the year of assessment, and

(B) where the initial period falls in the year of assessment 2009 or any subsequent year of assessment, on or before 15 December in that year of assessment, and”,

(f) in subsection (4C)—

(i) by substituting “Subject to subsections (2B)(c), (4CA), (4E), (4F), (4G) and (11)” for “Subject to subsections (2B)(c), (4E) and (11)”, and

(ii) in paragraph (b)(i), by substituting the following for clause (II):

“(II) the sum of the corresponding corporation tax for the preceding chargeable period and the corresponding income tax for the preceding chargeable period,”,

(g) by inserting the following after subsection (4C):

“(4CA) (a) Subject to subsections (2B)(c), (4E), (4F), (4G) and (11), where but for this subsection tax payable by a chargeable person for a chargeable period which is a relevant accounting period would be due and payable in accordance with subsection (3), and—

(i) the chargeable person has defaulted in the payment of the initial instalment or final instalment of preliminary tax for the chargeable period,

(ii) the initial instalment of preliminary tax paid by the chargeable person for the chargeable period is less than, or less than the lower of—

(I) 45 per cent of the tax payable by the chargeable person for the chargeable period, or

(II) 50 per cent of the sum of the corresponding corporation tax for the preceding chargeable period and the corresponding income tax for the preceding chargeable period,

(iii) where the chargeable period commenced on the company coming within the charge to corporation tax, the initial instalment of preliminary tax paid by the chargeable person for the chargeable period is less than 45 per cent of the tax payable by the chargeable person for the chargeable period,

(iv) the aggregate of the initial instalment and the final instalment of preliminary tax paid by the chargeable person for the chargeable period is less than 90 per cent of the tax payable by the chargeable person for the chargeable period, or

(v) the initial instalment or the final instalment of preliminary tax payable by the chargeable person for the chargeable period was not paid by the date on which it was due and payable,

then the tax payable by the chargeable person for the chargeable period shall be deemed to have been due and payable in accordance with paragraph (b).

(b) (i) Tax due and payable in accordance with this paragraph by a chargeable person for a chargeable period which is a relevant accounting period shall be due and payable in 2 instalments.

(ii) The first of the 2 instalments referred to in subparagraph (i) (in this paragraph and in paragraphs (c) and (d) referred to as the ‘initial relevant instalment’) shall be due and payable not later than the day on which the initial instalment of preliminary tax is due and payable in accordance with subsection (2BA).

(iii) The second of the 2 instalments referred to in subparagraph (i) (in this paragraph and in paragraph (d) referred to as the ‘final relevant instalment’) shall be due and payable not later than the day on which the final instalment of preliminary tax is due and payable in accordance with subsection (2BA).

(c) The amount of the initial relevant instalment shall be 45 per cent of the tax payable by the chargeable person for the chargeable period.

(d) The amount of the final relevant instalment shall be an amount equal to the excess of the tax payable by the chargeable person for the chargeable period over the amount of the initial relevant instalment.”,

(h) in subsection (4E), by substituting “Subject to subsections (4F) and (4G), where” for “Where”,

(i) by inserting the following after subsection (4E):

“(4F) Where as respects a chargeable period which is a relevant accounting period—

(a) the initial instalment of preliminary tax paid by the chargeable person for the chargeable period in accordance with subsection (2BA) is less than 45 per cent of the tax payable by the chargeable person for the chargeable period,

(b) the initial instalment of preliminary tax so paid by the chargeable person for the chargeable period is not less than 45 per cent of the amount which would be payable by the chargeable person for the chargeable period if no amount were included in the chargeable person’s profits for the chargeable period—

(i) in respect of chargeable gains on the disposal by the person of assets in the part of the chargeable period which is after the date by which the initial instalment of preliminary tax for the chargeable period is payable in accordance with subsection (2BA), or

(ii) in the case of a relevant company, in respect of profits or gains or losses accruing, and not realised, in the chargeable period on financial assets or financial liabilities as are attributable to changes in value of those assets or liabilities in the part of the chargeable period which is after the end of the month immediately preceding the month in which the initial instalment of preliminary tax for the chargeable period is payable in accordance with subsection (2BA),

and

(c) the aggregate of the initial instalment and the final instalment of preliminary tax paid by the chargeable person for the chargeable period in accordance with subsection (2BA) is not less than 90 per cent of that amount of tax which would be payable by the chargeable person for the chargeable period if computed in accordance with subsection (4G)(b),

then the initial instalment of preliminary tax paid by the chargeable person for the chargeable period shall be treated for the purposes of subsection (4CA) as having been paid by the date on which it is due and payable.

