Finance Act 2021

Type Act

Publication 2021-12-21

State In force

Source Irish Statute Book

articles 87

‘associated enterprise’, other than in Chapter 3, means an enterprise that is associated with another enterprise in accordance with subsections (2) and (4) of section 835AA, other than enterprises which would be considered associated enterprises pursuant only to paragraphs (e), (f) or (g) of section 835AA(2);

‘CGT rate’ means—

(a) other than in the cases referred to in paragraphs (b) and (c), the rate specified in section 28(3),

(b) in the case of a relevant disposal (within the meaning of Chapter 2 of Part 22), the rate specified in section 649A(1)(b), and

‘consolidating entity’ means an entity which is included in the ultimate consolidated financial statements, other than a non-consolidating entity;

‘de minimis amount’—

(a) in respect of an accounting period of 12 months, means €3,000,000, and

(b) in respect of an accounting period of less than 12 months, the amount referred to in paragraph (a) reduced pro rata;

‘deductible interest equivalent’ means the amount in respect of interest equivalent that is deducted in calculating the relevant profit or loss of a relevant entity;

‘deemed borrowing cost’ has the meaning assigned to it by section 835AAD(1);

‘Directive (EU) 2016/1164’ has the same meaning as it has in Part 35C;

‘disallowable amount’ means the amount by which the exceeding borrowing costs is greater than the allowable amount;

‘EBITDA’ shall be construed in accordance with section 835AAB(5);

‘EBITDA limit’ means 30 per cent;

‘enterprise’ has the same meaning as it has in Part 35C;

‘entity’ has the same meaning as it has in Part 35C;

‘exceeding borrowing costs’ has the meaning assigned to it by section 835AAB(4);

‘finance cost element of non-finance lease payments’ in respect of a company and an accounting period, means the portion of the deductible lease payment in that accounting period calculated as follows—

P x (A - B) /A

where—

P is the deductible lease payment,

A is the total expected cost of the lease, over the course of the life of the lease on the date the lease was entered into, and

B is the value of the right of use asset recognised in the accounts under international accounting standards, or would be so recognised if accounts were prepared in accordance with international accounting standards, on the date the lease was entered into,

but where the terms of the lease are amended during the life of the lease such that either of A or B are amended, then, for the accounting period in which that amendment was made and all successive accounting periods, A and B shall be calculated as if a new lease was entered into at the date of that amendment;

‘finance element of finance lease payments’ in respect of a company and an accounting period, means the portion of the deductible, or taxable, finance lease payment, as the case may be, in that accounting period calculated as follows—

P x (A/B)

where—

P is the deductible, or taxable, finance lease payment, as the case may be,

A is the expected total finance cost, or finance income, as the case may be, which will be recognised in the accounts under generally accepted accounting practice over the course of the life of the lease on the date the lease was entered into, and

B is the total expected cost of the lease, or income of the lease, as the case may be, over the course of the life of the lease on the date the lease was entered into,

‘finance income element of non-finance lease payments’ in respect of a company and an accounting period, means the portion of the taxable lease payment in that accounting period calculated as follows—

P x (A - B) /A

where—

P is the taxable lease payment,

A is the total expected income of the lease, over the course of the life of the lease on the date the lease was entered into, and

B is the value of the leased asset recognised in the accounts under generally accepted accounting practice on the date the lease was entered into less the expected depreciated value of the leased asset at the end of the lease, determined in accordance with the accounting policy in the financial statements for the year in which the lease is entered into,

‘finance lease’ means a lease which, under generally accepted accounting practice, falls to be treated as a finance lease;

‘interest equivalent’ means—

(a) interest,

(b) amounts economically equivalent to interest including—

(i) a discount, where securities are issued at a discount,

(ii) the finance element of finance lease payments,

(iii) the finance income element and finance cost element of non-finance lease payments of a company that carries on a trade of leasing that is treated for the purposes of the Tax Acts as a separate trade distinct from all other activities carried on by such company under section 403(2),

(iv) amounts under derivative instruments or hedging arrangements directly connected with the raising of finance, and

(v) such portion of the profit or loss on—

(I) a financial asset (within the meaning of section 76B), or

(II) a financial liability (within the meaning of section 76B),

the coupon or return on which principally comprises interest or one or more of the amounts referred to in this paragraph, to the extent that it would be reasonable to consider that such amount is economically equivalent to interest,

(d) amounts arising directly in connection with raising finance, including—

(i) guarantee fees,

(ii) arrangement fees, and

(iii) commitment fees,

(e) foreign exchange gains and losses on interest or amounts economically equivalent to interest, and

(f) any amount arising from an arrangement, or part of an arrangement, which could reasonably be considered, when the arrangement is considered in the whole, to be economically equivalent to interest;

‘interest group’ shall be construed in accordance with section 835AAK(1);

‘interest spare capacity’ has the meaning given to it by section 835AAB(4);

‘large scale asset’ means—

(a) a development, within the meaning of the Planning and Development Act 2000, specified in the Seventh Schedule of that Act, approved by—

(i) An Bord Pleanála under section 37G of that Act, on foot of an application made pursuant to section 37A(2)(a) or (b) of that Act, or

(ii) a local authority under section 170 of that Act,

(b) a development, referred to in section 182A of the Planning and Development Act 2000, approved by An Bord Pleanála under section 182B of that Act,

(c) a development, referred to in section 182C of the Planning and Development Act 2000, approved by An Bord Pleanála under section 182D of that Act,

(d) railway works, within the meaning of the Transport (Railway Infrastructure) Act 2001, in respect of which an order has been made under section 43 of that Act,

(e) a scheme, within the meaning of the Roads Act 1993, which has been approved under section 49 of that Act,

(f) a strategic housing development, within the meaning of Chapter 1 of Part 2 of the Planning and Development (Housing) and Residential Tenancies Act 2016 approved by—

(i) An Bord Pleanála, under section 9 of that Act, or

(ii) a local authority, under section 170 of the Planning and Development Act 2000,

(g) an asset (within the meaning of the State Authorities (Public Private Partnership Arrangements) Act 2002) constructed pursuant to a public private partnership arrangement (within the meaning of that Act),

(h) an installation generating energy from renewable sources (within the meaning of the European Union (Renewable Energy) Regulations (S.I. No. 365 of 2020)), which is regulated, either solely or jointly with another party, by the Commission for the Regulation of Utilities, or

