Legalize / Ireland / Act

Finance Act 2021

Type Act

Publication 2021-12-21

State In force

Source Irish Statute Book

articles 87

Reform history JSON API

Chapter 1 Interpretation

1. **Interpretation (Part 1)**

1. In this Part, “Principal Act” means the Taxes Consolidation Act 1997.

2. Amendment of section 531AN of Principal Act (rate of charge)

2. (1) Section 531AN of the Principal Act is amended—

(a) in subsection (3), by the substitution of “€21,295” for “€20,687”,

(b) in subsection (4), by the substitution of “2023” for “2022”, and

“Part 1

Part of aggregate income	Rate of universal social charge
(1)	(2)
The first €12,012	0.5 per cent
The next €9,283	2 per cent
The next €48,749	4.5 per cent
The remainder	8 per cent

”.

(2) Subsection (1) applies for the year of assessment 2022 and each subsequent year of assessment.

Chapter 3 Income Tax

3. Deduction in respect of certain expenses of remote working

3. (1) Chapter 2 of Part 5 of the Principal Act is amended by the insertion of the following section after section 114:

“114A. (1) In this section—

‘qualifying residence’ means a residential premises that is also used by a remote worker to perform the duties of his or her office or employment;

‘relevant expenses’, in relation to a remote worker, means expenses incurred and defrayed by the remote worker in respect of the provision of electricity, heating or an internet service in his or her qualifying residence;

‘remote worker’ means a person who is the holder of an office or employment of profit and who performs the duties of his or her office or employment—

(a) by working from his or her residential premises on a full-time or part-time basis, or

(b) by working some of his or her normal working time from his or her residential premises, with the remainder of that normal working time being spent in his or her normal place of employment or in some other place;

‘residential premises’ means, a dwelling or part of a dwelling which is occupied by an individual as his or her residence;

‘specified amount’, in relation to a year of assessment, means the amount of expenditure which qualifies for income tax relief in accordance with this section.

(2) Where in any year of assessment a remote worker, having made a claim in that behalf, proves that he or she has incurred and defrayed relevant expenses out of the emoluments of the office or employment of profit, he or she shall be entitled to claim a deduction (in this section referred to as ‘remote working relief’) from the emoluments to be assessed in respect of the specified amount determined in accordance with subsection (4).

(3) Subject to this section, where, for a year of assessment, an individual (in this section referred to as the ‘claimant’), on making a claim in that behalf, proves that relevant expenses were incurred by—

(a) in a case in which the claimant is a married person assessed to tax for the year of assessment in accordance with section 1017 or a civil partner assessed to tax for the year of assessment in accordance with section 1031C, the claimant or his or her spouse or civil partner, or

(b) in any other case, the claimant,

then the claimant shall be entitled to remote working relief.

(4) The specified amount, in relation to relevant expenses incurred by a remote worker in any year of assessment, shall be 30 per cent of an amount determined by the following formula:

where—

A is the amount of the relevant expenses incurred and defrayed by the remote worker in the year of assessment,

B is the number of days in the year of assessment the remote worker performed the duties of his or her office or employment of profit from his or her qualifying residence,

C is the number of days in the year of assessment, and

D is any amount reimbursed or to be reimbursed, directly or indirectly to the remote worker in relation to those expenses by his or her employer.

(5) Where the cost of incurring and defraying relevant expenses is shared by 2 or more persons (other than a person referred to in subsection (3)(a)) residing in a qualifying residence in a year of assessment, then, for the purposes of any claim for relief under this section, the total cost of incurring and defraying those expenses in the year of assessment shall be apportioned between each of the persons concerned by reference to the amount of those expenses that were defrayed by each such person.

(6) On making a claim under this section, a claimant shall provide to the Revenue Commissioners, through such electronic means as the Revenue Commissioners make available, full particulars of the relevant expenses, including—

(a) a copy of the statement issued by the service provider in respect of the service provided to the qualifying residence that constitutes the relevant expenses, and

(b) any other relevant information that may reasonably be required by the Revenue Commissioners to determine whether the requirements of this section are met.

(7) Where relief is given under this section to any individual in respect of relevant expenses, no relief or deduction under any other provision of the Income Tax Acts shall be given or allowed in respect of those relevant expenses.”.

(2) This section shall have effect for the year of assessment 2022 and each subsequent year of assessment.

4. Exemption in respect of Pandemic Placement Grant

4. Chapter 1 of Part 7 of the Principal Act is amended by the insertion of the following section after section 192H:

“192I. (1) In this section—

‘Minister’ means the Minister for Health;

‘qualifying grant’ means a grant, generally referred to and commonly known as the Pandemic Placement Grant, which is made periodically by or on behalf of the Minister to a qualifying student;

‘qualifying student’ means an undergraduate student who is registered on the candidate register maintained by the Nursing and Midwifery Board of Ireland and who is undertaking what is generally referred to and commonly known as a Supernumerary Clinical Placement or an Internship Clinical Placement as part of a qualifying course;

‘qualifying course’ means an undergraduate programme in nursing or midwifery, approved by the Nursing and Midwifery Board of Ireland under section 85(2) of the Nurses and Midwives Act 2011.

(2) Subject to subsection (3), a qualifying grant made to a qualifying student on or after 1 January 2021 and on or before 31 December 2022 shall be exempt from income tax and shall not be reckoned in computing the total income of the qualifying student for the purposes of the Income Tax Acts.

(3) This exemption shall apply to a maximum amount of €2,100 for each qualifying student in the year of assessment to which it relates.”.

5. Amendment of section 477C of Principal Act (Help to Buy)

5. Section 477C of the Principal Act is amended—

(a) in subsection (1), by the substitution in the definition of “qualifying period” of “2022” for “2021”,

(b) in subsection (5A), by the substitution of “2022” for “2021”,

(d) in subsection (16)(a)—

(i) by the substitution in subparagraph (ii) of “2022” for “2021”, and

(ii) by the substitution in subparagraph (iii) of “2022” for “2021”,

and

(e) in subsection (25), by the substitution of “2022” for “2021”.

6. Rate of charge and personal tax credits

6. As respects the year of assessment 2022 and subsequent years of assessment, the Principal Act is amended—

(a) in section 15—

(i) in subsection (3)(i), by the substitution of “€27,800” for “€26,300”, and

(ii) by the substitution of the following Table for the Table to that section:

“TABLE

PART 1

Part of taxable income	Rate of tax	Description of rate
(1)	(2)	(3)
The first €36,800	20 per cent	the standard rate
The remainder	40 per cent	the higher rate

PART 2

Part of taxable income	Rate of tax	Description of rate
(1)	(2)	(3)
The first €40,800	20 per cent	the standard rate
The remainder	40 per cent	the higher rate

PART 3

Part of taxable income	Rate of tax	Description of rate
(1)	(2)	(3)
The first €45,800	20 per cent	the standard rate
The remainder	40 per cent	the higher rate

”,

(b) in section 461—

(i) in paragraph (a), by the substitution of “€3,400” for “€3,300”,

(ii) in paragraph (b), by the substitution of “€3,400” for “€3,300”, and

(iii) in paragraph (c), by the substitution of “€1,700” for “€1,650”,

(d) in section 472AB—

(i) in subsection (2), by the substitution of “€1,700” for “€1,650” in each place where it occurs, and

(ii) in subsection (3), by the substitution of “€1,700” for “€1,650” in each place where it occurs.

7. Amendment of section 118 of Principal Act (benefits in kind: general charging provision)

7. (1) Section 118 of the Principal Act is amended by the insertion of the following subsections after subsection (5H):

“(5I) (a) Subject to paragraph (b), subsection (1) shall not apply to expense incurred by the body corporate in or in connection with the provision for a director or employee of a qualifying medical check-up, where—

(i) qualifying medical check-ups are made available generally by the body corporate to all directors and employees of that body corporate, or

(ii) the director or employee is required by the terms of his or her office or employment to undergo the qualifying medical check-up.

(b) A director or employee shall not, by virtue of this subsection, be relieved from a charge to income tax under subsection (1) more than once in any year of assessment, unless subparagraph (ii) of paragraph (a) applies.

‘medical practitioner’ means a person who is registered in the register established under section 43 of the Medical Practitioners Act 2007;

‘qualifying medical check-up’ means a medical examination carried out by a medical practitioner to test a person’s state of health.

(5J) (a) Subsection (1) shall not apply to health expenses incurred by the body corporate in or in connection with the provision for a director or employee of health care, where health care is made available generally by the body corporate to all directors and employees of that body corporate.

(b) In this subsection, ‘health care’ and ‘health expenses’ have the same meanings respectively as they have in section 469.

(5K) (a) Subsection (1) shall not apply to expense incurred by the body corporate in or in connection with the provision for a director or employee of a Covid-19 test where—

(i) the test is necessary for the performance of the duties of the office or employment of the director or employee, and

(ii) Covid-19 tests are made available by the body corporate to all directors and employees of that body corporate where necessary for the performance of the duties of the office or employment of those directors and employees.