(4G) Where as respects a chargeable period which is a relevant accounting period—

(a) the aggregate of the initial instalment and the final instalment of preliminary tax paid by the chargeable person for the chargeable period in accordance with subsection (2BA) is less than 90 per cent of the tax payable by the chargeable person for the chargeable period,

(b) the aggregate of the initial instalment and the final instalment of preliminary tax so paid by the chargeable person for the chargeable period is not less than 90 per cent of the amount which would be payable by the chargeable person for the chargeable period if no amount were included in the chargeable person’s profits for the chargeable period—

(i) in respect of chargeable gains on the disposal by the person of assets in the part of the chargeable period which is after the date by which, or

the final instalment of preliminary tax for the chargeable period is payable in accordance with subsection (2BA), and

(c) the chargeable person makes a further payment of preliminary tax for the chargeable period within one month after the end of the chargeable period and the aggregate of that payment and the initial instalment and final instalment of preliminary tax paid by the chargeable person for the chargeable period in accordance with subsection (2BA) is not less than 90 per cent of the tax payable by the chargeable person for the chargeable period,

then the final instalment of preliminary tax paid by the chargeable person for the chargeable period shall be treated for the purposes of subsection (4CA) as having been paid by the date on which it is due and payable.”,

and

(j) by substituting the following for subsection (11):

“(11) (a) In this subsection—

‘ initial balance ’ means the amount represented by the formula—

A — B

where—

A is the amount of the initial instalment of preliminary tax paid by the surrendering company for the relevant period in accordance with subsection (2BA), and

B is—

(i) where the relevant period commenced on the surrendering company coming within the charge to corporation tax—

(I) 45 per cent of the tax payable by the surrendering company for the relevant period, or

(II) where subsection (2B)(c) applies in relation to that period, a nil amount,

or,

(ii) in any other case, the lower of—

(I) 45 per cent of the tax payable by the surrendering company for the relevant period, or

(II) 50 per cent of the sum of the corresponding corporation tax for the preceding chargeable period and the corresponding income tax for the preceding chargeable period, which is payable by the surrendering company;

‘ final balance ’ means the amount represented by the formula—

C — D

where—

C is the amount of preliminary tax paid by the surrendering company for the relevant period in accordance with subsection (2B) or subsection (2BA), as the case may be, and

D is 90 per cent of the tax payable by the surrendering company for the relevant period, or, where subsection (2B)(c) applies in relation to that period, a nil amount;

‘ relevant initial balance ’ means that part of an initial balance that is specified in a notice given in accordance with paragraph (c);

‘ relevant final balance ’ means that part of a final balance that is specified in a notice given in accordance with paragraph (c).

(b) This subsection applies where—

(i) a chargeable person being a company (in this subsection referred to as the ‘ surren dering company ’) which is a member of a group pays—

(I) an initial instalment of preliminary tax for a chargeable period (in this subsection referred to as the ‘ relevant period ’) in accordance with subsection (2BA), being an amount which exceeds, or exceeds the lower of—

(A) 45 per cent of the tax payable by the surrendering company for the relevant period, or

(B) 50 per cent of the sum of the corresponding corporation tax for the preceding chargeable period and the corresponding income tax for the preceding chargeable period, which is payable by the surrendering company,

(II) an initial instalment of preliminary tax for a relevant period which commenced on the surrendering company coming within the charge to corporation tax, being an amount which exceeds 45 per cent of the tax payable by that company for the relevant period,

(III) an amount of preliminary tax for a relevant period in accordance with subsection (2B) or subsection (2BA) as the case may be, being an amount which exceeds 90 per cent of the tax payable by the surrendering company for the relevant period, or

(IV) any amount of preliminary tax for a relevant period in respect of which subsection (2B)(c) applies,

(ii) another chargeable person being a company (in this subsection referred to as the ‘ claimant company ’) which is a member of the group pays—

(I) an initial instalment of preliminary tax for a chargeable period in accordance with subsection (2BA), being an amount which is less than, or less than the lower of—

(A) 45 per cent of the tax payable by the claimant company for the chargeable period, or

(II) an initial instalment of preliminary tax for a chargeable period which commenced on the claimant company coming within the charge to corporation tax, being an amount which is less than 45 per cent of the tax payable by that company for the relevant period, or

(III) an amount of preliminary tax for a chargeable period in accordance with subsection (2BA), being an amount which is less than 90 per cent of the tax payable by the claimant company for the chargeable period,

(iii) the chargeable period in subparagraph (ii) coincides with the relevant period, and

(iv) the claimant company is not a small company in relation to the relevant period.