(i) an asset specified by the Minister for Finance in regulations made under section 835AAA(1),

that has a minimum expected life span of 10 years;

‘limitation spare capacity’ is the amount by which the exceeding borrowing costs are less than the allowable amount;

‘long-term infrastructure project’ means a project to provide, upgrade, operate or maintain a large scale asset;

‘non-consolidating entity’ means an entity which is valued in ultimate consolidated financial statements—

(a) using fair value accounting (within the meaning of international accounting standards),

(b) on the basis that it is an asset held for sale or held for distribution (within the meaning of international accounting standards), or

(c) where the ultimate consolidated financial statements are prepared under an alternative body of accounting standards, on an equivalent basis under those standards;

‘non-finance element of finance lease payments’ in respect of a company and an accounting period, means the deductible, or taxable, finance lease payments, as the case may be, in that accounting period less the finance element of the finance lease payments;

‘P rate’ is the rate specified in section 21A(3)(a);

‘payment for relief’ means a payment made by one member of an interest group to another member of an interest group pursuant to an agreement between them as respects an allocation of a disallowable amount or total spare capacity, being a payment not exceeding the reduction in tax payable in the current accounting period or successive accounting periods as a result of the allocation in respect of the member of the interest group making the payment;

‘qualifying long-term infrastructure project’ means a long-term infrastructure project—

(a) in respect of which the operator is established in, and tax resident in, a Member State,

(b) in respect of which the large scale asset concerned is in a Member State, and

‘relevant entity’ means a company or an interest group;

‘relevant loss’ shall be construed in accordance with section 835AZ(7);

‘relevant profit’ has the meaning assigned to it by section 835AZ(1);

‘reporting company’ shall be construed in accordance with section 835AAM(1);

‘single company worldwide group’ means a company that is not—

(a) a member of a worldwide group,

(b) a member of an interest group, or

‘specified return date for the accounting period’ has the same meaning as it has in Part 41A;

‘standalone entity’ means a company resident in the State that—

(a) is not a member of a worldwide group,

(b) has no associated enterprises, and

‘T rate’ is the rate specified in section 21(1)(f);

‘taxable interest equivalent’ means the amount in respect of interest equivalent that is income, profits or gains included in the calculation of the relevant profit or loss of a relevant entity, including a reversal of deductible interest equivalent;

‘total spare capacity’ is the aggregate of interest spare capacity and limitation spare capacity;

‘ultimate consolidated financial statements’ means the consolidated financial statements prepared by an ultimate parent under generally accepted accounting practice or an alternative body of accounting standards;

‘ultimate parent’ means an entity that prepares consolidated financial statements under generally accepted accounting practice, or an alternative body of accounting standards, and whose results are not fully included in any other consolidated financial statements prepared under such a practice or standard;

‘worldwide group’ means the ultimate parent and all consolidating entities in the ultimate consolidated financial statements and ‘member of a worldwide group’ shall be construed accordingly.

(2) The ‘allowable amount’ in respect of a relevant entity for an accounting period shall be calculated as follows:

allowable amount = EBITDA x EBITDA limit.

(3) A word or expression which is used in this Part and is also used in Directive (EU) 2016/1164 has, unless the context otherwise requires, the same meaning in this Part as it has in Directive (EU) 2016/1164.

Relevant profit and loss

835AZ. (1) Subject to subsections (2) and (3), ‘relevant profit’, in respect of a relevant entity and an accounting period, means—

(a) the amount of the profits on which corporation tax falls finally to be borne, and

(b) the amount of the gains or losses on a relevant disposal (within the meaning of section 648),

reduced by the amount, if any, of—

(i) the amount of the excess referred to in subsection (2) of section 243B, to the extent relief may be claimed under that subsection, but for this Part, and

(ii) the amount of the excess referred to in subsection (2) of section 396B, to the extent relief may be claimed under that subsection, but for this Part.

(2) Where an amount of charge, income, expense, gain or loss used to calculate an amount referred to in subsection (1) is subject to corporation tax or provides relief at the P rate, that amount shall be adjusted for the purpose of calculating ‘relevant profit’ under subsection (1) as follows:

Aadj = Aact x (P rate/T rate)

where—

Aadj is the adjusted amount of charge, income, expense, gain or loss, as the case may be, and

Aact is the actual amount of charge, income, expense, gain or loss, as the case may be.

(3) Where an amount of charge, income, expense, gain or loss used to calculate an amount referred to in subsection (1) is subject to corporation tax or capital gains tax or provides relief at the CGT rate, that amount shall be adjusted for the purpose of calculating ‘relevant profit’ under subsection (1) as follows:

Aadj = Aact x (CGT rate/T rate)

where—

Aadj is the adjusted amount of charge, income, expense, gain or loss, as the case may be, and

Aact is the actual amount of charge, income, expense, gain or loss, as the case may be.

(4) For the purpose of calculating relevant profit under subsection (1), no account shall be taken of—

(a) any relief for losses, or excesses, as the case may be, carried forward from a previous accounting period under section 396(1), 399(1) or 399(2),

(b) any relief for losses or excesses, as the case may be, carried back from a subsequent accounting period under section 396(2), 396A(3), 396B(3), 397(1) or 399(2), or

(c) amounts set off under section 420 (other than interest treated as a charge on income that may be set off under section 420(6), but for this Part) or 420A.

(5) Subject to subsection (6), for the purpose of calculating relevant profit under subsection (1) of a relevant entity carrying on a qualifying long-term infrastructure project, no account shall be taken of any income or expenses directly connected with a qualifying long-term infrastructure project.

(6) Where a relevant entity carries on both a qualifying long-term infrastructure project and activities other than a qualifying long-term infrastructure project, income and expenses shall be apportioned between the qualifying long-term infrastructure project and those other activities on a just and reasonable basis.

(7) The amount of relevant loss for an accounting period shall be calculated in the like manner as relevant profit would have been calculated and for these purposes the reference in subsection (1) to an amount of profits on which corporation tax falls finally to be borne shall be read as a reference to the amount of losses, after making all deductions and giving all reliefs that for the purposes of corporation tax are made or given from or against profits, including deductions and reliefs which under any provision are treated as reducing profits for those purposes.