(b) In this subsection—

‘Covid-19’ means a disease caused by infection with the virus SARS-CoV-2 and specified as an infectious disease in accordance with Regulation 6 of, and the Schedule to, the Infectious Diseases Regulations 1981 (S.I. No. 390 of 1981) or any variant of the disease so specified as an infectious disease in those Regulations;

‘Covid-19 test’ means a relevant test, administered in accordance with the instructions of the manufacturer of the test, the purpose of which is to detect the presence of Covid-19 in the person to whom the test is administered;

‘rapid antigen test’ means a test that relies on detection of viral proteins (antigens) using a lateral flow immunoassay that gives results in less than 30 minutes;

‘relevant test’ means—

(a) an RT-PCR test,

(b) a rapid antigen test of a kind—

(i) included, for the time being, in the common list of Covid-19 rapid antigen tests agreed in accordance with the Council Recommendation of 21 January 2021[^1], and

(ii) that complies with the requirements of Directive 98/79/EC of the European Parliament and of the Council of 27 October 1998[^2] or, as appropriate, Regulation (EU) 2017/746 of the European Parliament and of the Council of 5 April 2017[^3],

(c) a rapid antigen test of a kind that complies with regulatory requirements under the laws of a state other than a Member State that are equivalent to the requirements referred to in paragraph (b)(ii);

‘RT-PCR test’ means a reverse transcription polymerase chain reaction test.

(5L) (a) Subsection (1) shall not apply to expense incurred by the body corporate, or incurred by a director or employee and reimbursed by the body corporate, in or in connection with the provision for a director or employee of an influenza vaccine, where influenza vaccines are made available generally by the body corporate to all directors and employees of that body corporate.

(b) In this subsection, ‘influenza vaccine’ means an influenza vaccine specified in column 1 of the Eighth Schedule to the Medicinal Products (Prescription and Control of Supply) Regulations 2003 (S.I. No. 540 of 2003) and administered in accordance with the requirements specified in columns 2 to 6 of that Schedule opposite the mention of the product concerned.

(c) Relief shall not be given under section 469 in respect of the expense referred to in paragraph (a) incurred by a director or employee and reimbursed by the body corporate.”.

(2) Subsection (1) shall be deemed to have come into operation on 1 January 2021.

8. Amendment of section 127B of Principal Act (tax treatment of flight crew in international traffic)

8. Section 127B of the Principal Act is amended by the insertion of the following subsection after subsection (1):

“(1A) Subsection (1) shall not apply for the year of assessment 2022 or any subsequent year of assessment where, for that year of assessment an individual—

(a) is not resident in the State,

(b) is resident for the purposes of tax, by virtue of the law of the territory next-mentioned in this paragraph, in a territory with the government of which arrangements are for the time being in force by virtue of section 826(1), and

(c) is subject to tax on the income referred to in subsection (1) in a territory with the government of which arrangements are for the time being in force by virtue of section 826(1).”.

9. Benefit-in-kind: emissions-based calculations

9. (1) Section 121 of the Principal Act is amended, in subsection (4A), by the insertion of the following paragraph after paragraph (a):

“(aa) Notwithstanding paragraph (a), where a car in respect of which this subsection applies is an electric vehicle, the cash equivalent of the benefit of the car ascertained under paragraph (a) shall be computed on the original market value of the car reduced by:

(i) €35,000 in respect of a car made available in the period 1 January 2023 to 31 December 2023;

(ii) €20,000 in respect of a car made available in the period 1 January 2024 to 31 December 2024;

(iii) €10,000 in respect of a car made available in the period 1 January 2025 to 31 December 2025.”.

(2) Section 121A of the Principal Act is amended in subsection (2)(b)—

(a) in subparagraph (v)(III), by the substitution of “employment,” for “employment, and”,

(b) in subparagraph (vi), by the substitution of “€50,000, and” for “€50,000.”, and

“(vii) where a van is an electric vehicle, the cash equivalent of the benefit of the van ascertained under subsection (3) shall be computed on the original market value of the van reduced by:

(I) €35,000 in respect of a van made available in the period 1 January 2023 to 31 December 2023;

(II) €20,000 in respect of a van made available in the period 1 January 2024 to 31 December 2024;

(III) €10,000 in respect of a van made available in the period 1 January 2025 to 31 December 2025.”.

10. Amendment of section 472BB of Principal Act (sea-going naval personnel credit)

10. Section 472BB of the Principal Act is amended in subsection (3)—

(a) by the substitution of “2021 or 2022” for “2021”, and

(b) by the substitution, in paragraph (a), of “credit of €1,500 in relation to that year of assessment” for “credit of €1,500”.

11. Amendment of Schedule 13 to Principal Act (accountable persons for purposes of Chapter 1 of Part 18)

11. Schedule 13 to the Principal Act is amended—

(a) by the deletion of paragraphs 56 and 122,

(b) by the insertion of the following paragraph after paragraph 204:

“205. Data Protection Commission.”,

and

(i) in paragraph 39, of “Rásaíocht Con Éireann” for “Bord na gCon”, and

(ii) in paragraph 179, of “Office of the Financial Services and Pensions Ombudsman” for “Financial Services Ombudsman’s Bureau”.

12. Retirement benefits: amendment of death-in-service provision

12. Section 772 of the Principal Act is amended—

(a) in subsection (3), by the substitution of the following paragraph for paragraph (b):

“(b) that any pension or benefit for any widow, widower, surviving civil partner, children or dependants, or children of the surviving civil partner, of an employee who dies before retirement shall be provided for as either—

(i) a pension or pensions payable on the employee’s death of an amount that does not or, as the case may be, do not in aggregate exceed any pension or pensions which, consonant with the condition in paragraph (a), could have been provided for the employee on retirement on attaining the specified age, if the employee had continued to serve until the employee attained that age at an annual rate of remuneration equal to the employee’s final remuneration, or

(ii) benefits transferred to an approved retirement fund on the employee’s death of an amount that does not or, as the case may be, do not in aggregate exceed any benefit which, consonant with the condition in paragraph (a), could have been provided for the employee on retirement on attaining the specified age, if the employee had continued to serve until the employee attained that age at an annual rate of remuneration equal to the employee’s final remuneration;”,

and

(b) by the insertion of the following subsection after subsection (3I):

“(3J) Where benefits are provided in accordance with subsection (3)(b)(ii), sections 784A and 784B shall apply—

(a) as if the transfer of the benefits were the exercise of an option in accordance with section 784(2A), and

(b) with any necessary modifications, as if—

(i) any reference in those sections to the person lawfully carrying on in the State the business of granting annuities on human life were a reference to the trustees of the retirement benefit scheme, and

(ii) any reference in those sections to the annuity contract were references to the retirement benefit scheme.”.

13. Retirement benefits: removal of 15 year rule

13. Section 772 of the Principal Act is amended in subsection (3D) by the substitution of the following paragraph for paragraph (a):

“(a) a member’s entitlements under the scheme, other than an amount referred to in paragraph (b), may, either on the member’s changing employment or on the scheme being wound up, be transferred to one or more than one PRSA to which that member is the contributor if benefits have not become payable to the member under the scheme,”.

14. Retirement benefits: removal of Approved Minimum Retirement Fund (AMRF)

14. (1) Chapter 1 of Part 30 of the Principal Act is amended in section 772—

(a) by the substitution, in subsection (3A)(a), of the following for the construction of “B”:

“B is the amount or value of assets which the trustees, administrators or other person charged with the management of the scheme (in this section referred to as ‘the trustees’) would, if the assumptions in paragraph (b) were made, apply in purchasing an annuity payable to the relevant individual with effect from the date of the exercise of the option.”,

and

(b) in subsection (3B)(a)—

(i) by the deletion of “, 784C, 784D”,

(ii) by the substitution, in subparagraph (i), of “scheme, and” for “scheme,”,

(iii) by the substitution, in subparagraph (ii), of “scheme.” for “scheme,” and

(iv) by the deletion of subparagraph (iia).

(2) Chapter 2 of Part 30 of the Principal Act is amended—

(a) by the substitution, in section 784(2A), of the following for the construction of “B”:

“B is the amount or value of assets which the person with whom the contract is made is to apply in purchasing an annuity payable to the individual with effect from the date of the exercise of the said option.”,

(b) in section 784C—

(i) by the deletion of subsections (2) to (7), and

(ii) by the insertion of the following subsection after subsection (7):

“(7A) On 1 January 2022 an approved minimum retirement fund shall, thereupon, become an approved retirement fund and section 784A and subsections (1) and (5) of section 784B shall apply accordingly.”,

and

(i) by the deletion of subsections (1) to (3), and

(ii) by the insertion of the following subsection after subsection (5):

“(6) On or after 1 January 2022, a qualifying fund manager shall not accept any assets into an approved minimum retirement fund.”.

(3) Chapter 2A of Part 30 of the Principal Act is amended—

(a) in section 787H—

(i) by the substitution of the following subsection for subsection (2):

“(2) The assets that a PRSA administrator shall transfer to an approved retirement fund in accordance with subsection (1) shall be the assets available in the PRSA at the time the election under that subsection is made less any lump sum the PRSA administrator is permitted to pay without deduction of tax in accordance with section 787G(3)(a).”,

and

(ii) by the substitution, in subsection (3), of “sections 784A and 784B” for “sections 784A to 784D”,

and

(b) in section 787K(1)(c)(i)—

(i) by the substitution, in clause (II), of “section 787G(3)(a), or” for “section 787G(3)(a),”,

(ii) by the substitution of the following clause for clause (III):

“(III) assets transferred to an approved retirement fund in accordance with section 787H(1),”,

and

(iii) by the deletion of clause (IV).