(c) Where this subsection applies the 2 companies may, at any time on or before the specified return date for the chargeable period of the surrendering company, jointly give notice to the Collector-General, in such form as the Revenue Commissioners may require, that—

(i) paragraph (d)(i) is to have effect in relation to the relevant initial balance, or,

(ii) paragraph (d)(ii) is to have effect in relation to the relevant final balance,

which is specified in the notice.

(d) (i) Where this paragraph has effect in relation to any relevant initial balance—

(I) an additional amount of preliminary tax equal to the relevant initial balance shall be deemed for the purposes of subsection (4CA)(a)(ii) to have been paid by the claimant company on the due date for the payment of the initial instalment of preliminary tax of that company for the relevant period if 100 per cent of the tax payable by the claimant company for the relevant period, disregarding this clause, is paid on or before the specified return date for the relevant period, and

(II) the surrendering company shall for the purposes of this subsection be treated as having surrendered the relevant initial balance to the claimant company and that relevant initial balance shall not be available for use by any other company under this subsection.

(ii) Where this paragraph has effect in relation to any relevant final balance—

(I) an additional amount of preliminary tax equal to the relevant final balance shall be deemed for the purposes of subsection (4CA)(a)(iv) to have been paid by the claimant company on the due date for the payment of the final instalment of preliminary tax of that company for the relevant period if 100 per cent of the tax payable by the claimant company for the relevant period, disregarding this clause, is paid on or before the specified return date for the relevant period, and

(II) the surrendering company shall for the purposes of this subsection be treated as having surrendered the relevant final balance to the claimant company and that relevant final balance shall not be available for use by any other company under this subsection.

(e) A payment for a relevant initial balance or for a relevant final balance—

(i) shall not be taken into account in computing profits or losses of either company for corporation tax purposes, and

(ii) shall not be regarded as a distribution or a charge on income for any of the purposes of the Corporation Tax Acts,

and, in this paragraph, ‘ payment for a relevant initial balance or for a relevant final balance ’ means a payment made by the claimant company to the surrendering company in pursuance of an agreement between them as respects an amount surrendered in accordance with this subsection, being a payment not exceeding that amount.

(f) (i) This subsection shall not affect the liability to pay corporation tax of any company to which the subsection relates.

(ii) Where this subsection applies, the amount on which, but for this subsection, the claimant company is liable to pay interest in accordance with section 1080 shall be reduced by—

(I) any relevant initial balance deemed to have been paid by that company in accordance with paragraph (d)(i)(I), or

(II) any relevant final balance deemed to have been paid by that company in accordance with paragraph (d)(ii)(I).

(g) For the purposes of this subsection, 2 companies are members of the same group if and only if they would be such members for the purposes of section 411.”.

(2) (a) Subsection (1), apart from paragraphs (a)(i)(II) and (e)(ii), has effect for accounting periods commencing on or after 14 October 2008.

(b) Paragraphs (a)(i)(II) and (e)(ii) of subsection (1) apply to disposals made in the year of assessment 2009 and subsequent years of assessment.

39. Amendment of section 239 (income tax on payments by resident companies) of Principal Act.

39.— (1) Section 239 of the Principal Act is amended—

(a) in subsection (4) by inserting “, but in any event not later than day 21 of the month in which that period of 9 months ends” after “the end of that period”, and

(b) in subsection (5) by substituting “corporation tax” for “preliminary tax” and by inserting “in accordance with section 958 and” after “payable by the company”.

(2) This section has effect for accounting periods commencing on or after 14 October 2008.

40. Amendment of Schedule 4 (exemption of specified non-commercial state sponsored bodies from certain tax provisions) to Principal Act.

40.— (1) Schedule 4 to the Principal Act is amended—

(a) by inserting the following after paragraph 53:

“53A. The Institute of Public Health in Ireland Limited.”,

and

(b) by inserting the following after paragraph 84:

“84A. The Private Residential Tenancies Board.”,

(2) (a) Subsection (1)(a) is deemed to have come into force and have taken effect on and from 1 October 2002.

(b) Subsection (1)(b) is deemed to have come into force and have taken effect on and from 1 September 2004.