Long-term public infrastructure projects

835AAA. (1) The Minister for Finance, in consultation with the Minister for Public Expenditure and Reform, may make regulations for the purpose of this section specifying an asset is to be treated as a large scale asset, but an asset shall not be so specified unless—

(a) specifying the asset would not give rise to a breach of Article 107 of the Treaty of Functioning of the European Union,

(b) the purpose of the asset is to enhance the general public interest,

(d) the financing arrangements for the long-term infrastructure project to which the large scale asset relates present special features which justify such specification.

(2) For the purposes of subsection (1), in determining whether it is in the public interest to specify the asset concerned, the Minister shall have regard to whether—

(a) the asset concerned would be likely to be provided, upgraded, operated, or maintained in the absence of such specification,

(b) specifying the asset concerned would distort fair competition, and

(c) specifying the asset would give rise to a loss of Exchequer income, and whether the public benefit of specifying the asset outweighs any such loss.

Chapter 2

Interest limitation

Interpretation (Chapter 2)

835AAB. (1) In this Chapter—

‘legacy debt’ means a debt the terms of which were agreed before 17 June 2016, together with any contract entered into before or after that date with the sole purpose of eliminating or reducing interest rate risk on that debt, but where the terms of that debt include provision for an amount of principal not yet drawn down at that date, such principal shall only be considered an agreed term of that debt to the extent the lender is legally obliged to make available such amounts upon the happening of milestones as set out in the terms agreed before 17 June 2016;

‘milestone’ means a pre-determined deliverable or project phase defined in the terms of a debt, connected with the drawdown of principal, but does not include a call by the borrower for drawdown of principal.

(2) The deductible interest equivalent in respect of legacy debt of a relevant entity for an accounting period is the lower of—

(a) the deductible interest equivalent that arises on the legacy debt in the accounting period, and

(b) the deductible interest equivalent that would have arisen on the legacy debt in the accounting period in accordance with the terms of the legacy debt as they stood on 17 June 2016.

(3) For the purposes of this Part, the ‘net interest equivalent’ in respect of a relevant entity for an accounting period shall be calculated as follows:

IEnet = (IEded - IELD-ded) - IEtax

where—

IEnet is the amount of net interest equivalent in respect of the relevant entity for the accounting period,

IEded is the amount of deductible interest equivalent in respect of the relevant entity for the accounting period,

IELD-ded is the amount of deductible interest equivalent in respect of the legacy debt of the relevant entity for the accounting period, and

IEtax is the amount of taxable interest equivalent in respect of the relevant entity for the accounting period.

(4) Where the net interest equivalent in respect of a relevant entity for an accounting period is greater than or equal to zero, it shall be referred to in this Part as ‘exceeding borrowing costs’ and where the net interest equivalent in respect of a relevant entity for an accounting period is less than zero, it shall be referred to in this Part as ‘interest spare capacity’.

(5) In this Part, the EBITDA in respect of a relevant entity for an accounting period shall be the greater of zero and the amount calculated as follows:

R + I + FT + [(Capallow - IEded allow) - (Capcharge - IEded charge)] + IELD-ded

where—

R is the relevant profit or relevant loss, as the case may be, of the relevant entity for the accounting period,

I is the net interest equivalent of the relevant entity for the accounting period,

FT is the amount deducted in respect of foreign tax in calculating the relevant entity’s relevant profit or relevant loss, as the case may be, for the accounting period,

Capallow is the amount of allowances in respect of capital expenditure under Parts 9, 24 and 29 made to a relevant entity, and the amount in respect of the non-finance element of finance lease payments deducted in calculating that entity’s relevant profit or relevant loss, as the case may be, for the accounting period,

Capcharge is the amount of charges in respect of capital expenditure under Parts 9, 24 and 29 made on a relevant entity in calculating the relevant entity’s relevant profit or relevant loss, as the case may be, for the accounting period,

IEded allow is the amount of deductible interest equivalent referable to allowances in respect of capital expenditure under Parts 9, 24 and 29 made to a relevant entity in calculating the relevant entity’s relevant profit or relevant loss, as the case may be, for the accounting period,

IEded charge is the amount of deductible interest equivalent referable to charges in respect of capital expenditure under Parts 9, 24 and 29 made on a relevant entity in calculating the relevant entity’s relevant profit or relevant loss, as the case may be, for the accounting period, and

IELD-ded is the amount of deductible interest equivalent in respect of the legacy debt of the relevant entity for the accounting period.

Interest limitation

835AAC. (1) This section shall apply to a relevant entity for an accounting period where—

(a) the relevant entity is not, at any time in that accounting period, a standalone entity,

(b) the relevant entity has a disallowable amount greater than zero in respect of the accounting period, and

(2) For the purposes of determining whether the exceeding borrowing costs of a relevant entity exceeds the de minimis amount for an accounting period—

(a) in a case in which an amount of deductible interest equivalent is deducted against profits chargeable to tax at the P rate, the amount of that deductible interest equivalent shall be adjusted as follows:

IEded-adj = IEded x (T rate/P rate)

where—

IEded-adj is the adjusted amount of deductible interest equivalent in respect of the relevant entity for the accounting period, and

IEded is the amount of deductible interest equivalent in respect of the relevant entity for the accounting period deducted against profits chargeable to tax at the P rate,

(b) in a case in which an amount of taxable interest equivalent is chargeable to tax at the P rate, the amount of that taxable interest equivalent shall be adjusted as follows:

IEtax-adj = IEtax x (T rate/P rate)

where—

IEtax-adj is the adjusted amount of taxable interest equivalent in respect of the relevant entity for the accounting period, and

IEtax is the amount of taxable interest equivalent in respect of the relevant entity for the accounting period chargeable to tax at the P rate,

(c) in a case in which an amount of deductible interest equivalent is deducted against chargeable gains chargeable to tax at the CGT rate, the amount of that deductible interest equivalent shall be adjusted as follows:

IEded-adj = IEded x (T rate/CGT rate)

where—

IEded-adj is the adjusted amount of deductible interest equivalent in respect of the relevant entity for the accounting period, and

IEded is the amount of deductible interest equivalent in respect of the relevant entity for the accounting period deducted against chargeable gains chargeable to tax at the CGT rate,

(d) in a case in which an amount of deductible interest equivalent in respect of the legacy debt of the relevant entity is deducted against profits chargeable to tax at the P rate, the amount of that deductible interest equivalent shall be adjusted as follows:

IELD-ded-adj = IELD-ded x (T rate/P rate)

where—

IELD-ded-adj is the adjusted amount of deductible interest equivalent in respect of the legacy debt of the relevant entity for the accounting period, and

IELD-ded is the amount of deductible interest equivalent in respect of the legacy debt of the relevant entity for the accounting period deducted against profits chargeable to tax at the P rate, and

(e) in a case in which an amount of deductible interest equivalent in respect of the legacy debt of the relevant entity is deducted against chargeable gains chargeable to tax at the CGT rate, the amount of that deductible interest equivalent shall be adjusted as follows:

IELD-ded-adj = IELD-ded x (T rate/CGT rate)

where—

IELD-ded-adj is the adjusted amount of deductible interest equivalent in respect of the legacy debt of the relevant entity for the accounting period, and

IELD-ded is the amount of deductible interest equivalent in respect of the legacy debt of the relevant entity for the accounting period deducted against chargeable gains chargeable to tax at the CGT rate.

