Finance Act 2013

(i) directly by means of a dividend or other distribution of profits, being profits which have not been subject to tax, or

(ii) indirectly, from the profits mentioned in subclause (i), by the payment of dividends, or the making of other distributions, by one or more companies, without the income or profits represented by any of those dividends or distributions having been subject to tax;

‘relevant company’, in relation to a dividend, means a company that—

(a) is resident in the State, or

(b) is, by virtue of the law of a relevant Member State other than the State, resident for the purposes of tax in such a Member State and the dividend forms part of the profits of a branch or agency in the State;

‘relevant dividend’ means so much of a dividend as is neither—

(a) an excluded dividend, nor

(b) a dividend which, by virtue of section 21B(4)(c), is not to be taken into account in computing income for corporation tax;

‘source company’ means a company which—

(a) is not resident in the State, and

(b) is, by virtue of the law of a relevant Member State other than the State, resident for the purposes of tax in such a Member State;

‘tax’, except in the case of corporation tax in the State, means—

(a) tax imposed in a country other than the State, which corresponds to such corporation tax, and

(b) tax, corresponding to income tax in the State, which is imposed in a country other than the State by deduction from dividends or other distributions of profits,

but, for the purposes of the definition of ‘excluded dividend’ in this subparagraph, any tax charged by reference to a dividend or other distribution of profits such that most of the value of that dividend or distribution is exempted from that charge to tax shall be excluded from the meaning of ‘tax’.

(2) For the purposes of this paragraph, the relevant profits of a source company in relation to a dividend shall be—

(a) if the dividend is paid for a specified period, the profits of that period,

(b) if the dividend is not paid for a specified period but is paid out of specified profits, those profits, or

(c) if the dividend is paid neither for a specified period nor out of specified profits, the profits of the last period for which accounts of the body corporate were made up which ended before the dividend became payable,

but if, in a case within clause (a) or (c), the total dividend exceeds the profits available for distribution of the period mentioned in clause (a) or (c), as the case may be, the relevant profits shall be the profits of that period together with so much of the profits available for distribution of preceding periods (other than profits previously distributed or previously treated as relevant for the purposes of this subparagraph) as is equal to the excess, and for this purpose the profits of the most recent preceding period shall first be taken into account, then the profits of the next most recent preceding period, and so on.

(3) Where a source company pays a relevant dividend to a relevant company then, for the purpose of allowing credit against corporation tax for foreign tax in respect of that dividend, there shall, subject to paragraph 4, and subparagraph (5), be taken into account, as if it were tax payable in respect of that dividend under the law of the territory in which a source company is resident, an amount (referred to in this paragraph as ‘additional foreign credit’) determined in accordance with subparagraph (4).

(4) The additional foreign credit referred to in subparagraph (3) in respect of a relevant dividend shall be—

(a) where the relevant dividend is subject to corporation tax at the rate specified in section 21(1), an amount determined by the formula—

(A x B) — C

where—

A is the amount of the relevant dividend brought into charge to corporation tax in the State,

B is the lower of—

(i) the rate per cent specified in section 21(1), or

(ii) the rate per cent of tax, which corresponds, in the relevant Member State in which the source company is resident for the purposes of tax, to corporation tax in the State, applicable to the relevant profits in relation to the relevant dividend,

and

C is the amount of the credit for tax against corporation tax attributable to the relevant dividend which, apart from this paragraph, would be allowable under this Schedule,

or

(b) where the relevant dividend is chargeable to corporation tax under Case III of Schedule D, the amount determined by the formula—

(A x B) — C

where—

A is the amount of the relevant dividend brought into charge to corporation tax in the State,

B is the lower of—

(i) 25 per cent, or

(ii) the rate per cent of tax, which corresponds, in the relevant Member State in which the source company is resident for the purposes of tax, to corporation tax in the State, applicable to the relevant profits in relation to the relevant dividend,

and

C is the amount of the credit for tax against corporation tax attributable to the relevant dividend which, apart from this paragraph, would be allowable under this Schedule.

(5) The provisions of paragraph 9E shall not apply to any additional foreign credit calculated in accordance with this paragraph.

(6) This paragraph shall not apply to dividends paid in any case where paragraph 9H applies.”,

and

(g) by inserting the following paragraph after paragraph 13:

“14. The provisions of this Schedule shall apply for income levy as they apply for universal social charge with any necessary modifications.”.

(2) Paragraphs (a) to (e) of subsection (1) shall have effect as if they had come into operation for the year of assessment (within the meaning of section 2 of the Principal Act) 2011 and each subsequent year of assessment.

(3) Paragraph (f) of subsection (1) shall apply to dividends paid on or after 1 January 2013.

(4) Paragraph (g) of subsection (1) shall have effect as if it had come into operation for the years of assessment (within the meaning aforesaid) 2009 and 2010.

27. Amendment of section 79C (exclusion of foreign currency as asset of certain companies) of Principal Act.

27.— (1) The Principal Act is amended in section 79C—

(a) in subsection (1), in the definition of “relevant bank deposit”, by substituting “the currency of the State” for “Irish currency”, and

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

“(3) An amount determined by the formula—

A x C

B

where—

A is the net foreign exchange gain which is credited in the profit and loss account of a relevant holding company, as reduced by so much of any loss under section 383 as is attributable to a net foreign exchange loss and which has not been deducted from any other amount of income,

B is the rate referred to in section 21A(3)(a), and

C is the rate referred to in section 28(3),

shall be income chargeable under Case IV of Schedule D.”.

(2) This section applies in respect of accounting periods ending on or after 1 January 2013.

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

28.— (1) Section 766 of the Principal Act is amended in subsection (1)(a), in the definition of “qualifying group expenditure on research and development”, by substituting “€200,000” for “€100,000”.

(2) This section shall apply to accounting periods commencing on or after 1 January 2013.

29. Amendment of section 246 (interest payments by companies and to non-residents) of Principal Act.

29.— (1) Section 246 of the Principal Act is amended—

(a) in subsection (3) by substituting the following for paragraph (c):

“(c) interest paid to a person whose usual place of abode is outside the State—

(i) in respect of a relevant security, or

(ii) by a specified collective investment undertaking within the meaning of section 734,”,

(b) in subsection (3) by inserting the following after paragraph (f):

“(fa) interest paid in the State to an exempt approved scheme within the meaning of section 774,”,

and

(c) by deleting subsection (4).

(2) This section shall apply to interest paid on or after the passing of this Act.

30. Living City Initiative.

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

(a) in Part 10 by inserting the following after Chapter 12:

Living City Initiative

Interpretation (Chapter 13).

372AAA.— In this Chapter—

‘Georgian house’ means a building, constructed in the period 1714 to 1830 for use as a dwelling, comprising at least 2 stories, with or without a basement;

‘market value’, in relation to a building, structure or house, means the price which the unencumbered fee simple of the building, structure or house would fetch if sold in the open market in such manner and subject to such conditions as might reasonably be calculated to obtain for the vendor the best price for the building, structure or house, less the part of that price which would be attributable to the acquisition of, or of rights in or over, the land on which the building, structure or house is constructed;

‘qualifying period’ means the period commencing on the date of the coming into operation of section30of the Finance Act 2013 and ending 5 years after that date;

‘refurbishment’, in relation to a building, structure or house, means any work of construction, reconstruction, repair or renewal, including the provision or improvement of water, sewerage or heating facilities, carried out in the course of the repair or restoration, or maintenance in the nature of repair or restoration, of the building, structure or house;

‘special regeneration area’ means an area or areas specified as a special regeneration area by order of the Minister for Finance.

Residential accommodation: allowance to owner-occupiers in respect of qualifying expenditure incurred on the conversion and refurbishment of Georgian houses.