(4) (a) Subject to paragraph (b), this section shall come into operation on and from the date of the passing of this Act.

(b) Paragraphs (b)(i) and (c)(i) of subsection (2) shall come into operation on 1 January 2022.

15. Retirement benefits: amendment of section 774 of Principal Act (certain approved schemes: exemptions and reliefs)

15. Section 774 of the Principal Act is amended, in subsection (6)(aa)(iii), by the insertion of “or of a company for the benefit of whose employees the contributions are paid under the terms of that agreement” after “parties to that agreement”.

Chapter 4 Income Tax, Corporation Tax and Capital Gains Tax

16. Amendment of section 97A of Principal Act (pre-letting expenditure in respect of vacant premises)

16. Section 97A of the Principal Act is amended, in subsection (2), by the substitution of “31 December 2024” for “31 December 2021”.

17. Amendment of section 261 of Principal Act (taxation of relevant interest, etc.)

17. Section 261 of the Principal Act is amended—

(a) by the substitution, in paragraph (c)(i), of “person (other than a company)” for “person (being an individual)”,

(b) by the substitution, in paragraph (c)(ii)(I), of “paragraph (d)” for “section 59”, and

“(d) where relevant interest is to be taken into account in computing the total income of a person (other than a company) for any year of assessment, then, for the purpose of charging that total income to tax at the rate or rates of tax charged for that year of assessment, the following provisions shall apply—

(i) the relevant interest shall be regarded as income chargeable to tax under Case IV of Schedule D and shall be charged accordingly, and

(ii) in determining the amount of tax payable on that relevant interest, credit shall be given for the appropriate tax deducted from the relevant interest and the amount of the credit shall be the amount of such appropriate tax.”.

18. Non-resident landlords

18. The Principal Act is amended—

(a) in section 25—

(i) in subsection (1), by the substitution of “Subject to subsection (2A), a company not resident” for “A company not resident”, and

(ii) by the insertion of the following subsection after subsection (2):

“(2A) (a) Where a company not resident in the State is chargeable to tax under Case V of Schedule D in respect of any profits or gains, that company shall be chargeable to corporation tax on those profits or gains.

(b) Where a company not resident in the State disposes of an asset in respect of which the company was chargeable to tax under Case V of Schedule D on any profits or gains therefrom, or would have been but for an insufficiency of such profits or gains, the company shall, subject to section 649, not be chargeable to capital gains tax in respect of gains accruing to it on the disposal so that it is chargeable in respect of them to corporation tax.

(b) in section 308, by the insertion of the following subsections after subsection (2):

“(2A) Where a company not resident in the State—

(a) pursuant to section 25(2A), comes within the charge to corporation tax under Case V of Schedule D on 1 January 2022, and

(b) was entitled, immediately prior to that date, under section 305(1)(a), to carry forward an amount of an allowance to a year of assessment subsequent to the year of assessment for which the allowance was made,

then—

(i) subsection (3) shall apply to the amount of the allowance referred to in paragraph (b) as if it were an amount of allowance unallowed from an accounting period ending on 31 December 2021, and

(ii) section 305(1)(a) shall not apply to the amount of allowance to which subsection (3) shall apply in accordance with paragraph (i).

(2B) Where—

(a) a company not resident in the State comes within the charge to corporation tax under Case V of Schedule D pursuant to section 25(2A) on 1 January 2022, and

(b) a balancing allowance or balancing charge is made to or on, as the case may be, the company in respect of an allowance made to the company in a chargeable period ending on or before 31 December 2021,

the amount of the balancing allowance or balancing charge, as the case may be, shall be adjusted as follows:

Badj = (B x 0. 2) / R

where—

Badj is the adjusted amount of the balancing allowance or balancing charge, as the case may be,

B is the balancing allowance or balancing charge, as the case may be, and

R is the rate specified in section 21A(3)(a).”,

“(2A) Where a company not resident in the State—

(a) pursuant to section 25(2A), comes within the charge to corporation tax under Case V of Schedule D on 1 January 2022,

(b) was entitled, prior to that date, under section 384(2), to carry forward an excess to a year of assessment subsequent to the year of assessment in which the excess arose, and

then—

(i) subsection (2) shall apply to the amount of excess referred to in paragraph (c) as if it were a portion of excess for which relief had not been given under that subsection for a previous accounting period ending on 31 December 2021, and

(ii) section 384(2) shall not apply to the amount of excess to which subsection (2) shall apply in accordance with paragraph (i).”,

and

(d) in section 959AS—

(i) in subsection (1), by the substitution of “Subject to subsection (1A), preliminary tax appropriate to an accounting period” for “Preliminary tax appropriate to an accounting period”, and

(ii) by the insertion of the following subsection after subsection (1):

“(1A) Where a company, that comes within the charge to corporation tax under Case V of Schedule D pursuant to section 25(2A) on or after 1 January 2022, has an accounting period ending on or before 30 June 2022, preliminary tax appropriate to that accounting period is due and payable—

(a) not later than 21 June 2022, or

(b) where payment of preliminary tax is made by such electronic means as are required by the Revenue Commissioners, not later than 23 June 2022.”.

19. Amendment of certain tax exemption provisions of Principal Act

19. (1) The Principal Act is amended—

(a) in Schedule 4, by the insertion of the following paragraph after paragraph 1:

“1A. The Approved Housing Bodies Regulatory Authority.”,

and

(b) in Part 1 of Schedule 15, by the insertion of the following paragraph after paragraph 46:

“47. Western Development Commission.”.

(2) Subsection (1)(a) shall be deemed to have come into operation on 1 February 2021.

(3) Subsection (1)(b) shall be deemed to have come into operation on 1 February 1999.

20. Certain profits of micro-generation of electricity

20. Chapter 1 of Part 7 of the Principal Act is amended by the insertion of the following section after section 216C:

“216D. (1) In this section—

‘Act of 1999’ means the Electricity Regulation Act 1999;

‘generate’ has the same meaning as in the Act of 1999;

‘micro-generation of electricity’ means the use of renewable, sustainable or alternative forms of energy to generate electricity at a qualifying residence;

‘qualifying person’ means an individual who purchases electricity for own use;

‘qualifying residence’, in relation to a qualifying person for a year of assessment, means a residential premises situated in the State which is occupied by the qualifying person as his or her sole or main residence during the year of assessment and land which the qualifying person has for his or her own occupation and enjoyment with that residence as its garden or grounds;

‘residential premises’ means a building or part of a building used as a dwelling;

‘renewable, sustainable or alternative forms of energy’ has the same meaning as in the Act of 1999;

‘relevant period’ means the period commencing on 1 January 2022 and ending on 31 December 2024.

(2) This subsection applies to profits or gains, chargeable to income tax under Case IV of Schedule D, arising to a qualifying person, in the relevant period, from the micro-generation of electricity.

(3) So much of the profits or gains to which subsection (2) applies, arising to a qualifying person in a year of assessment, as do not exceed €200 shall be exempt from income tax and shall not be reckoned in computing total income for the purposes of the Income Tax Acts.”.

21. Amendment of section 285A of Principal Act (acceleration of wear and tear allowances for certain energy-efficient equipment)

21. (1) Section 285A of the Principal Act is amended—

(a) in subsection (1), by the insertion of the following definition:

“ ‘fossil fuel’ means coal, oil, natural gas, peat or any derivative thereof intended for use in the production of energy by combustion;”,

and

(b) in subsection (3)—

(i) in paragraph (a), by the deletion of “and”,

(ii) in paragraph (b), by the substitution of “the Table, and” for “the Table.”, and

(iii) by the insertion of the following paragraph after paragraph (b):

“(c) does not operate on fossil fuel, other than equipment that operates on electricity generated from using such fuel.”.

(2) Subsection (1) shall apply to capital expenditure incurred on or after 1 January 2022.

22. Amendment of section 285C of Principal Act (acceleration of wear and tear allowances for gas vehicles and refuelling equipment)

22. (1) Section 285C of the Principal Act is amended in subsection (1)—

(a) in the definition of “gas refuelling station”, by the substitution of “gaseous fuel or hydrogen fuel is supplied to a gas-powered vehicle” for “gaseous fuel is supplied to a gas vehicle”,

(b) by the substitution of the following definition for the definition of “gas vehicle”:

“ ‘gas-powered vehicle’ means a mechanically propelled road vehicle which is fuelled by gaseous fuel or hydrogen fuel;”,

“ ‘hydrogen’ means the chemical element falling within CN code 2804 10 00;

‘hydrogen fuel’ means gaseous or cryogenic liquid hydrogen of a fuel quality that complies with ISO 14687:2019 or SAE J2719;”,

(d) by the insertion of the following definition after the definition of “liquefied natural gas”:

“ ‘pre-cooling device’ means equipment, which complies with ISO 19880-1:2020, used for the process of cooling hydrogen fuel prior to dispensing of the fuel;”,

(e) in the definition of “qualifying vehicle”, by the substitution of “gas-powered vehicle” for “gas vehicle”,

(f) by the substitution of the following definition for the definition of “refuelling equipment”:

“ ‘refuelling equipment’ means—

(a) a storage tank for gaseous fuel or hydrogen fuel,

(b) a compressor, pump, control or meter used for the purposes of refuelling gas-powered vehicles,

(d) equipment for supplying gaseous fuel or hydrogen fuel to the fuel tank of a gas-powered vehicle;”,

and

(g) in the definition of “relevant period”, by the substitution of “31 December 2024” for “31 December 2021”.