(3) Subject to section 835AAL, and subsections (4) and (5), where this section applies to a relevant entity for an accounting period, the amount of tax payable (within the meaning of section 959A) by the relevant entity for the accounting period, or where there is no amount of tax payable due to an insufficiency of income, profits or gains, the amount of any loss or excess arising to the relevant entity in an accounting period, but for the application of this Part, shall be adjusted by reducing the amount of interest equivalent that, but for this Part, would have been deducted in the calculation of that tax payable or that loss or excess, as the case may be, by the disallowable amount until the disallowable amount has been exhausted.

(4) For the purposes of subsection (3), where the interest equivalent mentioned in that subsection is deducted against profits chargeable to tax at the P rate, or treated as reducing the corporation tax payable on profits chargeable to tax at the P rate, then the amount by which the interest equivalent shall be reduced in respect of a disallowable amount shall be calculated by applying the following fraction:

T rate/P rate.

(5) For the purposes of subsection (3), where the interest equivalent mentioned in that subsection is deducted against chargeable gains, or treated as reducing the corporation tax payable on profits chargeable to tax at the CGT rate, then the amount by which the interest equivalent shall be reduced in respect of a disallowable amount shall be calculated by applying the following fraction:

T rate/CGT rate.

(6) Where a reduction of interest equivalent in accordance with subsection (3) reduces an amount of interest equivalent deducted in connection with the provision of a specified intangible asset, by reference to which allowances referred to in section 291A(6)(a)(i) are made, then for the purposes of section 291A(6), the aggregate amount for an accounting period referred to in section 291A(6)(a) shall be an amount calculated by reference to the interest equivalent so reduced.

Carry forward of disallowable amount

835AAD. (1) Where section 835AAC applies to a relevant entity for an accounting period (in this section referred to as the ‘first-mentioned accounting period’), the relevant entity may carry forward the disallowable amount to succeeding accounting periods in accordance with this section and any such amount carried forward shall be referred to in this section as a ‘deemed borrowing cost’.

(2) This subsection applies where an amount of deemed borrowing cost arises from a disallowable amount which would have, but for this Part, reduced the amount of tax payable by the relevant entity in the first-mentioned accounting period or the accounting period immediately prior to the first-mentioned accounting period.

(3) Subject to subsections (5), (6), (15) and (16), where subsection (2) applies, a relevant entity may make a claim to deduct the amount of deemed borrowing cost referred to in subsection (2), or a portion thereof—

(a) from its total profits or chargeable gains arising in an accounting period subsequent to the first-mentioned accounting period, or

(b) where there is an insufficiency of such profits, to create a loss or excess in an accounting period subsequent to the first-mentioned accounting period and relief for that loss or excess shall be given in accordance with section 31, 396(1) or 399, as the case may be, and sections 397, 400 and 401 shall apply to that loss.

(4) Where a claim is made for a deduction under subsection (3), any such deduction shall be applied after all other claims for relief have been made.

(5) Where a deemed borrowing cost is deducted from profits chargeable to tax at the P rate, for the purpose of calculating the amount of the deemed borrowing cost applied in reducing the amount of profits chargeable to tax at that rate, the amount of deemed borrowing cost shall be multiplied by the following fraction:

P rate/T rate.

(6) Where a deemed borrowing cost is deducted from chargeable gains, for the purpose of calculating the amount of the deemed borrowing cost applied in reducing the amount of chargeable gains chargeable to tax at the CGT rate, the amount of deemed borrowing cost shall be multiplied by the following fraction:

CGT rate/T rate.

(7) This subsection applies where an amount of deemed borrowing cost arises from a disallowable amount which would have, but for this Part, resulted in the relevant entity—

(a) incurring a loss or excess,

(b) incurring a greater loss or excess than would have been incurred, or

(c) offsetting a lower amount of loss or excess against its income under section 396(1), 399(1) or 399(2) than would have been offset,

in the first-mentioned accounting period.

(8) Subject to subsections (9), (10), (15) and (16), where subsection (7) applies, a relevant entity’s deemed borrowing cost shall be treated as a loss or excess incurred in the first-mentioned accounting period (to the extent such a loss or excess would have arisen but for this Part) and relief for that loss or excess shall be given in accordance with section 31, 396(1) or 399, as the case may be, and sections 397, 400 and 401 shall apply to the amount of deemed borrowing cost referred to in subsection (7) in the same manner as they apply to a loss.

(9) Where a deemed borrowing cost that is treated as a loss or excess incurred in the first-mentioned accounting period is deducted from profits chargeable to tax at the P rate, for the purpose of calculating the amount of deemed borrowing cost treated as a loss or excess applied in reducing the amount of profits chargeable to tax at that rate, the amount of deemed borrowing cost treated as a loss or excess shall be multiplied by the following fraction:

P rate/T rate.

(10) Where a deemed borrowing cost that is treated as a loss incurred in the first-mentioned accounting period is deducted from chargeable gains, for the purpose of calculating the amount of deemed borrowing cost treated as a loss applied in reducing the amount of profits chargeable to tax at the CGT rate, the amount of deemed borrowing cost treated as a loss shall be multiplied by the following fraction:

CGT rate/T rate.

(11) This subsection applies where an amount of deemed borrowing cost arises from a disallowable amount which would have, but for this Part, resulted in a relevant entity incurring—

(a) an excess of expenses of management referred to in section 83(3), or

(b) a greater excess of expenses of management than would have been incurred,

in the first-mentioned accounting period.

(12) Subject to subsections (13), (14), (15) and (16), where subsection (11) applies, the amount of deemed borrowing cost of the relevant entity shall be treated for the purposes of subsection (3) of section 83, and any further application of that subsection, as if it has been disbursed as expenses of management for the first-mentioned accounting period.