372AAB.— (1) In this section—

‘conversion’ in relation to a building, structure or house, means any work of—

(a) conversion into a house of a building or part of a building where the building or, as the case may be, the part of the building has not, immediately prior to the conversion, been in use as a dwelling, and

(b) conversion into 2 or more houses of a building or part of a building where before the conversion the building or, as the case may be, the part of the building has not, immediately prior to the conversion, been in use as a dwelling or had been in use as a single dwelling,

including the carrying out of any necessary works of construction, reconstruction, repair or renewal, and the provision or improvement of water, sewerage or heating facilities in relation to the building or the part of the building, as the case may be;

‘house’ includes any building or part of a building used or suitable for use as a dwelling and any out office, yard, garden or other land appurtenant to or usually enjoyed with that building or part of a building;

‘letter of certification’ means a letter from the relevant local authority stating that—

(a) planning permission, in so far as it is required, in respect of the work carried out in the course of the refurbishment or conversion has been granted under the Planning and Development Acts 2000 to 2010,

(b) the total floor area of the house is not less than 38 square metres and not more than 210 square metres,

(c) the house to which the letter relates complies with such conditions, if any, as may be determined by the Minister for the Environment, Community and Local Government from time to time for the purposes of section 5 of the Housing (Miscellaneous Provisions) Act 1979, in relation to standards for improvement of houses and the provision of water, sewerage and other services in houses, and

(d) that at the time of issuing of the letter and on the basis of the information available at that time the cost of conversion into, or as the case may be, refurbishment of, the house appears to be reasonable;

‘qualifying expenditure’ means expenditure incurred by an individual, in the qualifying period, on the conversion into, or, as the case may be, the refurbishment of a qualifying premises, after deducting from that amount of expenditure any sum in respect of or by reference to—

(a) that expenditure,

(b) the qualifying premises, or

(c) the conversion or, as the case may be, the refurbishment work in respect of which that expenditure was incurred;

which the individual has received or is entitled to receive, directly or indirectly, from the State, any board established by statute or any public or local authority;

‘qualifying premises’ means a Georgian house—

(a) the site of which is wholly within a special regeneration area,

(b) which is used solely as a dwelling,

(c) in respect of which a letter of certification has issued, and

(d) which is first used, after the qualifying expenditure has been incurred, by the individual as his or her only or main residence;

‘relevant local authority’ means the county council, the city council or the borough council or, where appropriate, the town council, within the meaning of the Local Government Act 2001 in whose functional area the special regeneration area is situated;

‘total floor area’ means the total floor area of a house, measured in the manner referred to in section 4(2)(b) of the Housing (Miscellaneous Provisions) Act 1979.

(2) Where an individual, having duly made a claim, proves to have incurred qualifying expenditure on a qualifying premises in a year of assessment, the individual is entitled, for the year of assessment and for any of the 9 subsequent years of assessment in which the qualifying premises is his or her only or main residence, to have a deduction made from his or her total income of an amount equal to 10 per cent of the amount of that expenditure.

(3) Where the individual or—

(a) the individual’s spouse, is assessed to tax in accordance with section 1017, or

(b) the individual’s civil partner is assessed to tax in accordance with section 1031C,

then, except where section 1023 or 1031H, as the case may be, applies, the individual shall be entitled to have the deduction, to which he or she is entitled under subsection (2), made from his or her total income and the total income of his or her spouse or civil partner, as the case may be, if any.

(4) For the purposes of determining whether and to what extent qualifying expenditure incurred on or in relation to a qualifying premises is incurred or not incurred during the qualifying period, only such an amount of that expenditure as is properly attributable to work on the conversion into or refurbishment of the qualifying premises actually carried out during the qualifying period shall be treated as having been incurred in that period.

(5) Where qualifying expenditure, in relation to a qualifying premises, is incurred by 2 or more persons, each of those persons shall be treated as having incurred the expenditure in the proportions in which they actually bore the expenditure, and the expenditure shall be apportioned accordingly.

(6) Subsections (6), (9) and (10) of section 372AP shall, with any necessary modifications, apply in relation to—

(a) the apportionment of eligible expenditure (within the meaning of section 372AN) incurred on or in relation to a qualifying premises and of the relevant cost (within the meaning of section 372AP) in relation to that premises, and

(b) the amount of eligible expenditure (within the meaning aforesaid) to be treated as incurred in the qualifying period,

for the purposes of this section, in determining—

(i) the amount of qualifying expenditure incurred on or in relation to a qualifying premises, and

(ii) the amount of qualifying expenditure to be treated as incurred in the qualifying period,

as they apply for the purposes of section 372AP.

(7) Expenditure in respect of which an individual is entitled to relief under this section shall not include any expenditure in respect of which any person is entitled to a deduction, relief or allowance under any other provision of the Tax Acts.

(8) For the purposes of this section, expenditure incurred on the conversion into, or, as the case may be, refurbishment of a qualifying premises shall be deemed to have been incurred on the earliest date after the expenditure was actually incurred on which the premises is in use as a dwelling.

(9) This section shall not apply where qualifying expenditure incurred does not exceed 10 per cent of the market value of the building, structure or house immediately before that expenditure was incurred.

(10) An appeal to the Appeal Commissioners shall lie on any question arising under this section in like manner as an appeal would lie against an assessment to income tax and the provisions of the Tax Acts relating to appeals shall apply accordingly.

Capital allowances in relation to conversion or refurbishment of certain commercial premises.

372AAC.— (1) In this section—

‘conversion’, in relation to a building or structure, means any work of conversion, reconstruction or renewal, into a building suitable for use for the purposes of the retailing of goods or the provision of services only within the State and includes the provision or improvement of water, sewerage or heating facilities carried out, or maintenance in the nature of repair;

‘property developer’ means a person carrying on a trade which consists wholly or mainly of the construction or refurbishment of buildings or structures with a view to their sale;

‘qualifying expenditure’ means capital expenditure incurred on the conversion or refurbishment of a qualifying premises;

‘qualifying premises’ means a building or structure (or part of a building or structure) the site of which is wholly within a special regeneration area, and which—

(a) apart from this section is not an industrial building or structure within the meaning of section 268, and

(b) is—

(i) in use for the purposes of the retailing of goods, or

(ii) where subsection (3) applies, in use for the purposes of the retailing of goods or the provision of services only within the State, or

(iii) let on bona fide commercial terms for such use as is referred to in subparagraph (i) or, as the case may be, subparagraph (ii) and for such consideration as might be expected to be paid in a letting of the building or structure negotiated on an arm’s length basis,

but does not include any part of a building or structure in use as or as part of a dwelling house.

(2) (a) Subject to paragraph (b) and subsections (3) to (8), the provisions of the Tax Acts relating to the making of allowances or charges in respect of capital expenditure incurred on the construction or refurbishment of an industrial building or structure shall, notwithstanding anything to the contrary in those provisions, apply in relation to qualifying expenditure on a qualifying premises—

(i) as if the qualifying premises were, at all times at which it is a qualifying premises, a building or structure in respect of which an allowance is to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter 1 of Part 9 by reason of its use for the purpose specified in section 268(1)(a), and

(ii) where any activity carried on in the qualifying premises is not a trade, as if (for the purposes only of the making of allowances and charges by virtue of subparagraph (i)), it were a trade.

(b) An allowance shall be given by virtue of this subsection in relation to any qualifying expenditure on a qualifying premises only in so far as that expenditure is incurred in the qualifying period.

(3) In the case of a qualifying premises comprised in a Georgian house, subsection (2) shall apply only if the qualifying premises are comprised in the ground floor or basement and qualifying expenditure (within the meaning of section 372AAB) is incurred on the upper floor or floors of the building, and in respect of which a deduction has been given, or would on due claim being made be given, under that section.

(4) In relation to qualifying expenditure incurred in the qualifying period on a qualifying premises, section 272 shall apply as if—

(a) in subsection (3)(a)(ii) of that section the reference to 4 per cent were a reference to 15 per cent, and

(b) in subsection (4)(a) of that section the following were substituted for subparagraph (ii):

‘(ii) where capital expenditure on the conversion or refurbishment of the building or structure is incurred, 7 years beginning with the time when the building or structure was first used subsequent to the incurring of that expenditure.’.

(5) Notwithstanding section 274(1), no balancing allowance or balancing charge shall be made in relation to a qualifying premises by reason of any event referred to in that section which occurs more than 7 years after the qualifying premises was first used subsequent to the incurring of the qualifying expenditure on the conversion or refurbishment of the qualifying premises.

(6) This section shall not apply where qualifying expenditure incurred does not exceed 10 per cent of the market value of the building, structure or house immediately before that expenditure was incurred.

(7) For the purposes only of determining, in relation to a claim for an allowance by virtue of subsection (2), whether and to what extent capital expenditure incurred on the conversion or refurbishment of a qualifying premises is incurred or not incurred in the qualifying period, only such an amount of that capital expenditure as is properly attributable to work on the conversion or refurbishment of the premises actually carried out during the qualifying period shall (notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is or is to be treated as incurred) be treated as having been incurred in that period.

(8) Notwithstanding any other provision of this section, this section shall not apply in respect of qualifying expenditure incurred on a qualifying premises where—

(a) (i) a property developer, or a person who is connected (within the meaning of section 10) with the property developer is entitled to the relevant interest, within the meaning of section 269, in relation to that expenditure, and

(ii) either of the persons referred to in subparagraph (i) incurred the qualifying expenditure on that qualifying premises, or such expenditure was incurred by any other person connected (within the meaning of section 10) with the property developer,

or

(b) 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 local authority or any other agency of the State.