(2) Subsection (1) shall apply to qualifying expenditure incurred on or after 1 January 2022.

23. Amendment of section 285D of Principal Act (acceleration of wear and tear allowances for farm safety equipment)

23. Section 285D of the Principal Act is amended—

(a) in subsection (1) by the insertion of the following definition after the definition of “SME”:

“ ‘tax reference number’ has the same meaning as it has in section 891B(1);”,

(b) in subsection (3)—

(i) in paragraph (b), by the substitution of “applicant;” for “applicant; and”, and

(ii) by the insertion of the following paragraph after paragraph (b):

“(ba) the tax reference number of the applicant;”,

(i) in paragraph (c), by the substitution of “issued;” for “issued; and”, and

(ii) by the insertion of the following paragraph after paragraph (c):

“(ca) the tax reference number of the applicant;”,

(d) in subsection (7), by the substitution of “qualifying certificates issued under subsection (4) and all qualifying certificates deemed to be cancelled under subsection (13A)” for “qualifying certificates issued”,

(e) by the insertion of the following subsection after subsection (13):

“(13A) Where two or more certificates stand issued under subsection (4) to a person in respect of an item of qualifying equipment then—

(a) only the certificate issued in respect of the first application made by the person under subsection (2) in respect of the item of qualifying equipment shall be treated as a qualifying certificate for the purposes of subsection (14), and

(b) any other certificate standing issued under subsection (4) to that person in respect of that item of qualifying equipment is deemed to be cancelled in so far as it relates to that item of qualifying equipment and shall not be treated as a qualifying certificate for the purposes of subsection (14).”,

(f) in subsection (14), by the substitution of “Subject to subsections (13A), (15) and (16)” for “Subject to subsections (15) and (16)”, and

(g) in subsection (17), by the substitution of “relief granted under this section” for “relief granted”.

24. Amendment of Part 23 of Principal Act (farming and market gardening)

24. Part 23 of the Principal Act is amended—

(a) in section 657(7), by the deletion of all of the words from and including“; but where in the case of an individual” to the end of that subsection,

(b) in section 666(4), by the substitution of “2024” for “2021” in each place where it occurs,

(d) in section 667C—

(i) in subsection (2), by the substitution of the following paragraph for paragraph (b):

“(b) the following was substituted for subsection (4)—

‘(4) (a) A deduction shall not be allowed under this section in computing a company’s trading income for any accounting period which ends after 31 December 2022.

(b) Any deduction allowed by virtue of this section in computing the profits or gains of a trade of farming for an accounting period of a person other than a company shall not apply for any purpose of the Income Tax Acts for any year of assessment later than the year 2022.’,”,

and

(ii) in subsection (4), by the substitution of “31 December 2022” for “31 December 2021”.

25. Amendment of section 886 of Principal Act (obligation to keep certain records)

25. Section 886 of the Principal Act is amended, in subsection (2), by the insertion of the following paragraph after paragraph (a):

“(aa) Without prejudice to the generality of paragraph (a) and subsection (4)—

(i) the records shall include records and linking documents relating to any allowance, deduction, relief or credit (referred to in this paragraph as a ‘relevant amount’) taken into account in computing the amount of tax payable (within the meaning of section 959A), for the year of assessment or accounting period concerned,

(ii) the transactions, acts or operations giving rise to a relevant amount shall, for the purposes of subsection (4)(a)(i), be treated as transactions, acts or operations that were completed at the end of the year of assessment or accounting period for which a relevant amount is taken into account in computing the amount of tax payable (within the meaning aforesaid) for the year of assessment or accounting period concerned, and

(iii) the transactions, acts or operations giving rise to a relevant amount shall, for the purposes of subsection (4)(a)(ii), be treated as transactions, acts or operations that were completed at the end of the year of assessment or accounting period in which the return, in which the relevant amount is taken into account in computing the amount of tax payable (within the meaning aforesaid), has been delivered.”.

26. Amendment of Part 16 of Principal Act (relief for investment in corporate trades)

26. (1) Part 16 of the Principal Act is amended—

(a) in section 489, in paragraph (a) of the definition of “RICT group”, by the deletion of “but has since been disposed of”,

(b) in section 502, by the insertion of the following subsection after subsection (4):

“(5) In respect of shares issued on or after 1 January 2022, an amount equal to ten fortieths of the relief granted under subsection (2A) shall be withdrawn, unless in relation to a qualifying company and its qualifying subsidiaries—

(a) (i) the employment relevant number exceeds the employment threshold number by at least one qualifying employee, and

(ii) the relevant amount exceeds the threshold amount by at least the total emoluments of one qualifying employee in the year of assessment in which the subsequent period ends,

(b) the amount of expenditure on R&D+I incurred in the year of assessment in which the subsequent period ends exceeds the amount of expenditure on R&D+I incurred in the year of assessment prior to the year of assessment in which the subscription for eligible shares was made.”,

“(2) The individual, in each of the 3 years of assessment preceding the year of assessment that precedes the year of assessment in which that individual makes a relevant investment (being that individual’s first such investment), may have been in receipt of income other than income chargeable to tax under—

(a) Schedule E, or

(b) Case III of Schedule D in respect of profits or gains from an office or employment held or exercised outside the State,

not in excess of the lesser of—

(i) the aggregate of the amounts, if any, of that individual’s income chargeable to tax under Schedule E and Case III of Schedule D in respect of the profits or gains referred to in paragraphs (a) and (b), and

(ii) €50,000.”,

(d) in section 508(1), by the substitution of the following paragraph for paragraph (a):

“(a) makes a qualifying investment or has an amount of relief carried forward under this section in excess of—

(i) €100,000 in respect of which relief is available under section 507, or

(ii) the limits set out in section 502(3) in any other case,

or”,

(e) in section 508A—

(i) in subsection (1), by the insertion of “or qualifying investment fund,” after “designated fund”,

(ii) in subsection (3)(a)—

(I) by the substitution of the following for subparagraph (iv):

“(iv) where the investment is made through a designated fund or qualifying investment fund, the name, address and tax reference number of the designated fund or the qualifying investment fund, as the case may be,”,

and

(II) by the deletion of subparagraph (v),

and

(iii) by the substitution of the following subsection for subsection (4):

“(4) A qualifying company may not issue a statement of qualification in respect of a qualifying investment more than 4 months after the end of the year of assessment in which the shares were issued.”,

(f) in section 508C—

(i) in subsection (3)(a), by the deletion of subparagraph (iv), and

(ii) by the substitution of the following subsection for subsection (4):

“(4) A qualifying company may not issue a statement of qualification (SURE) in respect of a relevant investment more than 4 months after the end of the year of assessment in which the shares were issued.”,

(g) in section 508E(2), by the substitution of “not more than 4 months after the end of the year of assessment in which the shares were issued” for “within 60 days of the date referred to in section 508A(3)(a)(v)”,

(h) in section 508F(2), by the substitution of the following paragraph for paragraph (d):

“(d) where section 502(2)(b) applies, the date the conditions set out in section 508B(4)(a) are satisfied.”,

(i) in section 508G(2)—

(i) in paragraph (c), by the substitution of “investment.” for “investment;”, and

(ii) by the deletion of paragraph (d),

(j) by the substitution of the following title for the title to Chapter 7:

“Investment Funds”,

(k) by the insertion of the following section after section 508I:

“Qualifying investment funds

508IA. (1) In this Part—

‘alternative investment fund manager’ has the meaning assigned to it by the European Union (Alternative Investment Fund Managers) Regulations 2013 (S.I. No. 257 of 2013);

‘investment limited partnership’ means a partnership authorised in accordance with the Investment Limited Partnerships Act 1994;

‘limited partnership’ means a limited partnership registered in accordance with the Limited Partnerships Act 1907 and managed by an alternative investment fund manager in accordance with the European Union (Alternative Investment Fund Managers) Regulations 2013;

‘partnership agreement’ means any valid written agreement of the partners governed by the law of the State and subject to the exclusive jurisdiction of the courts of the State as to the affairs of a limited partnership or an investment limited partnership that is a qualifying investment fund for the purposes of this Part and the conduct of its business as may be amended, supplemented or restated from time to time;

‘qualifying investment fund’ means an investment limited partnership or a limited partnership that meets the requirements of subsection (2).