(13) Where a deemed borrowing cost that is treated as if it has been disbursed as expenses of management incurred in the first-mentioned accounting period is deducted from profits chargeable to tax at the P rate, for the purpose of calculating the amount of deemed borrowing cost treated as expenses of management applied in reducing the amount of profits chargeable to tax at that rate, the amount of deemed borrowing cost treated as an expense of management shall be multiplied by the following fraction:

P rate/T rate.

(14) Where a deemed borrowing cost that is treated as if it has been disbursed as expenses of management incurred in the first-mentioned accounting period is deducted from chargeable gains, for the purpose of calculating the amount of deemed borrowing cost treated as expenses of management applied in reducing the amount of chargeable gains chargeable to tax at the CGT rate, the amount of deemed borrowing cost treated as an expense of management shall be multiplied by the following fraction:

CGT rate/T rate.

(15) The aggregate of the deemed borrowing cost utilised in an accounting period under subsections (3), (8) and (12) shall be limited to the amount of the total spare capacity in the accounting period.

(16) Where the relief available under subsections (3), (8) and (12) would, but for subsection (15), exceed the total spare capacity of a relevant entity in an accounting period, relief under subsection (8) shall be given in priority to relief under subsection (3) or (12).

(17) For the purposes of determining, in respect of a disallowable amount carried forward in accordance with subsection (1), the amount of relief available in accordance with subsections (3), (8) and (12) in an accounting period (in this subsection referred to as the ‘relevant accounting period’) subsequent to the first-mentioned accounting period, the amount of relief given in respect of the deemed borrowing cost concerned under those subsections in the accounting periods, if any, prior to the relevant accounting period shall be deducted from the amount of the deemed borrowing cost.

(18) A deemed borrowing cost shall not be taken into account in calculating a relevant entity’s deductible interest equivalent in an accounting period subsequent to the first-mentioned accounting period.

(19) Notwithstanding anything in this section, no amount shall be deductible in respect of a deemed borrowing cost that arises from a disallowable amount which reduced an amount of interest equivalent deducted in connection with the provision of a specified intangible asset, by reference to which allowances referred to in section 291A(6)(a)(i) are made, and for the purposes of section 291A(6)(b)(ii) such amount shall, for the accounting period in which the disallowable amount arises, be treated as an amount of interest for which relief cannot be given by virtue of section 291A(6)(a).

Carry forward of total spare capacity

835AAE. (1) A relevant entity may carry forward its total spare capacity for a period not exceeding 60 months from the end of the accounting period in which the total spare capacity arose (in this section referred to as the ‘relevant period’).

(2) Where a disallowable amount arises in respect of a relevant entity for an accounting period during a relevant period, the relevant entity may, on making a claim, reduce the disallowable amount by an amount of the total spare capacity carried forward from a previous accounting period in accordance with subsection (1).

(3) Where a claim is made under subsection (2)—

(a) the disallowable amount for the accounting period concerned shall, subject to subsection (4), be reduced by the amount of total spare capacity carried forward from the previous accounting period, and

(b) the amount of total spare capacity not applied to reduce the disallowable amount in the accounting period shall be carried forward to the next accounting period.

(4) Where the total spare capacity carried forward from previous accounting periods is greater than the disallowable amount for an accounting period, the relevant entity shall, in reducing the disallowable amount, apply total spare capacity which has arisen in an earlier accounting period in priority to total spare capacity which has arisen in a later accounting period.

(5) Where a disallowable amount arises in respect of a relevant entity for an accounting period which begins before the end of a relevant period in respect of an amount of total spare capacity being applied to reduce the disallowable amount, the amount of total spare capacity shall be reduced by multiplying it by the following fraction:

A/B

where—

A is the length of the period common to the relevant period and accounting period, and

B is the length of the accounting period.

(6) For the purposes of determining the amount of relief available for total spare capacity, after the making of a claim or claims for relief under this section, or under subsection (3), (8) or (10) of section 835AAD, the amount of total spare capacity available for any subsequent claims shall be reduced by the amount claimed under the first-mentioned claims.

Reporting

835AAF. (1) Subject to subsection (2), a company shall make a return, by the specified return date for the accounting period, in the form specified by the Revenue Commissioners for that purpose.

(2) The return referred to in subsection (1) may include the following details in respect of the company and an accounting period:

(a) EBITDA;

(b) the allowable amount;

(d) the disallowable amount;

(e) interest spare capacity;

(f) limitation spare capacity;

(g) in respect of amounts carried forward from prior accounting periods—

(i) deemed borrowing cost carried forward,

(ii) deemed borrowing cost utilised in the accounting period,

(iii) total spare capacity carried forward, and

(iv) total spare capacity utilised in the accounting period;

(h) where the group ratio election is made in accordance with section 835AAH—

(i) group exceeding borrowing costs, and

(ii) group EBITDA;

(i) where the group equity election is made in accordance with section 835AAI—

(i) the amount inserted in respect of E, for the company and the worldwide group, in the formula for the calculation of the ratio of equity over total assets in section 835AAI(1), and

(ii) the amount inserted in respect of A, for the company and the worldwide group, in the formula for the calculation of the ratio of equity over total assets in section 835AAI(1);

(j) whether the company is a single company worldwide group.

(3) Where a company is a member of an interest group and section 835AAM applies, paragraphs (a), (b), (c), (h), (i) and (j) of subsection (2) shall not apply.

Chapter 3

Group and equity ratio

Interpretation (Chapter 3)

835AAG. (1) In this Chapter—

‘associated enterprise’ has the same meaning as it has in Part 35C, other than in Chapters 2, 3 and 8 of that Part and in the application of that Part to hybrid entities;

‘group EBITDA’ means the amount included in respect of profit or loss, before taking into account any amount of income tax, finance income, finance costs, depreciation, amortisation or impairments, excluding any amounts in respect of a qualifying long-term infrastructure project, in the ultimate consolidated financial statements of the group of which the relevant entity is a member for the period in which the relevant entity’s accounting period ends;

‘group exceeding borrowing costs’ means the amount included in respect of net finance expense, excluding any amount of finance income or finance expense in respect of a qualifying long-term infrastructure project, in the ultimate consolidated financial statements of the group of which the relevant entity is a member for the period in which the relevant entity’s accounting period ends;

‘group ratio’ means the following fraction expressed as a percentage:

(group exceeding borrowing costs)/(group EBITDA).