(9) Where relief is given by virtue of this section in relation to capital expenditure incurred on the conversion or refurbishment of a building or structure, relief shall not be given in respect of that expenditure under any other provision of the Tax Acts.”,

(b) in section 409F(2) by substituting “372AC, 372AD or 372AAC” for “372AC or 372AD” in paragraph (a) of the definition of “area-based capital allowance”,

(c) in section 531AAE(1) by substituting “372AC, 372AD or 372AAC,” for “372AC or 372AD,” in paragraph (a) of the definition of “area-based capital allowance”, and

(d) in Schedule 25B by inserting the following after the matter set out opposite reference number 38:

“

38A.	Section 372AAC (capital allowances in relation to conversion or refurbishment of certain commercial premises)	An amount equal to— (a) the aggregate amount of allowances (including balancing allowances) made to the individual under Chapter 1 of Part 9 as that Chapter is applied by section 372AAC, including any such allowance or part of any allowances made to the individual for a previous tax year and carried forward from that previous tax year in accordance with Part 9, or (b) where full effect has not been given in respect of that aggregate for that tax year, the part of that aggregate to which full effect has been given for that tax year in accordance with section 278 and section 304 or 305, as the case may be, or any of those sections as applied or modified by any other provision of the Tax Acts.

”.

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

31. Incentives for certain aviation services facilities.

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

(a) in section 268(1) by deleting “or” where it last occurs in paragraph (l) and by substituting “unit, or” for “unit,” in paragraph (m),

(b) in section 268(1) by inserting the following after paragraph (m):

“(n) for the purposes of a trade which consists of—

(i) the maintenance, repair or overhaul of aircraft used to carry passengers or cargo for hire or reward, or

(ii) the dismantling of aircraft of the kind referred to in subparagraph (i), for the purposes of the salvaging or recycling of parts or materials,”,

(c) in section 268 by inserting the following after subsection (1E):

“(1F) Where the relevant interest in relation to capital expenditure incurred on the construction of a building or structure in use for the purposes specified in subsection (1)(n) is held by a property developer (within the meaning of section 843A) or a person who is connected with the property developer, in the case where either of such persons incurred the capital expenditure on the construction of that building or structure, or such expenditure was incurred by any other person connected with the property developer, then, notwithstanding that subsection, that building or structure shall not, as regards a claim for any allowance under this Part by any such person, be regarded as an industrial building or structure for the purposes of this Part, irrespective of whether that relevant interest is held by the person in a sole capacity or jointly or in partnership with another person or persons.”,

(d) in section 268(9) by deleting “and” where it last occurs in paragraph (i) and by substituting “2008, and” for “2008.” in paragraph (j),

(e) in section 268(9) by inserting the following after paragraph (j):

“(k) by reference to paragraph (n), as respects capital expenditure incurred in the period commencing on the date of the coming into operation of section 31 of the Finance Act 2013 and ending 5 years after that date.”,

(f) in section 272(3) by deleting “and” at the end of paragraph (i) and by substituting “subsection (2)(c), and” for “subsection (2)(c).” in paragraph (j),

(g) in section 272(3) by inserting the following after paragraph (j):

“(k) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (n) of section 268(1), 15 per cent of the expenditure referred to in subsection (2)(c).”,

(h) in section 272(4) by deleting “and” at the end of paragraph (i) and by substituting “that expenditure, and” for “that expenditure.” in paragraph (j),

(i) in section 272(4) by inserting the following after paragraph (j):

“(k) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (n) of section 268(1)—

(i) 7 years beginning with the time when the building or structure was first used, or

(ii) where capital expenditure on the refurbishment of the building or structure is incurred, 7 years beginning with the time when the building or structure was first used subsequent to the incurring of that expenditure.”,

(j) in section 274(1)(b) by deleting “and” at the end of subparagraph (viii) and by substituting “that expenditure, and” for “that expenditure.” in subparagraph (ix)(II),

(k) in section 274(1)(b) by inserting the following after subparagraph (ix):

“(x) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (n) of section 268(1)—

(I) 7 years after the building or structure was first used, or

(II) where capital expenditure on the refurbishment of the building or structure is incurred, 7 years after the building or structure was first used subsequent to the incurring of that expenditure.”,

(l) in section 316(2C) by substituting “paragraph (g), (i), (j), (l) or (n) of section 268(1) is incurred or not incurred in any of the periods referred to in paragraph (d), (f), (g), (i) or (k) of section 268(9),” for “paragraphs (g), (i), (j) or (l) of section 268(1) is incurred or not incurred in any of the periods referred to in paragraphs (d), (f), (g) and (i) of section 268(9),”,

(m) in Schedule 25B by inserting the following after clause (VII) of paragraph (a)(i) of the matter set out opposite reference number 13:

“(VIII) section 268(1)(n) (inserted by the Finance Act 2013),”,

and

(n) in Schedule 25B by inserting the following after clause (VII) of paragraph (a)(i) of the matter set out opposite reference number 15:

“(VIII) section 268(1)(n) (inserted by the Finance Act 2013),”.

(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 for different provisions.

32. Amendment of Chapter 3 (other obligations and returns) of Part 38 of Principal Act.

32.— Chapter 3 of Part 38 of the Principal Act is amended by inserting the following after section 891D:

“Implementation of the Agreement to Improve Tax Compliance and Provide for Reporting and Exchange of Information concerning Tax Matters (United States of America) Order 2013.

891E.— (1) This section applies for the purpose of implementing the Agreement to Improve Tax Compliance and Provide for Reporting and Exchange of Information concerning Tax Matters (United States of America) Order 2013 (S.I. No. 33 of 2013).

(2) For the purposes of this section and the regulations made under this section—

‘Agreement’ means the Agreement Between the Government of Ireland and the Government of the United States of America to Improve International Tax Compliance and to Implement FATCA done at Dublin on 21 December 2012;

‘competent authority’ means the Secretary of the Treasury of the United States of America or his or her delegate;

‘register’ means to register with such body of persons, agency or authority as is specified in regulations under this section for the purpose;

‘registered financial institution’ means a financial institution that has registered in accordance with the regulations;

‘tax reference number’ means a U.S. TIN.

(3) Except where otherwise provided by this section or the regulations made under this section and unless the context otherwise requires, a word or expression used in this section or in the regulations (or in both) that is used in the Agreement shall have the same meaning as it has in the Agreement.

(4) The Revenue Commissioners, with the consent of the Minister for Finance, may make regulations under this section—

(a) requiring financial institutions to register in circumstances specified in the regulations (whether by reference to the institution concerned falling within a category specified in the regulations or the existence otherwise of circumstances in which the regulations require the institution concerned to register),

(b) with respect to the return by a registered financial institution of information on accounts held, managed or administered by that financial institution (being accounts falling within a category specified in the regulations or that are otherwise specified therein as accounts to be the subject of such a return), and

(c) with respect to the return by a registered financial institution of information on payments made to a non-participating financial institution (being payments falling within a category specified in the regulations or that are otherwise specified therein as payments to be the subject of such a return).

(5) Without prejudice to the generality of subsection (4), regulations under this section may include provisions—

(a) specifying the time limits within which financial institutions must register,

(b) requiring registered financial institutions to make a return of information in relation to U.S. reportable accounts,

(c) setting out the circumstances in which a registered financial institution is not required to make a return,

(d) setting out the circumstances in which financial institutions shall be treated as non-participating financial institutions,

(e) determining the date by which a return required to be made under the regulations shall be made to the Revenue Commissioners,

(f) prescribing the manner in which returns are to be made,

(g) specifying the accounts that are not treated as financial accounts,

(h) specifying the financial accounts that are U.S. reportable accounts,

(i) specifying the information to be reported in a return by the registered financial institution, to the Revenue Commissioners, in relation to U.S. reportable accounts and, where different information is to be reported for different years, specifying the information to be reported for each of those years,

(j) specifying—

(i) the currency in which the registered financial institution is required to report, and

(ii) the rules for conversion of amounts, denominated in another currency, into the currency, referred to in subparagraph (i), for the purposes of a return under the regulations,

(k) requiring financial institutions to identify the financial accounts that are held by U.S. persons who fall within a category specified in the regulations or who are otherwise persons the financial accounts held by whom are specified by the regulations to be the subject of such identification,

(l) specifying the records and documents that must be examined or obtained by the financial institution to enable the institution to identify the financial accounts that are held by U.S. persons who fall within a category specified in the regulations or who are otherwise specified by the regulations as persons in relation to whom the foregoing action in this paragraph must be taken, and, where different records or documents must be examined or obtained in different circumstances, specifying those circumstances,

(m) specifying additional requirements in relation to high value accounts that are held by U.S. persons who fall within a category specified in the regulations or who are otherwise persons the high value accounts held by whom are specified by the regulations to be the subject of such additional requirements,

(n) specifying the records and documents used to identify the holder of a U.S. reportable account that must be retained by the registered financial institution,

(o) specifying the financial accounts in respect of which the financial institution is not required to identify the account holder,

(p) setting out the circumstances in which a registered financial institution is required to aggregate financial accounts held by the same individual or entity for the purposes of reporting information on those accounts,