(2) A limited partnership or an investment limited partnership, as the case may be, shall be a qualifying investment fund for the purposes of this Part if—

(a) it is established under a partnership agreement and has as its principal business, to be expressed in the partnership agreement establishing the qualifying investment fund, the investment of its funds in accordance with a defined investment policy for the benefit of its investors, and

(b) under the terms of the partnership agreement it is provided that—

(i) the funds to be invested in eligible shares are to be invested without undue delay,

(ii) pending investment in eligible shares, any moneys subscribed for the purchase of shares are to be placed on deposit in a separate account with a bank licensed to transact business in the State,

(iii) any amounts received by means of dividends or interest are, subject to a commission in respect of management expenses at a rate not exceeding a rate which shall be specified in the partnership agreement under which the qualifying investment fund has been established, to be paid without undue delay to the partners,

(iv) any charges to be made by means of management or other expenses in connection with the establishment, running, winding down or termination of the qualifying investment fund shall be at a rate not exceeding a rate which shall be specified in the partnership agreement under which the qualifying investment fund is established,

(v) audited accounts of the qualifying investment fund are prepared annually and submitted to the Revenue Commissioners when requested,

(vi) the alternative investment fund manager, and any associate of that manager is not for the time being connected either directly or indirectly with any company whose shares comprise part of the qualifying investment fund,

(vii) any discounts on eligible shares received by the alternative investment fund manager of the qualifying investment fund are accepted solely for the benefit of the partners,

(viii) if a limit is placed on the size of the qualifying investment fund or a minimum amount for investment is stipulated, any subscriptions not accepted are to be returned without undue delay, and

(ix) no partner is allowed to have any eligible shares in any company in which the qualifying investment fund has invested transferred into his or her name until 4 years have elapsed from the date of the issue of the shares to the fund.”,

(l) in section 508J—

(i) in subsection (1)(a), by the substitution of “or by a person or persons having the management of a qualifying investment fund for the purposes of this Chapter (in this section referred to as the ‘fund managers’)” for “for the purposes of this Chapter (in this Part referred to as the ‘managers of a designated fund’)”,

(ii) in subsections (2), (3) and (4)(a), by the substitution of “fund managers” for “managers of a designated fund” in each place where it occurs, and

(iii) in subsection (4), by the insertion of “or the qualifying investment fund” after “designated fund” in each place where it occurs,

(m) in section 508P, by the insertion of the following subsection after subsection (8):

“(9) Where during a compliance period in respect of a qualifying investor’s investment in a qualifying company, that company redeems shares of that individual, where the compliance period for that share issue has ended, or purchases shares from that individual, where the compliance period for that share issue has ended (either of which is referred to in this subsection as ‘the redemption’), then, notwithstanding subsection (7), the relief that individual is entitled to, other than pursuant to section 503 or 507, shall not be reduced where—

(a) the most recent qualifying investment, in respect of which a claim for relief under this Part is made, in a company in the RICT group was more than 18 months prior to the date of the redemption,

(b) there is no qualifying investment, in respect of which a claim for relief under this Part is made, in a company in the RICT group within the period of 12 months after the date of the redemption, and

(c) there is no qualifying investment by that individual, in respect of which a claim for relief under this Part is made, in a company in the RICT group within the period of 5 years after the date of the redemption.”,

(n) in section 508U—

(i) by the insertion of the following subsection after subsection (3):

“(3A) Where any relief is to be withdrawn under section 502(5) that relief shall be withdrawn by the making of an assessment on the qualifying company to corporation tax under Case IV of Schedule D for the year of assessment following the year of assessment in which the subsequent period ends, in an amount equal to 0. 4 times the amount referred to in section 502(5).”,

and

(ii) in subsection (4)—

(I) in paragraph (b) by the deletion of “or”,

(II) in paragraph (c) by the substitution of “ends, or” for “ends.”, and

(III) by the insertion of the following paragraph after paragraph (c):

“(d) in the case of relief withdrawn in accordance with subsection (3A), the year of assessment following the year of assessment in which the subsequent period ends.”,

(o) in section 508Y(2)(c), by the substitution of “designated fund or qualifying investment fund, the managers of the designated fund or qualifying investment fund” for “designated fund, the managers of the designated fund”, and

(p) in section 508Z, by the substitution of “2024” for “2021” in each place where it occurs.

(2) Paragraphs (e)(ii)(II), (e)(iii), (f), (g), (h) and (i)(ii) of subsection (1) shall have effect as respects shares issued on or after 1 January 2022.

27. Amendment of Part 35A of Principal Act (transfer pricing)

27. (1) Part 35A of the Principal Act is amended in section 835A—

(a) by the substitution, in subsection (1), of the following definition for the definition of “relevant person”:

“ ‘relevant person’ in relation to an arrangement, means a person who is within the charge to tax in respect of profits or gains or losses, the computation of which profits or gains or losses takes account of the results of the arrangement, or would take account of the results of such an arrangement;”,

and

(b) by the substitution of the following subsection for subsection (3):

“(3) For the purposes of this Part, references to losses that are chargeable to tax are references to losses arising from an arrangement or relevant activities, a profit or gain arising from which would be chargeable to tax.”.

(2) Part 35A of the Principal Act is amended by the substitution of the following section for section 835E:

“Modification of basic rules on transfer pricing for arrangements between qualifying persons

835E. (1) For the purposes of this Part, a ‘qualifying person’, in relation to a chargeable period, means a person who—

(a) subject to paragraph (b)—

(i) is a supplier in relation to an arrangement and who for that chargeable period is chargeable to income tax or corporation tax under Schedule D, other than under Case I or II of Schedule D, in respect of the profits or gains or losses arising from that arrangement, or

(ii) is an acquirer in relation to an arrangement and who for that chargeable period is chargeable to income tax or corporation tax under Schedule D in respect of the profits or gains or losses arising from that arrangement,

(b) is resident in the State for the purposes of income tax for that chargeable period where the supplier or the acquirer is chargeable to income tax in respect of the profits or gains or losses arising from that arrangement, and

(2) (a) For the purposes of subsection (1)(a)(i), a supplier shall, for the chargeable period, be regarded as chargeable to income tax or corporation tax under Schedule D, other than under Case I or II of Schedule D, in respect of the profits or gains or losses arising from the arrangement concerned only where the consideration receivable by the supplier under that arrangement—

(i) is directly taken into account in computing the amount of profits or gains or losses of the supplier that are chargeable to income tax or corporation tax under Schedule D, other than under Case I or II of Schedule D, for the chargeable period, or

(ii) would be so taken into account if any consideration were receivable by the supplier under the arrangement.

(b) (i) For the purposes of subsection (1)(a)(ii), an acquirer shall, subject to subparagraph (ii), for the chargeable period, be regarded as chargeable to income tax or corporation tax under Schedule D, in respect of the profits or gains or losses arising from the arrangement concerned only where the consideration payable by the acquirer under that arrangement—

(I) is directly taken into account in computing the amount of profits or gains or losses of the acquirer that are chargeable to income tax or corporation tax under Schedule D for the chargeable period, or

(II) would be so taken into account if any consideration were payable by the acquirer under the arrangement.

(ii) For the purposes of subsection (1)(a)(ii), in the case of an acquirer to whom subparagraph (i) does not apply, the acquirer shall, for the chargeable period, be regarded as chargeable to—

(I) income tax under Schedule D in respect of the profits or gains or losses arising from the arrangement concerned where any profits or gains or losses of the acquirer arising directly or indirectly from the relevant activities of the acquirer are or, if there were any such profits or gains or losses, would be, chargeable to income tax under Schedule D for the chargeable period, or

(II) corporation tax under Schedule D, in respect of the profits or gains or losses arising from the arrangement concerned, where any profits or gains or losses of the acquirer arising directly or indirectly from the relevant activities of the acquirer are or, if there were any such profits or gains or losses, would be, chargeable to corporation tax under Schedule D for the chargeable period, or would be chargeable to corporation tax but for section 129, and the acquirer is resident in the State for the chargeable period.

(3) Subject to subsections (6) to (8), where—

(a) a supplier or an acquirer, in relation to an arrangement, is chargeable to tax for a chargeable period, under Schedule D, other than under Case I or II of Schedule D, in respect of the profits or gains or losses arising from that arrangement (in this section referred to as the ‘eligible person’), and

(b) the supplier and the acquirer are both qualifying persons, in relation to that arrangement, for the chargeable period of the eligible person,

then, section 835C shall not apply in computing the amount of profits or gains or losses arising to the eligible person from the arrangement for the chargeable period.

(4) For the purposes of subsection (3)(a)—

(a) a supplier shall, for the chargeable period, be regarded as chargeable to income tax or corporation tax under Schedule D, other than under Case I or II of Schedule D, in respect of profits or gains or losses arising from the arrangement concerned only where the consideration receivable by the supplier under that arrangement—

(ii) would be so taken into account if any consideration were receivable by the supplier under the arrangement,

and

(b) an acquirer shall, for the chargeable period, be regarded as chargeable to income tax or corporation tax under Schedule D, other than under Case I or II of Schedule D, in respect of profits or gains or losses arising from the arrangement concerned only where the consideration payable under that arrangement—

(i) is directly taken into account in computing the amount of profits or gains or losses of the acquirer that are chargeable to income tax or corporation tax under Schedule D, other than under Case I or II of Schedule D, for the chargeable period, or

(ii) would be so taken into account if any consideration were payable by the acquirer under the arrangement.