(2) Where a relevant entity is a single company worldwide group, group exceeding borrowing costs and group EBITDA shall be calculated on the basis of the financial statements of the relevant entity prepared under generally accepted accounting practice, adjusted such that transactions with associated enterprises are disregarded.

(3) Where arrangements are entered into by any person and it is reasonable to consider that the main purpose or one of the main purposes of the arrangements, or any part of them, is the avoidance of the effect of the adjustment referred to in subsection (2), then that subsection shall apply as if the arrangements, or the part of them, as the case may be, had not been entered into.

Group ratio

835AAH. (1) Subject to section 835AAJ(2) and (3), where the group ratio exceeds 30 per cent for an accounting period of a relevant entity, the relevant entity may make an election under this subsection.

(2) Where a relevant entity makes an election under subsection (1), the definition of ‘allowable amount’ in section 835AY(2) shall, for the purposes of the application of this Part to the relevant entity for the accounting period concerned, be subject to the modification that the reference in that definition to the EBITDA limit shall be construed as a reference to the group ratio of the relevant entity for that accounting period.

Equity ratio

835AAI. (1) In this section, ‘ratio of equity over total assets’ means the following fraction expressed as a percentage:

E/A

where—

E is the equity, including share capital, share premium and reserves of a relevant entity, worldwide group or single company worldwide group, and

A is the total assets, of a relevant entity, worldwide group or single company worldwide group,

in each case, as disclosed in the financial statements of the relevant entity, worldwide group or single company worldwide group, as the case may be, which are prepared under generally accepted accounting practice or an alternative body of accounting standards.

(2) For the purpose of calculating the ratio of equity over total assets for a single company worldwide group, the amount to be included as E in the formula in subsection (1) shall be increased by an amount equal to the amount owed by the relevant entity to its associated enterprises which gives rise to deductible interest equivalent.

(3) This section applies to a relevant entity in respect of an accounting period where—

(a) the relevant entity’s ratio of equity over total assets is greater than, equal to or not more than two percentage points less than the worldwide group’s ratio of equity over total assets, calculated on the basis of the ultimate consolidated financial statements relating to the period in which the relevant entity’s accounting period ends, or

(b) the relevant entity is a member of a single company worldwide group, the relevant entity’s ratio of equity over total assets is greater than, equal to or not more than two percentage points less than the single company worldwide group’s ratio of equity over total assets calculated on the basis of the financial statements relating to the period in which the relevant entity’s accounting period ends.

(4) Where, in the period of 6 months prior to the end of an accounting period of a relevant entity, a scheme or arrangement is entered into which results in an increase in the amount represented by E in the formula in subsection (1) for the relevant entity, the effect of that scheme or arrangement shall not be taken into account in calculating the relevant entity’s ratio of equity over total assets for that accounting period, unless—

(a) it is shown that the scheme or arrangement was entered into for bona fide commercial reasons, and

(b) it is not reasonable to consider that the scheme or arrangement is, or forms part of, any scheme or arrangement of which the main purpose, or one of the main purposes, is the satisfaction of paragraph (a) or (b) of subsection (3).

(5) Where arrangements are entered into by any person and it is reasonable to consider that the main purpose, or one of the main purposes, of the arrangements, or any part of them, is the avoidance of an increase, in accordance with subsection (2), in the amount included as E in the formula in subsection (1), subsection (2) shall apply as if the arrangements, or that part of them, had not been entered into.

(6) Subject to section 835AAJ(2) and (3), where this section applies in respect of an accounting period of a relevant entity, the relevant entity may make an election under this subsection.

(7) Where a relevant entity makes an election under subsection (6) in respect of an accounting period, section 835AAC shall not apply to the relevant entity in respect of the accounting period.

Election

835AAJ. (1) An election under section 835AAH or 835AAI shall be made—

(a) in such form as the Revenue Commissioners shall specify, and

(b) on or before the specified return date for the accounting period to which the election relates.

(2) An election shall not be made by a relevant entity under section 835AAH and 835AAI in respect of an accounting period.

(3) An election shall not be made by a relevant entity under section 835AAH or 835AAI in respect of an accounting period where the relevant entity is an interest group and its members include a company referred to in section 835AAK(1)(a)(ii).

Chapter 4

Application of this Part to interest groups

Interpretation (Chapter 4)

835AAK. (1) For the purposes of this Part, an ‘interest group’ shall comprise the companies within the charge to corporation tax in the State that—

(a) are—

(i) members of the same worldwide group, or

(ii) where not members of the same worldwide group, deemed to be members of the same group of companies under section 411,

and

(b) have elected to be members of the interest group.

(2) Where a company, branch or agency, or any activities of a company, branch or agency, falls to be included in two interest groups, then the company, branch or agency shall elect to be treated as a member of one such group only for the purposes of this Part.

(3) The election referred to in subsection (1) shall—

(a) apply for a period of at least three years from the beginning of the accounting period in respect of which the election is made or, if later, the date on which one of the conditions set out in subsection (1)(a) is satisfied,

(b) be made in such form as the Revenue Commissioners shall specify, and

(4) Subsequent to the period referred to in subsection (3)(a), an election referred to in subsection (1) may be withdrawn and such withdrawal shall—

(a) apply for a period of at least three years from the beginning of the accounting period in respect of which the withdrawal is made,

(b) be made in such form as the Revenue Commissioners shall specify, and

Application of Part to interest group

835AAL. (1) This section applies where a company is a member of an interest group.

(2) Where a relevant entity is an interest group, section 835AAC shall apply, subject to the modification that a reference to a disallowable amount of a relevant entity shall be construed as a reference to the disallowable amount of the member of the interest group calculated or allocated, as the case may be, in accordance with subsection (6), (7) or (8), as the case may be.

(3) Where an amount is required to be calculated in respect of an interest group for the purposes of this Part, it shall comprise the results of all the members of the interest group.

(4) The accounting period of an interest group shall be the accounting period which is common to more than half of the members of the interest group or, where there is no such accounting period, the accounting period of the reporting company.

(5) Where the accounting period of a member of an interest group does not coincide with the accounting period of the interest group—

(a) the results of such a member shall be apportioned such that the income and expenses are those which, on a just and reasonable basis, arose during the accounting period of the interest group, and

(b) all balance sheet amounts shall be those which would be reflected in the balance sheet of the member of the interest group on the final day of the accounting period of the interest group.