(q) specifying the actions to be taken by a registered financial institution where there is a change in circumstances with respect to the holder of a financial account,

(r) setting out the conditions under which a financial institution may appoint a third party as its agent to carry out the duties and obligations imposed on it by the regulations,

(s) setting out the circumstances in which an account held by an NFFE will be a U.S. reportable account,

(t) setting out the circumstances in which a registered financial institution may make a nil return,

(u) specifying the information to be reported by the registered financial institution in relation to payments made to non-participating financial institutions,

(v) imposing an obligation on—

(i) a financial institution to obtain a tax reference number from persons, being persons who fall within a category specified in the regulations or who are otherwise specified by the regulations as persons in relation to whom the foregoing action in this paragraph must be taken and—

(I) with whom the institution enters into a contractual relationship, or

(II) for whom the institution undertakes any transaction,

on or after a date specified in the regulations, which shall not be earlier than the commencement of the regulations (and such persons are in this paragraph referred to as ‘customers’) for the purposes of including that number in a return under the regulations, and

(ii) customers to provide a financial institution with their tax reference number on request by the financial institution where, on or after a date specified in the regulations—

(I) such customers enter into a contractual relationship with the financial institution, or

(II) the financial institution undertakes any transaction for such customers,

being respectively—

(A) a relationship which resultsin the opening, operation, administration or management of a financial account, or

(B) a transaction which arisesin relation to a financial account,

(w) defining ‘books’ and ‘records’ for the purposes of the regulations,

(x) in relation to any of the matters specified in the preceding paragraphs, determining the manner of keeping records and setting the period for the retention of records so kept,

(y) enabling the authorisation of Revenue officers, for the purpose of such officers—

(i) requiring—

(I) the production of books, records or other documents,

(II) the provision of information, explanations and particulars, and

(III) persons to give all such assistance as may reasonably be required and as is specified in the regulations,

in relation to financial accounts within such time as may be specified in the regulations, and

(ii) making extracts from or copies of books, records or other documents or requiring that copies of such books, records and documents be made available,

and

(z) specifying such supplemental and incidental matters as appear to the Revenue Commissioners to be necessary—

(i) to enable persons to fulfill their obligations under the regulations, or

(ii) for the general administration and implementation of the regulations, including—

(I) delegating to a Revenue officer the authority to perform any acts and discharge any functions authorised by this section or the regulations to be performed or discharged by the Revenue Commissioners, and

(II) the authorisation by the Revenue Commissioners of Revenue officers to exercise any powers, to perform any acts or to discharge any functions conferred by this section or by the regulations.

(6) Every regulation made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudiceto the validity of anything previously done thereunder.

(7) A Revenue officer authorised for the purpose of regulations under this section may at all reasonable times enter any premises or place of business of a financial institution for the purposes of—

(a) determining whether information—

(i) included in a return made under the regulations by the financial institution was correct and complete, or

(ii) not included in such a return was correctly not so included,

or

(b) examining the procedures put in place by the financial institution for the purposes of ensuring compliance with that institution’s obligations under the regulations.

(8) (a) Section 898O shall apply to—

(i) a failure by a financial institution to deliver a return required under regulations under this section, and

(ii) the making of an incorrect or incomplete return under those regulations,

as it applies to a failure to deliver a return or to the making of an incorrect or incomplete return referred to in section 898O.

(b) A person who does not comply with—

(i) the requirements of a Revenue officer in the exercise or performance of the officer’s powers or duties under this section or under regulations made under this section, or

(ii) any requirement of such regulations,

shall be liable to a penalty of €1,265.

(9) Section 4 of the Post Office Savings Bank Act 1861 shall not apply to the disclosure of information required to be included in a return made under the regulations made under this section and, accordingly, this section shall apply to information to which, but for this subsection, the said section 4 would apply.

(10) (a) Notwithstanding section 851A, the Revenue Commissioners are authorised to communicate to the competent authority information which is contained in a return required under regulations under this section.

(b) The Revenue Commissioners shall communicate the information referred to in paragraph (a) to the competent authority not later than the expiry of 9 months following the end of the tax year in which the return is received.

(11) Where arrangements are entered into by any person and the main purpose or one of the main purposes of the arrangements, or any part of them, is the avoidance of any of the obligations imposed under this section or regulations thereunder, then this section and those regulations shall apply as if the arrangements, or that part of them, had not been entered into.”.

Chapter 5 Corporation Tax

33. Amendment of surcharges on undistributed investment and estate income and undistributed income of service companies.

33.— (1) Section 440(1) of the Principal Act is amended in paragraph (b)(i) by substituting “€2,000” for “€635” in each place.

(2) Section 441 of the Principal Act is amended—

(a) in subsection (4)(b)(i) by substituting “€2,000” for “€635” in each place, and

(b) in subsection (6)(b)(ii) by substituting “(5A)” for “(5)” in each place.

(3) Subsection (1) and subsection 2(a) have effect in relation to accounting periods ending on or after 1 January 2013.

34. Amendment of section 486C (relief from tax for certain start-up companies) of Principal Act.

34.— (1) Section 486C of the Principal Act is amended—

(a) in subsection (2)(a) by substituting “at any time” for “in at any time”,

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

“(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, for the purposes of this section, the income from the qualifying trade for that accounting period shall be the amount of the income of the qualifying trade for that part of the accounting period and that part of the accounting period shall be treated as a separate accounting period.”,

(c) in subsection (4)(a) by deleting “wholly or partly”,

(d) in subsection (4)(b) by deleting “wholly or partly”,

(e) in subsection (4)(c) by substituting “For the purposes of this subsection and subsection (4A)” for “For the purposes of this subsection”,

(f) in subsection (4)(d) by substituting “For the purposes of this subsection and subsection (4A)” for “For the purposes of this subsection”,

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

“(4A) (a) In this subsection—

‘accounting period following the relevant period’, in relation to a company carrying on a qualifying trade, means an accounting period commencing on a date which occurs after the expiry of the relevant period in relation to the qualifying trade;

‘corporation tax referable to the qualifying trade’, in relation to an accounting period of a company, means the corporation tax payable by the company for the accounting period, so far as it is referable to—

(i) income from the qualifying trade for that accounting period, and

(ii) chargeable gains on the disposal of relevant assets in relation to the trade in that accounting period.

(b) (i) Where for an accounting period of a company falling within the relevant period in relation to a qualifying trade carried on by the company—

(I) the total corporation tax payable by the company for the accounting period does not exceed the lower relevant maximum amount, and

(II) the total contribution for the accounting period exceeds the corporation tax referable to the qualifying trade for that accounting period,

the amount (in paragraph (c) referred to as a ‘first relevant amount’) of the excess referred to in clause (II) shall be available to reduce, in accordance with this subsection, the corporation tax referable to the qualifying trade for an accounting period following the relevant period.

(ii) Where for an accounting period of a company falling within the relevant period in relation to a qualifying trade carried on by a company—

(I) the total corporation tax payable by the company for the accounting period exceeds the lower relevant maximum amount but does not exceed the upper relevant maximum amount, and

(II) the total contribution for the accounting period exceeds the corporation tax referable to the qualifying trade for that accounting period,

an amount (in paragraph (c) referred to as a ‘second relevant amount’) determined by the following formula:

[C — (3 x (T — M) x C/T)] — R

where—

C is the total contribution for the accounting period,

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

M is the lower relevant maximum amount, and

R is the amount of relief to which the company is entitled under subsection (4)(b) for the accounting period,

shall be available to reduce, in accordance with this subsection, the corporation tax referable to the qualifying trade for an accounting period following the relevant period.

(c) For the purposes of this subsection, the aggregate of all amounts which are—

(i) the first relevant amount, or

(ii) the second relevant amount,

if any, for each accounting period falling within the relevant period, shall be referred to as a ‘specified aggregate’.

(d) (i) Subject to paragraphs (e) and (f), where a company carries on a qualifying trade in an accounting period following the relevant period, the corporation tax referable to the qualifying trade for that accounting period shall be reduced by the specified aggregate.

(ii) Subject to paragraphs (e) and (f), where there is a reduction in the corporation tax for an accounting period following the relevant period by virtue of subparagraph (i) and the specified aggregate exceeds the amount of that reduction, the corporation tax referable to the qualifying trade for the next accounting period shall be reduced by the amount of that excess and so much of that excess as is not applied to reduce that corporation tax shall, in turn, be applied by the company to reduce the corporation tax referable to the qualifying trade for the succeeding accounting period and so on for each succeeding accounting period.

(e) As respects a qualifying trade carried on by a company, the amount by which the corporation tax referable to the qualifying trade for an accounting period following the relevant period may be reduced under this subsection shall not exceed the lesser of—

(i) such corporation tax, and

(ii) the total contribution,

for that accounting period.