(5) For the purposes of subsection (3)(b)—

(a) where the supplier is the eligible person, the acquirer shall be a qualifying person only where the acquirer is a qualifying person for the duration of the chargeable period of the supplier, and

(b) where the acquirer is the eligible person, the supplier shall be a qualifying person only where the supplier is a qualifying person for the duration of the chargeable period of the acquirer.

(6) (a) Subsection (3) shall only apply to an arrangement where the arrangement is entered into for bona fide commercial reasons.

(b) Subsection (3) shall not apply to an arrangement where the main purpose, or one of the main purposes, of the arrangement is the avoidance of tax.

(7) (a) Subsection (3) shall not apply in the case of an arrangement, where, due to the existence of the arrangement, an amount, which is greater than the actual consideration payable by the acquirer under the arrangement, may—

(i) be taken into account as an expenditure or expense,

(ii) be taken into account in determining allowances for capital expenditure which may be made, or

(iii) otherwise be deducted, allowed or relieved,

in computing the profits or gains, of the acquirer, on which tax falls finally to be borne for the purposes of domestic tax or foreign tax.

(b) For the purpose of this subsection, ‘domestic tax’ and ‘foreign tax’ have the same meaning as in section 835Z(1).

(8) (a) Subsection (3) shall not apply in the case of an arrangement involving a supplier and an acquirer who are qualifying persons (in this subsection referred to as the ‘first-mentioned arrangement’) which is made as part of, or in connection with, any scheme involving the acquirer in relation to the first-mentioned arrangement, or a person associated with the acquirer, entering into an arrangement with a person or persons who are not qualifying persons (in this subsection referred to as the ‘second-mentioned arrangement’) and the sole or main purpose of the first-mentioned arrangement is to directly or indirectly obtain a tax advantage in connection with the second-mentioned arrangement.

(b) For the purpose of this subsection, ‘tax advantage’ has the same meaning as in section 811C(1).

(9) A qualifying person shall maintain and have available such records as may reasonably be required for the purposes of determining whether the requirements of this section are met.”.

(3) Part 35A of the Principal Act is amended—

(a) by the substitution, in section 835F(5)(a)(i), of “qualifying person” for “qualifying relevant person”, and

(b) by the substitution, in section 835G(4), of “qualifying person” for “qualifying relevant person”.

(4) Subsections (1) to (3) shall apply for chargeable periods (within the meaning of section 321(2) of the Principal Act) commencing on or after 1 January 2022.

(5) Section 15 of the Finance Act 2020 is repealed.

Chapter 5 Corporation Tax

28. Attribution of profits to a branch

28. (1) The Principal Act is amended in Chapter 2 of Part 2 by the insertion of the following section after section 25:

“25A. (1) In this section—

‘Article 7 of the OECD Model Tax Convention’ means the provisions contained in Article 7 of the Model Tax Convention on Income and on Capital published by the OECD on 21 November 2017;

‘authorised OECD approach guidance’ means the guidance on the attribution of profits to permanent establishments set out in the 2010 Report on the Attribution of Profits to Permanent Establishments approved for publication by the Council of the OECD on 22 July 2010, supplemented by the whole or part of such additional guidance on the attribution of profits to permanent establishments, published by the OECD on or after the date of the passing of the Finance Act 2021, as may be designated by the Minister for Finance for the purposes of this section by order made under subsection (5);

‘branch’, in relation to a company which is not resident in the State, means a branch or agency through which the company carries on a trade in the State;

‘double taxation relief arrangements’ means arrangements having effect by virtue of section 826;

‘OECD’ means the Organisation for Economic Co-operation and Development;

‘Minister’ means the Minister for Finance;

‘relevant branch income’ has the meaning given to it in subsection (2);

‘relevant branch records’ has the meaning given to it in subsection (7);

‘return’ and ‘specified return date for the accounting period’ have the meanings given to them by section 959A;

‘Revenue officer’ means an officer of the Revenue Commissioners;

‘small enterprise’ and ‘medium enterprise’ have the meanings assigned, respectively, to those expressions by section 835F and ‘small or medium-sized enterprise’ shall be construed accordingly.

(2) For the purposes of section 25(2), the amount of any trading income arising directly or indirectly through or from a branch and any income from property or rights used by, or held by or for, the branch (in this section referred to as ‘relevant branch income’) shall be an amount that is attributable to the branch in accordance with subsections (3) and (4).

(3) For the purposes of subsection (2), the relevant branch income that is attributable to a branch is the amount of such income which it would have earned, in particular in its dealings with other parts of the company (in this subsection referred to as ‘the first-mentioned company’), if it were a separate and independent company engaged in the same or similar activities as the branch is engaged in under the same or similar conditions as obtained in respect of the branch, taking into account the functions performed, assets used and risks assumed by the first-mentioned company through the branch and through the other parts of that company.

(4) (a) For the purpose of attributing relevant branch income to a branch, subsection (3) shall be construed to ensure, as far as is practicable, consistency between—

(i) the effect which is to be given to subsection (3), and

(ii) regardless of whether such double taxation relief arrangements actually apply, the effect which would be given if double taxation relief arrangements incorporating paragraph 2 of Article 7 of the OECD Model Tax Convention were to be applied, in accordance with the authorised OECD approach guidance, to the computation of so much of the profits as are attributable to the branch that comprise relevant branch income.

(b) For the purpose of determining the effect which would be given if double taxation relief arrangements referred to in paragraph (a)(ii) were to be applied, in accordance with the authorised OECD approach guidance, as required by paragraph (a)(ii), references to ‘Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations’ and ‘the Guidelines’ in the authorised OECD approach guidance shall be construed, as far as is practicable, as references to the transfer pricing guidelines (within the meaning of section 835D).

(5) The Minister may, for the purposes of this section, by order designate the whole or part of any additional guidance on the attribution of profits to permanent establishments, published by the OECD on or after the date of the passing of the Finance Act 2021, as being comprised in the authorised OECD approach guidance.

(6) Every order made by the Minister under subsection (5) shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the order is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the order is laid before it, the order shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

(7) (a) Subject to paragraph (d), a company carrying on a trade in the State through a branch for an accounting period shall have available and, upon request made in writing by a Revenue officer, shall provide to the Revenue Commissioners, such records (in this section referred to as ‘relevant branch records’) as may reasonably be required for the purposes of determining whether the relevant branch income of the company for that accounting period has been computed in accordance with this section.

(b) The relevant branch records shall include—

(i) a description of the business of the company, including its organisational structure, business strategy and key competitors,

(ii) a description of the business of the branch, including its organisational structure, business strategy and key competitors,

(iii) a functional and factual analysis which contains such information as may reasonably be required for the purposes of determining—

(I) the existence, characterisation and terms of any dealings between the branch and other parts of the company, and

(II) the appropriate attribution of assets, risks and free capital to the branch,

(iv) calculations supporting the attribution of free capital to the branch based on the functional and factual analysis referred to in subparagraph (iii),

(v) in relation to each of the dealings between the branch and other parts of the company, accounting records and contemporaneous documents which support the existence of such dealings,

(vi) a description of the transfer pricing method used in respect of each of the dealings between the branch and other parts of the company and the reasons for selecting the transfer pricing method,

(vii) details of the tested party used, if applicable, and an explanation of the reasons for selection,

(viii) in respect of each of the dealings between the branch and other parts of the company, a list and a description of selected comparable uncontrolled transactions (internal or external), if any, and information on relevant financial indicators for independent enterprises relied on in attributing the relevant branch income to the branch, including a description of the comparable search methodology and the source of such information, and

(ix) in respect of each of the dealings between the branch and other parts of the company, information and allocation schedules showing how the transfer pricing method has been used to determine the relevant branch income attributable to the branch.

(i) ‘functional and factual analysis’ and ‘free capital’ shall be construed in accordance with the authorised OECD approach guidance, and

(ii) ‘transfer pricing method’, ‘tested party’, ‘selected comparable uncontrolled transactions (internal or external)’, ‘relevant financial indicators for independent enterprises’ and ‘comparable search methodology’ shall be construed in accordance with the transfer pricing guidelines (within the meaning of section 835D).

(d) Paragraph (a) shall not apply to a company for an accounting period where—

(i) the company is a small enterprise for that accounting period, or

(ii) the company is a medium enterprise for that accounting period and the relevant branch income attributable to the branch of the company, as determined in accordance with subsections (3) and (4), for that accounting period is less than €250,000.

(8) (a) The relevant branch records shall be prepared no later than the specified return date for the accounting period concerned.

(b) Where a Revenue officer makes a request in writing to a company under subsection (7)(a), the company shall provide the relevant branch records to the Revenue Commissioners within 30 days from the date of the request.

(9) (a) Where a company fails to comply with a request to provide relevant branch records to the Revenue Commissioners in accordance with subsections (7)(a) and (8)(b), the company shall, subject to paragraph (b), be liable to a penalty of €4,000.

(b) Where the company referred to in paragraph (a) is not a small or medium-sized enterprise, the penalty specified in that paragraph shall be €25,000 and, if the failure referred to in that paragraph, on the part of that company, continues, that company shall be liable to a further penalty of €100 for each day on which the failure continues.