(6) Subject to subsections (7) and (8), the disallowable amount of a member of an interest group shall be calculated as follows:

DAmember = DAgroup x (DIEmember/DIEgroup)

where—

DAmember is the disallowable amount of the member of the interest group,

DAgroup is the disallowable amount of the interest group,

DIEmember is the deductible interest equivalent of the member of the interest group, and

DIEgroup is the deductible interest equivalent of the interest group.

(7) Where a reporting company and each member of the interest group concerned jointly notify the Revenue Commissioners, in the form specified by the Revenue Commissioners for that purpose, that the disallowable amount, or a portion of the disallowable amount, of the interest group should be deemed to be the disallowable amount of a member of the interest group, the disallowable amount of that member shall be the amount so notified.

(8) A disallowable amount allocated under subsection (7) to a member of an interest group in an accounting period shall not exceed the deductible interest equivalent of that group member for that accounting period.

(9) Subject to subsection (10), the total spare capacity of a member of an interest group arising in an accounting period shall be calculated as follows:

TSCmember = TSCgroup x (TIEmember/TIEgroup)

where—

TSCmember is the total spare capacity of the member of the interest group,

TSCgroup is the total spare capacity of the interest group,

TIEmember is the taxable interest equivalent of the member of the interest group, and

TIEgroup is the taxable interest equivalent of the interest group.

(10) Where a reporting company and each member of the interest group concerned jointly notify the Revenue Commissioners, in the form specified by the Revenue Commissioners for that purpose, that the total spare capacity, or a portion of the total spare capacity, of the interest group should be deemed to be the total spare capacity of a member of the interest group, the total spare capacity of that member shall be the amount so notified.

(11) For the purposes of the application of section 835AAD or 835AAE to an interest group, a reference in the section concerned to a relevant entity shall be construed as a reference to a member of an interest group.

(12) Where—

(a) an amount of total spare capacity is carried forward from a preceding accounting period by a member of an interest group, and

(b) the reporting company of the interest group and each member of the interest group concerned jointly notify the Revenue Commissioners, in the form specified by the Revenue Commissioners for that purpose, that the total spare capacity so carried forward, or a portion of that total spare capacity, should be reallocated to a member of the interest group,

the total spare capacity so notified shall be allocated to the member of the interest group.

(13) Subject to subsection (14), where the relevant entity is an interest group, section 835AAI shall apply subject to the modification that the relevant entity’s ratio of equity over total assets shall be calculated on the basis of a consolidation of the results of the members of the interest group as if each member of the interest group had a common ultimate parent resident in the State prepared under the same body of accounting standards and same accounting policies as applies to the ultimate consolidated financial statements of the worldwide group concerned, but where a member of an interest group is a branch or agency of a company not resident in the State, then the results of that member of the interest group shall be the results of the branch or agency.

(14) Where members of an interest group hold investments in companies which are not members of an interest group, and such investments would, but for this subsection, be fully consolidated in the results of the members of an interest group prepared pursuant to subsection (13), those investments shall, for the purposes of subsection (13) be accounted for at cost, measured at the lower of their carrying amount and fair value less costs to sell, as if the relevant entity was a company required to prepare non-consolidated financial statements.

(15) A payment for relief shall not—

(a) be taken into account in computing profits or losses of either the payor or the recipient of the payment for relief for corporation tax purposes, and

(b) be regarded as a distribution or a charge on income for any of the purposes of the Corporation Tax Acts.

Interest group reporting

835AAM. (1) An interest group shall appoint a member of the group that is a chargeable person, within the meaning of Part 41A, for the purposes of this Chapter (in this Part referred to as a ‘reporting company’).

(2) Where an election has been made in accordance with section 835AAK to form an interest group, the reporting company shall make a return on behalf of the interest group on or before the specified return date for the accounting period, in the form specified by the Revenue Commissioners.

(3) The return referred to in subsection (2) may include the following details in respect of the interest group and an accounting period of the interest group:

(a) the name and tax reference number of each member of the interest group;

(b) EBITDA;

(d) exceeding borrowing costs;

(e) the disallowable amount and its allocation as amongst the members of the interest group;

(f) total spare capacity and its allocation as amongst the members of the interest group;

(g) in respect of amounts carried forward from prior accounting periods—

(i) deemed borrowing cost carried forward and its allocation as amongst the members of the interest group,

(ii) deemed borrowing cost utilised in the accounting period and its allocation as amongst the members of the interest group,

(iii) total spare capacity carried forward and its allocation as amongst the members of the interest group, and

(iv) total spare capacity utilised in the accounting period and its allocation as amongst the members of the interest group;

(h) where an election is made in accordance with section 835AAH(1)—

(i) group exceeding borrowing costs, and

(ii) group EBITDA;

(i) where an election is made in accordance with section 835AAI(6)—

(i) amount inserted in respect of E, for the interest group and the worldwide group, in the formula for the calculation of the ratio of equity over total assets in section 835AAI(1), and

(ii) amount inserted in respect of A, for the interest group and the worldwide group, in the formula for the calculation of the ratio of equity over total assets in section 835AAI(1);

(j) where a payment for relief is made in accordance with section 835AAL(15)—

(i) the name and tax reference number of the payee and payor, and

(ii) the amount of the payment.

Chapter 5

Application of this Part

Scope of application

835AAN. This Part shall apply to an accounting period of a relevant entity commencing on or after 1 January 2022.

Order of application

835AAO. This Part shall apply after all provisions of the Tax Acts and the Capital Gains Tax Acts, other than section 811C.”.

(4) The Principal Act is amended in Part 35C, in section 835AX, in subsection (1), by the substitution of “other than section 811C and Part 35D” for “other than section 811C”.