(f) So much of a specified aggregate as is applied by a company to reduce corporation tax under this subsection shall be so applied only once.”,

(h) in subsection (5) by substituting “subsections (4) and (4A)” for “subsection (4)”, and

(i) in subsection (7) by substituting “subsections (4) and (4A)” for “subsection (4)”.

(2) Paragraphs (e) to (i) of subsection (1) have effect as respects any first relevant amount or second relevant amount (both within the meaning of section 486C of the Principal Act (as amended by subsection (1))) for accounting periods ending on or after 1 January 2013.

35. Amendment of section 288 (balancing allowances and balancing charges) of Principal Act.

35.— (1) Section 288 of the Principal Act is amended in subsection (3C) by substituting “5 years” for “10 years”.

(2) This section applies to expenditure incurred by a company after 13 February 2013.

36. Amendment of section 226 (certain employment grants and recruitment subsidies) of and Schedule 4 (exemption of specified non-commercial State-sponsored bodies from certain tax provisions) to Principal Act.

36.— (1) Section 226 of the Principal Act is amended in subsection (1)—

(a) by inserting the following after paragraph (d):

“(dd) as respects grants or subsidies paid on or after the 1st day of September 2005, the Wage Subsidy Scheme, being a scheme administered by the Department of Social Protection,”,

and

(b) by deleting paragraph (e).

(2) Schedule 4 to the Principal Act is amended—

(a) by inserting the following after paragraph 83A:

“83B. The Pharmaceutical Society of Ireland.”,

and

(b) by inserting the following after paragraph 91:

“91A. Science Foundation Ireland.”.

(3) (a) Paragraph (a) of subsection (2) is deemed to have come into force and have taken effect as on and from 22 May 2007.

(b) Paragraph (b) of subsection (2) is deemed to have come into force and have taken effect as on and from 25 July 2003.

37. Amendment of section 396B (relief for certain trading losses on a value basis) of Principal Act.

37.— (1) Section 396B of the Principal Act is amended in subsection (5)—

(a) by substituting “Subject to paragraph (b), where a company” for “Where a company”,

(b) by renumbering the existing provision as paragraph (a) of that subsection, and

(c) by inserting the following after paragraph (a):

“(b) (i) In this paragraph ‘relevant amount’ means an amount (not being an amount incurred by a company for the purposes of a trade carried on by it) of charges on income, expenses of management or other amount (not being an allowance to which effect is given under section 308(4)) which is deductible from, or may be treated as reducing, profits of more than one description.

(ii) For the purposes of paragraph (a), where as respects an accounting period of a company a relevant amount is deductible from, or may be treated as reducing, profits of more than one description, the amount by which corporation tax is reduced by virtue of subsection (3) shall be deemed to be the amount by which it would have been reduced if no relevant amount were so deductible or so treated.”.

(2) This section applies as respects accounting periods commencing on or after 1 January 2013.

38. Amendment of section 411 (surrender of relief between members of groups and consortia) of Principal Act.

38.— (1) Section 411 of the Principal Act is amended in subsection (1) by substituting the following for paragraph (c):

“(c) In determining for the purposes of this section and the following provisions of this Chapter whether one company (in this paragraph referred to as the ‘first-mentioned company’) is a 75 per cent subsidiary of another company—

(i) the other company shall be treated as not being the owner of—

(I) any share capital which it owns directly in a company if a profit on a sale of the shares would be treated as a trading receipt of its trade,

(II) any share capital which it owns indirectly and which is owned directly by a company for which a profit on the sale of the shares would be a trading receipt, or

(III) any share capital which it owns directly or indirectly in a company that is not a company which, by virtue of the law of a relevant territory, is resident for the purposes of tax in such a relevant territory,

and

(ii) the first-mentioned company shall not be treated as a 75 per cent subsidiary of the other company unless—

(I) that other company, by virtue of the law of a relevant territory, is resident for the purposes of tax in such a relevant territory, or

(II) the principal class of shares of that other company or, where the company is a 75 per cent subsidiary of another company, the principal class of shares of that other company, is substantially and regularly traded on a stock exchange in the State, on one or more than one recognised stock exchange in a relevant territory or territories or on such other stock exchange as may be approved of by the Minister for Finance for the purposes of Chapter 8A of Part 6.”.

(2) (a) Subject to paragraph (b), this section applies as respects accounting periods ending on or after 1 January 2013.

(b) This section shall not have effect in relation to the determination of the amount of loss or other amount available for surrender under section 411(2) of the Principal Act for an accounting period beginning before 1 January 2013 and ending after that date to the extent that the loss or other amount is attributable to the part of the accounting period falling before 1 January 2013.

(c) Any apportionment necessary for the purposes of giving effect toparagraph (b) shall be made in accordance with section 4(6) of the Principal Act.

39. Rate of appropriate tax for companies.

39.— (1) The Principal Act is amended in section 730F—

(a) in subsection (1) by substituting “Subject to subsection (1B), in this section” for “In this section”, and

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

“(1B) Where the policyholder is a company—

(a) the rate specified in subsection (1)(a)(i) shall not apply unless the policyholder has made the declaration referred to in paragraph (b), and

(b) the rate specified in subsection (1)(a)(ii) shall apply unless immediately before the chargeable event, the life assurance company is in possession of a declaration from the policyholder to the effect that the policyholder is a company and which includes the company’s tax reference number (within the meaning of section 891B(1)).”.

(2) The Principal Act is amended in section 739D—

(a) in subsection (5A) by substituting “Subject to subsection (5AA), the amount” for “The amount”, and

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

“(5AA) Where the unit holder is a company—

(a) the formula specified in subsection (5A)(a) shall not apply unless the unit holder has made the declaration referred to in paragraph (b), and

(b) the formula specified in subsection (5A)(b) shall apply unless immediately before the chargeable event, the investment undertaking is in possession of a declaration from the unit holder to the effect that the unit holder is a company and which includes the company’s tax reference number (within the meaning of section 891B(1)).”.

(3) The Principal Act is amended in section 739E—

(a) in subsection (1) by substituting “Subject to subsection (1B), in this section” for “In this section”, and

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

“(1B) Where the unit holder is a company—

(a) the rate specified in paragraph (a)(i) or paragraph (b)(i), as the case may be, of subsection (1) shall not apply unless the unit holder has made the declaration referred to in paragraph (b), and

(b) the rate specified in paragraph (a)(ii) or paragraph (b)(ii), as the case may be, of subsection (1) shall apply unless immediately before the chargeable event, the investment undertaking is in possession of a declaration from the unit holder to the effect that the unit holder is a company and which includes the company’s tax reference number (within the meaning of section 891B(1)).”.

40. Life assurance policies and investment funds.

40.— (1) The Principal Act is amended in section 730F(1)—

(a) in paragraph (a)(ii) by substituting “36 per cent” for “33 per cent”, and

(b) in paragraph (b) by substituting “(S + 36) per cent” for “(S + 33) per cent”.

(2) The Principal Act is amended in section 730J—

(a) in paragraph (a)(i)(I) by substituting “33 per cent” for “30 per cent”,

(b) in paragraph (a)(i)(II)(A) by substituting “(S + 36) per cent” for “(S + 33) per cent”,

(c) in paragraph (a)(i)(II)(B) by substituting “36 per cent” for “33 per cent”, and

(d) in paragraph (a)(ii)(I) by substituting “(H + 33) per cent” for “(H + 30) per cent”.

(3) The Principal Act is amended in section 730K(1)—

(a) in paragraph (a) by substituting “(S + 36) per cent” for “(S + 33) per cent”, and

(b) in paragraph (b) by substituting “36 per cent” for “33 per cent”.

(4) The Principal Act is amended in Chapter 1A of Part 27—

(a) in section 739D(5A) in the formula in paragraph (b) by substituting “(G x 36)” for “(G x 33)”, and

(b) in section 739E(1)—

(i) in paragraph (a)(ii) by substituting “33 per cent” for “30 per cent”,

(ii) in paragraph (b)(ii) by substituting “36 per cent” for “33 per cent”, and

(iii) in paragraph (ba) by substituting “(S + 36) per cent” for “(S + 33) per cent”.

(5) The Principal Act is amended in Chapter 4 of Part 27—

(a) in section 747D(a)(i)(I)—

(i) in subclause (A) by substituting “(S + 36) per cent” for “(S + 33) per cent”, and

(ii) in subclause (B) by substituting “33 per cent” for “30 per cent”,

(b) in section 747D(a)(i)(II)—

(i) in subclause (A) by substituting “(S + 36) per cent” for “(S + 33) per cent”, and

(ii) in subclause (B) by substituting “36 per cent” for “33 per cent”,

(c) in section 747D(a)(ii)(I) by substituting “(H + 33) per cent” for “(H + 30) per cent”, and

(d) in section 747E(1)(b)—

(i) in subparagraph (i) by substituting “(S + 36) per cent” for “(S + 33) per cent”, and

(ii) in subparagraph (ii) by substituting “36 per cent” for “33 per cent”.