Chapter 6 Capital Gains Tax

41. Tax treatment of certain venture fund managers.

41.— The Principal Act is hereby amended by inserting the following section after section 541B:

“541C.— (1) In this section—

‘ carried interest ’, in relation to a relevant investment, means the share of profits (where the share ratio was agreed at the outset of the relevant investment) referred to in paragraph (b) of the definition of ‘total profits of an investment’ that is received by a company or partnership in respect of the management of the relevant investment;

‘ carried interest to which this section applies ’, in relation to a relevant investment, means an amount of carried interest which is not greater than 20 per cent of the total profits from the relevant investment;

‘ innovation activities ’ means development of new technological, telecommunication, scientific or business processes;

‘ investor ’, in relation to a relevant investment, means a person other than a person entitled to carried interest or a person connected with that person;

‘ relevant investment ’ means an investment, which remains in place for at least 6 years, in unquoted shares or securities of a private trading company and that company is—

(a) carrying on a business set up and commenced on or after 1 January 2009, other than a business—

(i) which was previously carried on by another person and to which the company has succeeded,

(ii) the activities of which were previously carried on as part of another person’s business, or

(iii) which is an excepted trade within the meaning of section 21A,

and

(b) carrying on a business of research, development or innovation activities;

‘ research and development activities ’ has the same meaning as in section 766(1);

‘ total profits of an investment ’, in relation to a relevant investment, means the sum of—

(a) the profits which are attributable to investors in the relevant investment by reference to an agreed initial rate of return, and

(b) the balance of the profits of the relevant investment over and above those calculated by reference to the agreed initial rate of return.

(2) (a) Notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts, carried interest to which this section applies and which is received by a partnership shall be deemed to be an amount of chargeable gains to which section 28(1) applies.

(b) Notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts, carried interest to which this section applies and which is received by a company shall be deemed to be an amount of chargeable gains to which section 28(1) applies.

(3) (a) Notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts, the rate of capital gains tax in respect of chargeable gains to which subsection (2)(a) apply shall be 15 per cent.

(b) Notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts, the rate of corporation tax in respect of chargeable gains to which subsection (2)(b) apply shall be 12.5 per cent.”.

42. Amendment of section 29 (persons chargeable) of Principal Act.

42.— (1) Section 29 of the Principal Act is amended in subsection (4) by deleting “and the United Kingdom” in both places where it occurs.

(2) This section applies to disposals made on or after 20 November 2008.

43. Amendment of section 549 (transactions between connected persons) of Principal Act.

43.— (1) Section 549 of the Principal Act is amended—

(a) by substituting the following for subsection (6):

“(6) Where the asset mentioned in subsection (1) is subject to any right or restriction enforceable by the person making the disposal or by a person connected with that person, then that market value shall, where the amount of the consideration for the acquisition is in accordance with subsection (2) deemed to be equal to the market value of the asset, be what its market value would be if not subject to the right or restriction, reduced—

(a) by the lesser of—

(i) the market value of the right or restriction, and

(ii) the amount by which its extinction would enhance the value of the asset to its owner, or

(b) by the market value of the right or restriction, where the market value referred to in paragraph (a)(i) and the amount referred to in paragraph (a)(ii) are equal.”,

and

(b) by inserting the following after subsection (7):

“(7A) (a) This subsection applies where the asset mentioned in subsection (1) is subject to any right or restriction enforceable by the person making the disposal or by the person connected with that person, and the market value of the asset at the date of its acquisition (without reference to any right or restriction) is greater than the consideration, in money or money’s worth, given in payment for that asset.

(b) Where, on a subsequent disposal of an asset to which paragraph (a) applies by the person who acquired that asset, subsection (7) has the effect (without taking account of this subsection) of—

(i) increasing a loss, or

(ii) substituting a loss for a gain,

then that subsection shall not apply.”.

(2) This section applies to disposals made on or after 20 November 2008.

44. Capital gains: rate of charge.

44.— (1) The Principal Act is amended—

(a) in section 28(3) by substituting “22 per cent” for “20 per cent”, and

(b) in section 649A—

(i) by substituting the following for paragraph (b) of subsection (1):

“(b) in the case of a relevant disposal made on or after 15 October 2008, 22 per cent.”,

and

(ii) in subsection (2) by deleting paragraph (b)(i).

(2) This section applies to disposals made on or after 15 October 2008.

45. Treatment of certain disposals made by The Pharmaceutical Society of Ireland.

45.— (1) The Principal Act is amended by inserting the following section after section 611:

“611A.— (1) In this section—

‘ new Society ’ means Cumann Cógaisceoirí na hÉireann or, in the English language, The Pharmaceutical Society of Ireland established by section 5(2) of the Pharmacy Act 2007;

‘ old Society ’ means the Pharmaceutical Society of Ireland constituted and incorporated by section 4 of the Pharmacy (Ireland) Act 1875.

(2) An asset disposed of by the new Society which it acquired from the old Society by virtue of section 5 of the Pharmacy Act 2007 shall be deemed to have been acquired by the new Society at the same time and for the same consideration that it was acquired by the old Society, and the provisions of section 556 shall apply accordingly.”.