(10) (a) In this subsection ‘relevant branch adjustment’ means the amount of any difference between—

(i) the amount of chargeable profits included in a return delivered by or on behalf of a company on or before the specified return date for an accounting period, and

(ii) the amount of chargeable profits that should have been included in the return delivered by or on behalf of the company on or before the specified return date for the accounting period,

which arose by virtue of the chargeable profits, included in the return delivered by or on behalf of the company, not being computed in accordance with this section.

(b) Where the conditions set out in paragraph (c) are met, a relevant branch adjustment shall not be taken into account in determining whether a penalty referred to in section 1077F(2) for a careless default applies to the company for an accounting period or in computing the amount of any such penalty.

(i) the company has, for the accounting period, prepared the relevant branch records, by the date specified in subsection (8)(a),

(ii) the company provides the relevant branch records referred to in subparagraph (i) to a Revenue officer within the period specified in subsection (8)(b), and

(iii) the relevant branch records referred to in subparagraph (i) are complete and accurate and demonstrate that, notwithstanding the relevant branch adjustment, the company has made reasonable efforts to comply with this section in determining the relevant branch income that is attributable to the branch.

(11) Subsections (3) and (4) of section 886 shall apply with any necessary modifications to the relevant branch records as those provisions apply to the records required by that section.

(12) This section shall not apply to so much of the trade of an overseas life assurance company (within the meaning of section 706) as is life business (within the meaning aforesaid) that is not new basis business (within the meaning of section 730A).”.

(2) Subject to subsection (3), subsection (1) shall apply for accounting periods commencing on or after 1 January 2022.

(3) As respects a small or medium-sized enterprise (within the meaning of section 25A (inserted by subsection (1)) of the Principal Act), subsection (1) shall apply for accounting periods commencing on or after such day as the Minister for Finance may appoint by order.

29. Amendment of section 129A of Principal Act (dividends paid out of foreign profits)

29. (1) Section 129A of the Principal Act is amended in subsection (3)(a) by the substitution of the following subparagraph for subparagraph (ii):

“(ii) ending on the last day of—

(I) the accounting period of the company immediately preceding the accounting period in which the distribution is made, or

(II) the accounting period in which the distribution is made, where the distribution is an interim dividend paid, in that accounting period, out of profits arising in that accounting period,”.

(2) Subsection (1) shall apply to distributions made on or after the date of the passing of this Act.

30. Amendment of Part 35C of Principal Act (implementation of Council Directive (EU) 2016/1164 of 12 July 2016 as regards hybrid mismatches)

30. (1) Part 35C of the Principal Act is amended—

(a) in section 835Z—

(i) in subsection (1), by the substitution of the following definition for the definition of ‘entity’:

“ ‘entity’ means—

(a) a person (other than an individual) that has legal personality under the laws of the territory in which it is established,

(b) an undertaking (other than an individual) that has legal personality under the laws of the territory in which it is established,

(c) an agreement, trust or other arrangement that has legal personality under the laws of the territory in which it is established,

(d) an association of persons recognised under the laws of the territory in which it is established as having the capacity to perform legal acts, or

(e) any other legal arrangement of whatever nature or form, that owns or manages assets, that is subject to any of the taxes covered by this Part;”,

and

(ii) in subsection (4), by the substitution of “Subject to section 835AVA(3), a reference in this Part” for “A reference in this Part”,

(b) in section 835AA—

(i) in subsection (1), by the insertion of the following definitions:

“ ‘consolidated group for financial accounting purposes’ means a group consisting of—

(i) a parent entity, and

(ii) all other entities, other than non-consolidating entities,

which are included in the same consolidated financial statements;

‘parent entity’ means an entity that prepares, or would prepare, consolidated financial statements under generally accepted accounting practice;”,

and

(ii) in subsection (2)—

(I) by the substitution of the following paragraph for paragraph (e):

“(e) where both enterprises—

(i) are entities, and

(ii) are part of the same consolidated group for financial accounting purposes,”,

and

(II) by the substitution of the following paragraph for paragraph (f):

“(f) where both enterprises—

(i) are entities, and

(ii) would, if consolidated financial statements were prepared under international accounting standards, be part of the same consolidated group for financial accounting purposes,”,

(i) by the substitution of the following subsection for subsection (1):

“(1) Subject to subsection (3), this section applies where an enterprise is taxable in an investor or payee territory (in this section referred to as the ‘first-mentioned territory’) such that payments (in this section referred to as ‘disregarded payments’) between—

(a) the head office of an entity and a permanent establishment of that entity,

(b) two or more permanent establishments of an entity,

(d) two or more permanent establishments of an individual,

(e) where an enterprise is a participator in a hybrid entity, the enterprise and the hybrid entity,

(f) where an enterprise is a participator in two or more such hybrid entities, two or more such hybrid entities, or

(g) where an entity is an entity on which a controlled foreign company charge or foreign company charge is made in respect of two or more hybrid entities, two or more such hybrid entities,

are disregarded when computing the taxable profits of the enterprise in the first-mentioned territory under a provision of the law of that territory similar in effect to section 26(1), or subparagraph (i) or (ii) of paragraph (a) of subsection (1) of Schedule D in section 18.”,

and

(ii) in subsection (3), by the substitution of the following paragraph for paragraph (a):

“(a) the disregarded payments are between—

(i) where the enterprise referred to in subsection (1) is an individual, an individual and a permanent establishment of the individual,

(ii) where the enterprise referred to in subsection (1) is an individual, two or more permanent establishments of the individual,

(iii) where the enterprise referred to in subsection (1) is a participator in a hybrid entity, the enterprise and the hybrid entity,

(iv) where the enterprise referred to in subsection (1) is a participator in two or more hybrid entities, two or more such hybrid entities, or

(v) where the entity referred to in subsection (1) is an entity on which a controlled foreign company charge or foreign company charge is made in respect of two or more hybrid entities, two or more such hybrid entities, and”,

(d) in section 835AJ, in subsection (1), by the substitution of “A financial instrument deduction without inclusion mismatch outcome shall arise in respect of a payment where” for “A financial instrument deduction without inclusion mismatch outcome shall arise where”,

(e) in section 835AL, in subsection (1), by the substitution of “shall arise in respect of a payment to a hybrid entity where it would be reasonable to consider that” for “shall arise in respect of a payment to a hybrid entity where”,

(f) by the insertion of the following Chapter after Chapter 10:

“Chapter 10A

Reverse hybrid mismatches

Interpretation (Chapter 10A)

835AVA. (1) In this Chapter—

‘collective investment scheme’ shall be construed in accordance with section 835AVB;

‘relevant ownership interest’, in relation to a reverse hybrid entity, shall be construed in accordance with subsection (4);

‘relevant participator’, in relation to a reverse hybrid entity, means a participator with a relevant ownership interest in the reverse hybrid entity;

‘reverse hybrid entity’ means a hybrid entity established in the State—

(a) that, for the purposes of the Acts, is not chargeable to tax in respect of its profits or gains, because those profits or gains are treated, or would be so treated but for an insufficiency of profits or gains, as arising or accruing to the participators in the hybrid entity, and

(b) some or all of the profits or gains of which are regarded, for the purposes of the tax law of the territory in which a participator in the hybrid entity is established, as arising or accruing to the hybrid entity on its own account;

‘reverse hybrid mismatch outcome’ shall be construed in accordance with section 835AVD.

(2) In this Chapter, ‘associated entities’ has the meaning given to ‘associated enterprises’ by section 835AA, subject to the following modifications:

(a) a reference, in that section, to ‘enterprise’ shall be construed as a reference to ‘entity’;

(b) a reference, in subsection (2) of that section, to ‘25 per cent’ shall be construed as a reference to ‘50 per cent’; and

(c) two entities shall not be treated as acting together with respect to voting rights, share ownership rights or similar ownership rights solely because they are partners in a partnership.

(3) A reference in this Chapter to the territory in which a reverse hybrid entity is established shall be construed as a reference to the territory in which the reverse hybrid entity is registered, incorporated or created.

(4) A participator shall have a relevant ownership interest in a reverse hybrid entity where—

(a) the participator possesses or is beneficially entitled to, or the participator and its associated entities possess or are beneficially entitled to, directly or indirectly, 50 per cent or more of the ownership rights in the reverse hybrid entity,

(b) the participator is, or the participator and its associated entities are, entitled to exercise, directly or indirectly, 50 per cent or more of the voting power in the reverse hybrid entity, or

(c) the participator holds, or the participator and its associated entities hold, directly or indirectly, rights giving rise to an entitlement to 50 per cent or more of the profits of the reverse hybrid entity.