(6) (a) 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 of the Principal Act) on or after 1 January 2013.

(b) Subsection (2) applies and has effect as respects the receipt by a person of a payment in respect of a foreign life policy (within the meaning of Chapter 6 of Part 26 of the Principal Act) on or after 1 January 2013.

(c) Subsection (3) 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 of the Principal Act) on or after 1 January 2013.

(d) Subsection (4) 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) of the Principal Act) on or after 1 January 2013.

(e) Paragraphs (a) to (c) of subsection (5) apply and have effect as respects the receipt by a person of a payment in respect of a material interest in an offshore fund (within the meaning of Chapter 4 of Part 27 of the Principal Act) on or after 1 January 2013.

(f) Paragraph (d) of subsection (5) 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 of the Principal Act) on or after 1 January 2013.

41. REITS.

41.— The Principal Act is amended—

(a) in section 153 by inserting the following after subsection (4):

“(4A) Subsection (4) shall not apply to a property income dividend (within the meaning of section 705A).”,

(b) in section 172D by inserting the following after subsection (3A):

“(3B) Subsections (2) and (3) shall not apply to a property income dividend (within the meaning of section 705A).”,

and

(c) by inserting the following Part after Part 25:

“PART 25A

Interpretation and application.

705A.— In this Part—

‘aggregate income’, in relation to a company or group, means the aggregate profits of the company or group, as the case may be, as—

(a) reduced by the aggregate net gains of the company or group, as the case may be, where aggregate net gains arise, or

(b) increased by the aggregate net losses of the company or group, as the case may be, where aggregate net losses arise;

‘aggregate net gains’, in relation to a company or group, means the amount by which the sum of the gains recognised in arriving at the aggregate profits of the company or group, as the case may be, being gains which arise on the revaluation or disposal of investment property or other non-current assets, exceeds the sum of the losses so recognised, being losses which arise on such revaluation or disposal;

‘aggregate net losses’, in relation to a company or group, means the amount by which the sum of the losses recognised in arriving at the aggregate profits of the company or group, as the case may be, being losses which arise on the revaluation or disposal of investment property or other non-current assets, exceeds the sum of the gains so recognised, being gains which arise on such revaluation or disposal;

‘aggregate profits’, in relation to a company or group, means the profit that is stated in accounts of the company or consolidated accounts of the group, as the case may be, being accounts made up in accordance with relevant accounting standards, or, where such accounts or consolidated accounts, as the case may be, have not been made up, the profits which would be so stated if such accounts or consolidated accounts, as the case may be, were made up in accordance with those standards;

‘authorised officer’ means an officer of the Revenue Commissioners authorised by them in writing to exercise the powers conferred by this Part;

‘control’ shall be construed in accordance with section 432;

‘distribution’ has the same meaning as in the Corporation Tax Acts;

‘group’ means a group of companies comprising a holding company and its wholly-owned subsidiaries and a reference to a member of a group shall be construed as a reference to any company in the group;

‘group Real Estate Investment Trust’ means a group, where—

(a) the principal company of that group:

(i) has given a notice under section 705E, and

(ii) complies with the conditions in section 705B(1)(a),

and

(b) the group complies with the conditions in section 705B(1)(b),

and any references to ‘group REIT’ shall be construed accordingly;

‘holding company’ means a company that holds another company as its wholly-owned subsidiary and, for the purpose of this definition and for the purpose of the immediately preceding definition, a company shall be a wholly-owned subsidiary of another company if and so long as 100 per cent of its ordinary share capital is directly owned by that other company;

‘market value’ shall be construed in accordance with section 548;

‘principal company’ means the company within a group that gives a notice to the Revenue Commissioners under section 705E(2);

‘property income’, in relation to a company or group, means the property profits of the company or group, as the case may be, as—

(a) reduced by the property net gains of the company or group, as the case may be, where property net gains arise, or

(b) increased by the property net losses of the company or group, as the case may be, where property net losses arise;

‘property income dividend’ means a dividend paid by a REIT or the principal company of a group REIT, as the case may be, from its property income;

‘property net gains’, in relation to a company or group, means the amount by which the sum of the gains recognised in arriving at the aggregate profits of the company or group, as the case may be, being gains which arise on the revaluation or disposal of investment property or other non-current assets which are assets of the property rental business, exceeds the sum of the losses so recognised, being losses which arise on such revaluation or disposal;

‘property net losses’, in relation to a company or group, means the amount by which the sum of the losses recognised in arriving at the aggregate profits of the company or group, as the case may be, being losses which arise on the revaluation or disposal of investment property or other non-current assets which are assets of the property rental business, exceeds the sum of the gains so recognised, being gains which arise on such revaluation or disposal;

‘property profits’, in relation to a company or group, means an amount which is the lesser of—

(a) the amount which would be the aggregate profits of the company or group, as the case may be, if the residual business, if any, of the company or group, as the case may be, were disregarded, and

(b) the aggregate profits of that company or group, as the case may be;

‘property rental business’ means a business which is carried on by a REIT or a group REIT, as the case may be, for the sole purpose of generating rental income in the State or outside the State, and, for the purpose of this definition, such businesses of a group are to be treated as a single business;

‘qualifying investor’ in relation to a REIT or a group REIT, as the case may be, means—

(a) an investment undertaking within the meaning of section 739B(1), or

(b) a person referred to in paragraph (a), (b), (f) or (ka) of section 739D(6);

‘Real Estate Investment Trust’ means a company which—

(a) has given a notice under section 705E, and

(b) complies with the conditions in section 705B(1),

and any references to ‘REIT’ shall be construed accordingly;

‘recognised stock exchange’ means a stock exchange in a Member State, being a stock exchange which—

(a) is regulated by the appropriate regulatory authority of that Member State, and

(b) other than in the case of the Irish Stock Exchange, has substantially the same level of recognition in that Member State as the Irish Stock Exchange has in the State;

‘relevant accounting standards’ has the meaning assigned to it in Schedule 17A;

‘rental income’ means any rent-charge or payment in the nature of rent in respect of—

(a) residential premises within the meaning of section 96(1), and

(b) any building other than such residential premises;

‘residual business’, in relation to a REIT or a group REIT, means any business carried on by the REIT or group REIT, as the case may be, which is not property rental business;

‘specified accounting period’ means the accounting period in which the company or principal company, as the case may be, gives a notice under section 705E;

‘specified debt’ means any debt incurred by a REIT or group REIT in respect of monies borrowed by, or advanced to, the REIT or group REIT, as the case may be;

‘specified return date for the accounting period’ has the same meaning as in section 959A;

‘the Acts’ means the Tax Acts and the Capital Gains Tax Acts.

Conditions for notice under section 705E.

705B.— (1) Subject to subsections (2) and (3), the notice referred to in section 705E shall contain a statement to the effect that—

(a) each of the following conditions, in relation to a REIT or the principal company of a group REIT, as the case may be, is met throughout the specified accounting period, namely—

(i) it is resident in the State and not resident in another territory,

(ii) it is incorporated under the Companies Acts,

(iii) its shares are listed on the main market of a recognised stock exchange in a Member State, and

(iv) it is not a close company within the meaning of Chapter 1 of Part 13,

and

(b) each of the following conditions, in relation to a REIT or group REIT, as the case may be, is reasonably expected to be met at the end of the specified accounting period, namely—

(i) at least 75 per cent of the aggregate income of the REIT or group REIT derives from carrying on property rental business,

(ii) it conducts property rental business consisting of at least three properties, the market value of no one of which is more than 40 per cent of the total market value of the properties constituting the property rental business,

(iii) it maintains a property financing costs ratio (within the meaning of section 705H(1)) of at least 1.25:1,

(iv) at least 75 per cent of the aggregate market value of the assets of the REIT or group REIT relates to assets of the property rental business of the REIT or group REIT, as the case may be,

(v) it ensures that the aggregate of the specified debt shall not exceed an amount equal to 50 per cent of the aggregate market value of the assets of the business or businesses of the REIT or group REIT, as the case may be, and

(vi) subject to having sufficient distributable reserves, it distributes to the shareholders of the REIT or the shareholders of the principal company of the group REIT, as the case may be, at least 85 per cent of the property income for each accounting period of the REIT or group REIT, as the case may be, by way of property income dividend, on or before the specified return date for the accounting period in relation to the REIT, or the principal company of the group REIT, as the case may be.

(2) Each of the conditions in subparagraphs (iii) and (iv) of subsection (1)(a) shall be regarded as having been met throughout the specified accounting period if that condition is met within the period of three years commencing on the date on which the company or group becomes a REIT, or group REIT, as the case may be.

(3) The condition in subparagraph (ii) of subsection (1)(b) shall be regarded as having been met at the end of the specified accounting period if that condition is met within the period of three years commencing on the date on which the company or group becomes a REIT, or group REIT, as the case may be.