(2) This section applies to disposals made on or after 20 November 2008.

PART 2 Excise

46. Amendment of Chapter 1 of Part 2 (consolidation and modernisation of general excise law) of Finance Act 2001.

46.— Chapter 1 of Part 2 of the Finance Act 2001 is amended—

(a) by substituting the following for section 99:

“Liability of persons.

99.— (1) An authorised warehouse-keeper is liable for payment of the excise duty on excisable products released from a tax warehouse by such authorised warehousekeeper—

(a) for consumption, or

(b) for delivery under a suspension arrangement.

(2) The liability under subsection (1)(b) is fully or partly discharged where, and to the extent that, the excisable products have been (as the case may be)—

(a) received by another tax warehouse in the State,

(b) received by a person or trader, referred to in section 115(2), or

and evidence to that effect is received within the prescribed time and in the prescribed manner.

(3) A registered trader or a non-registered trader is liable for payment of excise duty on excisable products received by such a trader under a suspension arrangement, and such payment shall be made when such products are so received.

(4) A tax representative, acting on behalf of the persons referred to in paragraph (a) or (b) of subsection (1) of section 113, is liable for the payment of excise duty on excisable products delivered to the State by or on behalf of such persons.

(5) Where excisable products are imported into the State from outside the Community, and the products are not then placed under a suspension arrangement, the person liable for payment of the excise duty is—

(a) the person who declares such products for free circulation, in accordance with Article 79 of Regulation (EEC) No. 2913/92, or

(b) where the excisable products are not declared for free circulation—

(i) any person who imports the products, and

(ii) any person who arranged for the importation of the products, or on whose behalf such importation was arranged.

(6) Where excisable products are produced, otherwise than under a suspension arrangement in a tax warehouse, the person liable for payment of the excise duty is—

(a) the producer of the excisable products, and

(b) any person who arranged for the production, or on whose behalf the production was carried out.

(7) Where any person, otherwise than under a suspension arrangement, has—

(a) sold or delivered, or

(b) kept for sale or delivery,

excisable products on which the appropriate excise duty has not been paid, then—

(i) such person,

(ii) any other person on whose behalf such excisable products have been so sold, kept, or delivered, and

(iii) any person to whom such products have been delivered,

is liable for payment of the excise duty on such excisable products.

(8) Where any person has received excisable products on which excise duty has been relieved, rebated, repaid, or charged at a rate lower than the appropriate standard rate, subject to a requirement that such excisable products are used for a specific purpose or in a specific manner, and where that requirement has not been satisfied, then the person who has received such excisable products is liable for payment of the excise duty on such products at the rate appropriate to them, without the benefit of any such relief, rebate, repayment or lower rate.

(9) Where under subsections (1) to (8) more than one person is, in a particular case, liable for payment of an excise duty liability, such persons are jointly and severally liable.

(10) Subsections (1) to (9) are without prejudice to the liability of excisable products to excise duty, or their liability to forfeiture, under excise law.

Assessment of excise duty payable.

99A.— (1) (a) In this section ‘ authorised officer ’ means an officer authorised by the Commissioners to exercise the powers conferred by this section.

(b) This section does not apply to betting duty chargeable under Chapter 1 of Part 2 of the Finance Act 2002.

(2) Where an authorised officer has reason to believe that a person is liable for payment of excise duty, then such officer may make an assessment of the amount that, in the opinion of such officer, such person is liable to pay.

(3) The authorised officer shall give notice to each person assessed of every assessment made by such officer, setting out the amount of the assessment, the type of excise duty covered by the assessment, the right of appeal against the assessment, under section 146, and the time allowed for giving notice of such appeal.

(4) (a) Where an authorised officer has reason to believe that the amount of any assessment is excessive or deficient, or that there is no such liability, then such officer shall reduce, increase or vacate such assessment, as the case may be.

(b) In any case where an assessment is reduced or increased under paragraph (a), an authorised officer shall, accordingly, issue a revision of the notice referred to in subsection (3), to the person assessed.

(c) In any case where an assessment is vacated under paragraph (a), an authorised officer shall inform the person assessed in writing.

(5) Any assessment under subsection (2), and any action to collect the amount assessed, is without prejudice to—

(a) the liability to forfeiture, under the law relating to excise, of any goods or vehicles concerned in the assessment,

(b) any proceedings in relation to an offence under the law relating to excise, involving any goods or vehicles concerned in the assessment.”,

(b) in section 145 by inserting the following after subsection (1):

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