Collective investment scheme

835AVB. (1) In this section—

‘beneficial owner’, in relation to an undertaking, is any individual who is a beneficial owner within the meaning of—

(a) the Investment Limited Partnerships Act 1994, or

(b) the Investment Funds, Companies and Miscellaneous Provisions Act 2005,

and in applying this Chapter to a relevant partnership the beneficial owner of the partnership shall be identified in the same manner as the beneficial owner of an investment limited partnership is identified;

‘collective investment scheme’ means a relevant investment undertaking—

(a) that is widely held, and

(b) which holds a diversified portfolio of assets;

‘relevant AIFM’ means an AIFM, within the meaning of the European Union (Alternative Investment Fund Managers) Regulations 2013 (S.I. No. 257 of 2013), authorised under those Regulations;

‘relevant investment undertaking’ means—

(a) a common contractual fund, within the meaning of section 739I,

(b) an investment limited partnership, within the meaning of section 739J, or

but where the undertaking referred to in paragraph (a) or (b) is an umbrella scheme, within the meaning of section 739B, it shall mean a sub-fund of that undertaking;

‘relevant partnership’ means—

(a) a partnership, or

(b) a limited partnership under the Limited Partnerships Act 1907,

the affairs of which are managed by a relevant AIFM and which has been established under the law of the State.

(2) For the purposes of the definition of ‘collective investment scheme’ in subsection (1), a relevant investment undertaking is widely held where there is no beneficial owner of that undertaking.

(3) Subject to subsection (4), for the purposes of determining whether a relevant investment undertaking holds a diversified portfolio of assets, regard shall be had to—

(a) the nature of the assets held by the relevant investment undertaking,

(b) the extent to which the relevant investment undertaking is exposed to the risks and rewards of different classes of assets (whether directly or indirectly),

(d) the means through which the investment objective of the relevant investment undertaking is to be achieved, as set out in its prospectus, and

(e) where the assets held are derivatives, the assets to which the derivatives give exposure.

(4) A relevant investment undertaking shall not be determined to hold a diversified portfolio of assets—

(a) in a case in which the undertaking holds securities, where more than 10 per cent of those securities are issued by a single issuer, or

(b) in a case in which the undertaking holds land, unless the undertaking holds 3 or more properties and the market value of each of those properties is less than 40 per cent of the total market value of the properties held.

(5) In a case in which a relevant investment undertaking, having satisfied the conditions in paragraphs (a) and (b) of the definition of ‘collective investment scheme’ in subsection (1), ceases to satisfy one or both of those conditions, the relevant investment undertaking will be treated as satisfying those conditions where it would be reasonable to consider that the failure to satisfy the condition was temporary, inadvertent and unavoidable at the time the condition ceased to be satisfied, having regard to—

(a) the means through which the investment objective of the relevant investment undertaking is to be achieved, as set out in its prospectus,

(b) the date or dates on which the condition ceased to be satisfied,

(d) the steps taken, if any, to ensure the condition is satisfied and the date or dates on which it is satisfied, and

(e) the steps taken, if any, to prevent the circumstances, referred to in paragraph (c), reoccurring.

(6) In a case in which a relevant investment undertaking, has not satisfied the conditions in paragraphs (a) and (b) of the definition of ‘collective investment scheme’ in subsection (1), the relevant investment undertaking will be treated as satisfying those conditions where it would be reasonable to consider that the conditions will be satisfied within 24 months of the date on which the undertaking makes its first investment, and that the failure to satisfy the conditions is temporary, inadvertent and unavoidable, having regard to—

(a) the means through which the investment objective of the relevant investment undertaking is to be achieved, as set out in its prospectus,

(b) the circumstances giving rise to the condition not being satisfied, and

(7) In a case in which a relevant investment undertaking, having satisfied the conditions in paragraphs (a) and (b) of the definition of ‘collective investment scheme’ in subsection (1), ceases to satisfy one or both of those conditions, the relevant investment undertaking will be treated as satisfying those conditions where—

(a) the failure to satisfy the condition is due to the commencement of the winding down of the relevant investment undertaking, and

(b) the date on which the winding down is completed is less than 12 months after the date on which the condition first ceased to be satisfied as a result of the winding down.

Application (Chapter 10A)

835AVC. This Chapter shall apply to—

(a) a reverse hybrid entity, other than a collective investment scheme, in which one or more of the participators is a relevant participator, and

(b) a reverse hybrid mismatch outcome.

Reverse hybrid mismatch outcome

835AVD. (1) Subject to subsection (2), a reverse hybrid mismatch outcome shall arise where some or all of the profits or gains of a reverse hybrid entity that are attributable to a relevant participator are subject to neither domestic nor foreign tax.

(2) A reverse hybrid mismatch outcome shall not arise in respect of the profits or gains of a reverse hybrid entity where the profits or gains are attributable to a relevant participator that—

(a) under the laws of the territory in which it is established, is exempt from tax which generally applies to profits or gains in that territory,

(b) is established in a territory, or part of a territory, that does not impose a foreign tax, or

(c) is established in a territory that does not impose a tax that generally applies to profits or gains derived from payments receivable in that territory by enterprises from sources outside that territory.

(3) Subject to subsections (7) and (8), a reverse hybrid mismatch outcome shall be neutralised, notwithstanding any other provision of the Tax Acts and the Capital Gains Tax Acts, by the profits and gains referred to in subsection (1) being charged to corporation tax on the reverse hybrid entity concerned as if the business carried on in the State by the reverse hybrid entity was carried on by a company resident in the State.

(4) In subsection (5), ‘unit’ has, as the context requires, the meaning assigned to it in section 739B(1), that meaning as modified in accordance with section 739J(1)(b), or, where this section is applied to a relevant partnership, a ‘partnership interest’, within the meaning of section 739J.

(5) A reverse hybrid entity that is liable to tax under subsection (3) shall—

(a) be entitled to appropriate or cancel such portion of units of the relevant participator concerned as are required to meet the amount of the tax arising on profits attributable to that participator, and

(b) be acquitted and discharged of such appropriation or cancellation, as the case may be, as if the amount of tax had been paid to the participator.

(6) Where a reverse hybrid entity exercises its right under subsection (5)(a)—

(a) the participator concerned shall allow the appropriation or cancellation, as the case may be, and

(b) the appropriation or cancellation, as the case may be, shall take place at the end of the tax period in respect of which the tax arose.

(7) Where, in respect of a reverse hybrid entity, a participator is resident in a territory with the government of which arrangements having the force of law by virtue of section 826(1) have been made, then any corporation tax being charged on that entity by virtue of subsection (3) shall take account of the provisions of those arrangements.

(8) The provisions of the Tax Acts relating to the calculation, assessment and collection of tax shall apply to any tax due pursuant to this section—

(a) as if the reverse hybrid entity was a company resident in the State for the tax period, and

(b) without prejudice to the generality of paragraph (a), where the reverse hybrid entity—

(i) is a common contractual fund, all obligations falling on the common contractual fund pursuant to this Part shall be fulfilled on behalf of the common contractual fund by the management company who is authorised to act on behalf, or for the purposes, of the common contractual fund and habitually does so, but the management company shall not be liable in a personal capacity to any tax imposed by this Part on the common contractual fund, and

(ii) is a partnership, all obligations falling on the partnership pursuant to this part shall be fulfilled by the precedent partner (within the meaning of section 1007) on behalf of the partnership.”,

and

(g) by the substitution of the following section for section 835AW:

“835AW. (1) Chapters 1 to 10 shall apply to payments made or arising on or after 1 January 2020.

(2) Chapter 10A shall apply to tax periods commencing on or after 1 January 2022.”.

(2) Subsection (1)(c) shall be deemed to have come into operation on 1 January 2020.

31. Interest limitation

31. (1) Part 3 of the Principal Act is amended—

(a) in section 37, in subsection (3), by the substitution of “Notwithstanding anything in the Tax Acts, other than Part 35D,” for “Notwithstanding anything in the Tax Acts,”, and

(b) in section 38, in subsection (3), by the substitution of “Notwithstanding anything in the Tax Acts, other than Part 35D,” for “Notwithstanding anything in the Tax Acts,”.

(2) Part 12 of the Principal Act is amended—

(a) in section 400, by the insertion of the following subsection after subsection (7):

“(7A) The predecessor shall not be entitled to relief under section 835AAD or 835AAE and the successor shall be entitled to relief under section 835AAD(8) or (10) or, on making a claim, under section 835AAD(3) or section 835AAE(2), for any amount for which the predecessor would have been entitled to claim relief if the predecessor had continued to carry on the trade.”,

and

(b) in section 401, in subsection (2)—

(i) in paragraph (i), by the substitution of “after the change of ownership,” for “after the change of ownership, or”,

(ii) in paragraph (ii), by the substitution of “after the change of ownership, or” for “after the change of ownership.”, and

(iii) by the insertion of the following paragraph after paragraph (ii):

“(iii) under section 835AAE for total spare capacity (within the meaning of Part 35D) arising to the company in an accounting period beginning before the change of ownership for any accounting period after the change of ownership.”.

(3) The Principal Act is amended by the insertion of the following Part after Part 35C:

“PART 35D

Implementation of Council Directive (EU) 2016/1164 of 12 July 2016 as regards interest limitation

Chapter 1

Interpretation and general (Part 35D)

Interpretation (Part 35D)

835AY. (1) In this Part—

‘allowable amount’ shall be construed in accordance with subsection (2);

‘alternative body of accounting standards’ means standards that accounts of entities are to comply with which are laid down by such body or bodies having authority to lay down standards of that kind in Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, the Republic of Korea, the United States of America, the Republic of India and the People’s Republic of China;

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