(4) Subparagraph (iv) of subsection (1)(a) shall not apply to a REIT or a group REIT, as the case may be, which is under the control of persons who are qualifying investors.

Conditions regarding shares.

705C.— (1) In this section—

‘ordinary shares’ means shares other than preference shares;

‘preference shares’ means shares which do not carry any right to dividends other than dividends at a rate per cent of the nominal value of the shares which is fixed, and which carry rights in respect of dividends and capital which are comparable with those general for fixed-dividend shares quoted on a stock exchange in the State.

(2) Each share issued by a REIT or the principal company of a group REIT, as the case may be, shall either—

(a) form part of its ordinary share capital, or

(b) be a preference share with no voting rights attaching to it.

(3) No more than one class of ordinary share shall be issued by a REIT or by the principal company of a group REIT, as the case may be.

Conditions regarding an accounting period.

705D.— Subject to subsections (2) and (3) of section 705B, where a notice has been given under section 705E by—

(a) a company, all of the conditions in section 705B(1) must continue to be met by that company for each accounting period following the specified accounting period until a notice has been issued in accordance with section 705O,

(b) a principal company in respect of a group, the conditions in section 705B(1)(a) must continue to be met by that principal company for each accounting period following the specified accounting period until a notice has been issued in accordance with section 705O, and

(c) a principal company in respect of a group, the conditions in section 705B(1)(b) must continue to be met by that group for each accounting period following the specified accounting period until a notice has been issued in accordance with section 705O.

Notice to become a Real Estate Investment Trust.

705E.— (1) A company shall not be a REIT unless it gives a notice to the Revenue Commissioners under this section.

(2) A group shall not be a group REIT unless a company (in this Part referred to as the ‘principal company’) which is a member of that group gives a notice to the Revenue Commissioners under this section.

(3) (a) A notice under this section is a notice in writing specifying a date on or after 1 January 2013—

(i) from which the company is to be a REIT, or

(ii) from which the group is to be a group REIT,

being a date that is not earlier than the date of the notice given under subsection (1) or subsection (2), as the case may be, and

(b) the notice shall, in the case of a group REIT, list all of the members of the group, to each of which the group REIT designation will apply.

(4) The date from which a company or group shall be a REIT or a group REIT, as the case may be, shall be the date—

(a) on or after 1 January 2013, as specified in a notice under subsection (3), and

(b) from which the company or group, as the case may be, meets, or is regarded as having met, the conditions of section 705B.

Duration of Real Estate Investment Trust.

705F.— A company or group shall not be a REIT or a group REIT, as the case may be, after the date specified in a notice issued in accordance with section 705O to the company or group, as the case may be.

Charge to tax.

705G.— (1) Notwithstanding anything in the Acts, but subject to the provisions of this Part, a company which is a REIT or a member of a group REIT shall not be chargeable to tax in respect of—

(a) income of its property rental business, or

(b) chargeable gains accruing on the disposal of assets of that property rental business.

(2) Where a company or group, which is, or which, subsequent to such acquisition, becomes, a REIT or group REIT, as the case may be, acquires an asset which is used, or subsequent to such acquisition is used, for the purposes of its property rental business, and following that acquisition—

(a) the asset is developed, the cost of which development exceeds 30 per cent of the market value of the asset at the date of commencement of the development, and

(b) the asset is disposed of within the period of three years beginning with the completion of the development,

then, notwithstanding the provisions of subsection (1), the profits arising therefrom, computed in accordance with the Tax Acts, shall be chargeable to corporation tax at the rate specified in section 21A.

Profit: financing cost ratio.

705H.— (1) In this section—

‘property financing costs’ means costs, being costs of debt finance or finance leases for the purposes of property rental business, which are taken into account in arriving at aggregate profits, including amounts in respect of—

(a) interest, discounts, premiums, or net swap or hedging costs, and

(b) fees or other expenses associated with raising debt finance or arranging finance leases;

‘property financing costs ratio’ means the ratio of the sum of property income and property financing costs of a company or group to the property financing costs of the company or group, as the case may be.

(2) This section applies to a REIT or a group REIT if the property financing costs ratio of the REIT or group REIT, as the case may be, is less than 1.25:1 for an accounting period.

(3) (a) Subject to paragraph (b), the REIT or the principal company of the group REIT, as the case may be, shall be charged to corporation tax under Case IV of Schedule D for the accounting period in respect of the amount by which the property financing costs of the REIT or group REIT, as the case may be, would have to be reduced for the property financing costs ratio to equal 1.25:1 for that accounting period.

(b) The amount mentioned in paragraph (a) shall not exceed 20 per cent of the property income of the REIT or group REIT, as the case may be.

(4) No loss, deficit, expense or allowance may be set off against the first-mentioned amount in subsection (3)(a) in charging that amount to corporation tax.

Funds awaiting reinvestment.

705I.— (1) This section applies where—

(a) a REIT or group REIT disposes of a property of its property rental business, or

(b) a REIT or a principal company, in the case of a group REIT, raises cash from the issue of ordinary share capital,

and the REIT or group REIT, as the case may be, holds the proceeds.

(2) (a) Profits arising from the investment of such proceeds, other than in property for the property rental business, shall be treated as property profits during the period of 24 months commencing on—

(i) date of disposal, where subsection (1)(a) applies, or

(ii) date of issue of ordinary share capital, where subsection (1)(b) applies,

and as not being property profits thereafter.

(b) Any apportionment of profits for the purpose of paragraph (a) shall be made in accordance with section 4(6).

(3) Where the proceeds are held at any time after the date on which the period referred to in subsection (2) ends, the proceeds are to be treated as being assets of the residual business after that date.

Taxation of shareholders.

705J.— (1) This section applies where a REIT or group REIT, as the case may be, pays a property income dividend.

(2) Subject to subsection (3), a shareholder within the charge to corporation tax shall, notwithstanding any other provision of the Tax Acts, be chargeable to corporation tax under Case IV of Schedule D in respect of a distribution referred to in subsection (1).

(3) A property income dividend, received by a company which is a member of a group REIT from a company which is a member of the same group REIT, shall not be chargeable to corporation tax and the property income dividend shall not be taken into account in computing income for corporation tax of the first-mentioned company.

(4) Notwithstanding the provisions of subsection (2), and subject to subsection (3), a shareholder within the definition of ‘qualifying company’ in section 110(1) shall be chargeable to corporation tax under Case III of Schedule D in respect of a distribution referred to in subsection (1).

(5) Where, but for subsection (2) and section 129, a property income dividend would be income of a company which is income chargeable to tax under Case I of Schedule D, it shall be so chargeable notwithstanding those provisions.

Taxation of certain shareholders.

705K.— (1) In this section, and subject to subsection (2), ‘holder of excessive rights’ means a person, other than a qualifying investor, who—

(a) is beneficially entitled, directly or indirectly, to at least 10 per cent of the distribution referred to in section 705B(1)(b)(iv),

(b) is beneficially entitled to, or controls directly or indirectly—

(i) at least 10 per cent of the share capital of, or voting rights in, the REIT, or

(ii) in the case of a group REIT, to at least 10 per cent of the share capital of, or voting rights in, the principal company.

(2) Where a shareholder becomes a holder of excessive rights in a company as a result of that company becoming a REIT or the principal company of a group REIT, then the provisions of subsection (3) will not apply for a period of three years commencing from the date specified by that company in accordance with section 705E(4).

(3) Where a REIT or group REIT makes a distribution to a holder of excessive rights and the REIT or group REIT, as the case may be, has not taken reasonable steps to prevent the distribution to such a person being made, the REIT or the principal company of the group REIT, as the case may be, shall, notwithstanding the provisions of section 705G, be treated as receiving an amount of income equal to the amount of the distribution.

(4) The amount of income referred to in subsection (3) shall be chargeable to corporation tax under Case IV of Schedule D and shall be treated as income—

(a) arising in the accounting period in which the distribution is made, and

(b) against which no loss, deficit, expense or allowance may be set off.

Transfer of assets.

705L.— (1) Where a company becomes a REIT, the assets of the company before it becomes a REIT shall be deemed, for the purposes of the Capital Gains Tax Acts, to have been—

(a) sold by the company immediately before it becomes a REIT, and

(b) reacquired by the company immediately on becoming a REIT,

and such deemed sale and reacquisition shall be treated as being for a consideration equal to the market value of the assets on the date specified by the company, in accordance with section 705E(3)(a), in a notice under that section.

(2) Where a group becomes a group REIT, the assets of each member of the group before it becomes a group REIT shall be deemed for the purposes of the Capital Gains Tax Acts, to have been—

(a) sold by that member of the group immediately before the group becomes a group REIT, and

(b) reacquired by that member of the group immediately on the group becoming a group REIT,

and such deemed sale and reacquisition shall be treated as being for a consideration equal to the market value of the assets on the date specified by the principal company of the group, in accordance with section 705E(3)(a), in a notice under that section.

(3) Where an asset of a REIT or group REIT, as the case may be, which is used for the purposes of the property rental business of the REIT or group REIT, as the case may be, ceases to be used for such purposes and begins to be used for the purposes of the residual business of the REIT or group REIT, as the case may be, the asset shall be deemed for the purposes of the Capital Gains Tax Acts, to have been—

(a) sold by the REIT, or the relevant member of the group REIT, as the case may be, for that property rental business, and

(b) acquired by the REIT, or the relevant member of the group REIT, as the case may be, for that residual business,

at the date on which it ceases to be so used.

(4) The deemed sale and acquisition in subsection (3) shall be treated as being for a consideration equal to the market value of the asset at the date referred to in subsection (3). A gain accruing to the property rental business as a result of subsection (3) shall, notwithstanding the provisions of section 705G, be a chargeable gain for the purposes of the Capital Gains Tax Acts.

(5) Where an asset of a REIT or group REIT, as the case may be, which is used for the purposes of the residual business, ceases to be used for such purposes and begins to be used for the purposes of the property rental business, the asset shall be deemed for the purposes of the Capital Gains Tax Acts, to have been—

(a) sold by the REIT, or the relevant member or members of the group REIT, as the case may be, for that residual business, and

(b) acquired by the REIT, or the relevant member or members of the group REIT, as the case may be, for that property rental business,

at the date on which it ceases to be so used, for a consideration equal to the market value of the asset on that date.

Annual statement to Revenue.

705M.— (1) Every REIT, or principal company in respect of a group REIT, shall, in respect of each accounting period, by 28 February in the year following the year in which the accounting period ends, make a statement to the Revenue Commissioners in electronic format approved by them, confirming that the conditions in section 705D have been met in relation to the REIT or group REIT, as the case may be, throughout the accounting period specified in the statement.

(2) Where a REIT or principal company in respect of a group REIT, as the case may be, cannot make the statement referred to in subsection (1), it shall notify the authorised officer of the Revenue Commissioners and that notification shall—

(a) state the date or dates on which the condition or conditions first ceased to be met and the date or dates (if any) on which the condition or conditions was or were met again,

(b) give a description of the respects in which the condition or conditions was or were not met, and

(c) give details of the steps (if any) taken to prevent a recurrence of the condition or conditions not being met.

(3) Where a REIT, or principal company in respect of a group REIT—

(a) within a reasonable time determined by the authorised officer, fails to secure that a condition referred to in subsection (2) is met, or

(b) fails to make a statement required under subsection (1),

then, the Revenue Commissioners may treat the REIT or group REIT, as the case may be, as having ceased to be a REIT or group REIT at the end of the accounting period immediately prior to the accounting period in which the failure to meet the condition, or make the statement required, began and may apply the provisions of section 705O.

(4) Where a REIT, or principal company in respect of a group REIT—

(a) makes an incorrect or incomplete statement under subsection (1), or

(b) fails, without reasonable excuse, to make a statement under that subsection,

then, the REIT, or principal company in respect of a group REIT, as the case may be, shall be liable to a penalty of €3,000. For the purposes of the recovery of a penalty under this subsection, section 1061 shall apply in the same manner as it applies for the purposes of the recovery of a penalty under any of the sections referred to in that section.

Breach of conditions regarding distributions.

705N.— Where for an accounting period a REIT or group REIT does notcomply with the provisions of section 705B(1)(b)(iv) in respect of the requirement to distribute at least 85 per cent of its property income—

(a) the REIT or the principal company of the group REIT, as the case may be, shall be charged to corporation tax under Case IV of Schedule D in respect of an amount calculated by subtracting the amount of property income distributed in respect of that accounting period from the amount equal to 85 per cent of the property income of that accounting period, and

(b) no loss, deficit, expense or allowance may be set off against the first-mentioned amount in paragraph (a) in charging that amount to corporation tax,

but, where a company is restricted from making a distribution by reason of any provision of the Companies Acts, regard shall be had to such restriction in determining the amount, if any, chargeable to tax by virtue of paragraph (a).

Cessation Notice.

705O.— (1) Subsection (2) shall apply if a REIT or group REIT gives a notice in writing to the Revenue Commissioners specifying a date from which it will cease to be a REIT or group REIT, as the case may be.

(2) The company or group shall cease to be a REIT or group REIT, as the case may be, at the date specified in the notice referred to in subsection (1).

(3) The specified date shall be a date on or after the date of the notice referred to in subsection (1).

(4) In accordance with section 705M(3), the authorised officer may by written notice state that any company or group shall cease to be a REIT or group REIT, as the case may be.

(5) The date the company or group ceases to be a REIT or group REIT, as the case may be, shall be a date specified by the authorised officer in the notice referred to in subsection (4).

(6) Where a notice is given under subsection (4), the REIT or group REIT to which the notice is given may, within 30 days from the date of such notice, appeal to the Appeal Commissioners and the Appeal Commissioners shall hear the appeal in all respects as if it were an appeal against an assessment.

(7) The notice of appeal referred to in subsection (6) shall be given in writing to the authorised officer.

Effect of cessation.

705P.— (1) Where a notice is given under sections 705O(1) or (4), a company or group which has ceased to be a REIT or group REIT, as the case may be, is to be treated for corporation tax purposes as having ceased, at the date specified in the notice of cessation, to be a REIT or group REIT.

(2) Where a notice is given under sections 705O(1) or (4), the assets of the REIT or group REIT, as the case may be, shall be deemed to have been disposed of by the REIT or the members of the group REIT, as the case may be, immediately before the cessation date and reacquired by the post-cessation company or members of the group, as the case may be, immediately after the cessation date, at the market value on that cessation date.

Anti-avoidance provision.

705Q.— (1) This Part shall not apply to any transaction engaged in by, or on behalf of, a REIT or group REIT, or to which it is directly, or indirectly, a party unless the transaction has been undertaken for bona fide commercial reasons and does not form part of any arrangement or scheme of which the main purpose, or one of the main purposes, is the avoidance of liability to tax.

(2) Where appropriate, a reference in subsection (1) to a REIT or a group REIT includes a reference to a company or a group before it has become, or after it has ceased to be, a REIT or a group REIT and, in the case of a group REIT, a company before it has become, or after it has ceased to be, a member of the group REIT.”.

42. Tax treatment of investment limited partnerships.

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

(a) in section 246(1), in the definition of “investment undertaking”, by deleting “or” in paragraph (c), by substituting “(inserted by the Finance Act 2005), or” for “(inserted by the Finance Act 2005);” in paragraph (d) and by inserting the following after paragraph (d):

“(e) an investment limited partnership within the meaning of section 739J;”,

(b) in section 734(1)(a), in the definition of “collective investment undertaking”, by substituting “(iii) a limited partnership (other than an investment limited partnership within the meaning of the Investment Limited Partnerships Act 1994) which—” for “(iii) a limited partnership which—”,

(c) in section 739B(1) in the definition of “investment undertaking”—

(i) in paragraph (b) by inserting “and” after “issued pursuant to the relevant Regulations,”,

(ii) by deleting “and” before paragraph (d), and

(iii) by deleting paragraph (d),

(d) in section 739D(6), by inserting the following paragraph after paragraph (c):

“(cc) is an investment limited partnership within the meaning of section 739J which has made a declaration to the investment undertaking in accordance with paragraph 4A of Schedule 2B,”,

(e) by inserting the following section after section 739I:

“Investment limited partnerships.

739J.— (1) (a) In this section ‘investment limited partnership’ means an investment limited partnership within the meaning of the Investment Limited Partnerships Act 1994.

(b) For the purposes of this section the definitions of ‘relevant gains’, ‘relevant income’, ‘relevant payment’, ‘relevant profits’, ‘unit’ and ‘unit holder’ shall apply, with any necessary modifications, to an investment limited partnership as they apply to an investment undertaking.

(2) (a) Notwithstanding anything in the Acts and subject to subsection (3), an investment limited partnership shall not be chargeable to tax in respect of relevant profits.

(b) For the purposes of the Acts, relevant income and relevant gains in relation to an investment limited partnership shall be treated as arising, or as the case may be, accruing, to each unit holder of the investment limited partnership 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 limited partnership without passing through the hands of the investment limited partnership.

(3) Every investment limited partnership shall in respect of each year of assessment, on or before 28 February in the year following the year of assessment, make a statement (including, where it is the case, a statement with a nil amount) to the Revenue Commissioners in electronic format approved by them which in respect of each year of assessment—

(a) specifies the total amount of relevant profits arising to the investment limited partnership in respect of units in the investment limited partnership, and

(b) specifies in respect of each person who is a unit holder—