(5) The Principal Act is amended in Part 41A—

(a) in section 959AR, by the substitution of the following subsection for subsection (4)—

“(4) Where as respects an accounting period, other than a relevant accounting period, of a company—

(a) for accounting periods other than those referred to in paragraph (b)—

(i) the preliminary tax paid by the chargeable person for the accounting period in accordance with subsection (1) is less than 90 per cent of the tax payable by the chargeable person for the accounting period,

(ii) the preliminary tax so paid by the chargeable person for the accounting period is not less than 90 per cent of the amount of tax which would be payable by the chargeable person for the accounting period if no amount were included in the company’s profits for the accounting period—

(I) in respect of chargeable gains on the disposal of assets in the part of the accounting period which is after the date by which preliminary tax for the accounting period is payable in accordance with subsection (1), or

(II) in the case of a relevant company, in respect of profits or gains or losses accruing, and not realised, in the accounting period on financial assets or financial liabilities as are attributable to changes in value of those assets or liabilities in the part of the accounting period which is after the end of the month immediately preceding the month in which preliminary tax for the accounting period is payable in accordance with subsection (1),

and

(iii) the chargeable person makes a further payment of preliminary tax for the accounting period within one month after the end of the accounting period and the aggregate of that payment and the preliminary tax paid by the chargeable person for the accounting period in accordance with subsection (1) is not less than 90 per cent of the tax payable by the chargeable person for the accounting period,

(b) for accounting periods commencing on or after 1 January 2022 and ending on or before 31 December 2027—

(iii) the chargeable person makes a further payment of preliminary tax for the accounting period within a period of 6 months after the end of the accounting period, but where the last day of that period of 6 months is later than day 21 of the month in which it occurs, the further payment of preliminary tax for the accounting period is paid no later than—

(I) day 21 of the month in which that last day occurs, or

(II) where payment is made by such electronic means as are required by the Revenue Commissioners, day 23 of the month in which that last day occurs,

and

(iv) the aggregate of that payment and the preliminary tax paid by the chargeable person for the accounting period in accordance with subsection (1) is not less than 90 per cent of the tax payable by the chargeable person for the accounting period,

the further payment of preliminary tax paid by the chargeable person for the accounting period shall be treated for the purposes of subsection (3) as having been paid by the date by which it is due and payable.”,

and

(b) in section 959AS, by the substitution of the following subsection for subsection (7):

“(7) Where, as respects a relevant accounting period, either—

(a) for accounting periods other than those referred to in paragraph (b)—

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

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

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

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

and

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

(b) for accounting periods commencing on or after 1 January 2022 and ending on or before 31 December 2027—

(I) day 21 of the month in which that last day occurs, or

(II) where payment is made by such electronic means as are required by the Revenue Commissioners, day 23 of the month in which that last day occurs,

and

(iv) the aggregate of the payment referred to in subparagraph (iii) and the initial instalment and final instalment of preliminary tax paid by the chargeable person for the accounting period in accordance with subsection (2) is not less than 90 per cent of the tax payable by the chargeable person for the accounting period,

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

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

32. Section 481 of the Principal Act is amended, in subsection (1), in the definition of “eligible expenditure”—

(a) by the substitution, in paragraph (a), of “the film,” for “the film, and”,

(b) by the substitution, in paragraph (b), of “subsection (2E), and” for “subsection (2E);”, and

“(c) directly by the qualifying company concerned on the provision of labour only services by an individual (not being an eligible individual) for the purposes of the production of the film;”.

33. Digital games relief

33. (1) The Principal Act is amended by the insertion of the following section after section 481:

“Relief for investment in digital games

481A. (1) In this section—

‘date of completion’, in relation to a qualifying digital game, means the date on which the game is first made available to the public or, where the game is commissioned by an undertaking other than the digital games development company, the date on which the game is first provided by the digital games development company to the undertaking and ‘completed’ shall be construed accordingly;

‘digital game’ means a game which—

(a) integrates digital technology,

(b) incorporates not less than three of the following classes of information, in digital form:

(i) text;

(ii) sound;

(iii) still images;

(iv) animated images,

(d) is controlled by software enabling the person playing the game to interact fully with the dynamics of the game, including by providing feedback to the person, enabling control over elements of the game by the person and allowing the person to adapt elements of the game;

‘digital games development company’ means a company that—

(a) is resident in the State, or is resident in a European Economic Area (EEA) state other than the State and carries on business in the State through a branch or agency,

(b) carries on a trade of developing digital games that are wholly or principally to be made available to the public on a commercial basis with a view to the realisation of profit,

(i) the accounting period referred to in paragraph (a) of the definition of ‘qualifying period’, or

(ii) each accounting period ending in the qualifying period, referred to in paragraph (b) of that definition,

as the case may be, and

(d) is not, or is not part of, an undertaking which would be regarded as an undertaking in difficulty;

‘digital games corporation tax credit’, in relation to a qualifying digital game, means an amount equal to 32 per cent of the lowest of—

(a) the eligible expenditure,

(b) 80 per cent of the qualifying expenditure, and

‘eligible digital game’ means a digital game which is—

(a) developed on a commercial basis with a view to the realisation of profit,

(b) wholly or mainly to be made available to the public,

(d) which is not produced solely or mainly—

(i) as part of a promotional campaign or advertising for a specific product or undertaking, or

(ii) as a game of skill or chance for a prize comprising money or money’s worth;

‘eligible expenditure’ means the portion of the qualifying expenditure that is expended on the development of the digital game in the State or the EEA;

‘final certificate’ shall be construed in accordance with subsection (9);

‘interim certificate’ shall be construed in accordance with subsection (4);

‘interim digital game’ means a digital game in respect of which—

(a) an interim certificate has been issued, and

(b) no final certificate has been issued;

‘interim digital games corporation tax credit’, in relation to an interim digital game, means an amount incurred in an accounting period equal to 32 per cent of the lowest of—

(a) the eligible expenditure amount,

(b) 80 per cent of the qualifying expenditure, and

‘qualifying digital game’ means a digital game in respect of which the Minister has issued a final certificate;

‘qualifying expenditure’, in relation to an interim digital game or a qualifying digital game, is expenditure incurred by the digital games development company on the design, production and testing of a digital game;

‘qualifying period’, in relation to digital games corporation tax credit means—

(a) the accounting period of the digital games development company, in respect of which the specified return date for the chargeable period, within the meaning of section 959A, immediately precedes the date the claim referred to in subsection (19) or subsection (20), as the case may be, was made, or

(b) where the accounting period referred to in paragraph (a) is a period of less than 12 months, the period—

(i) commencing on the date on which the most recently commenced accounting period, which commences on or before the date which is 12 months before the end of the accounting period referred to in paragraph (a), commences, and

(ii) ending on the date the accounting period referred to in paragraph (a) ends,

and references in subsections (22) and (23) to corporation tax and in subsection (23) to corporation tax paid shall be construed accordingly;

‘Rescuing and Restructuring Guidelines’ means the Communication of the Commission on Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty[^4];

‘specified amount’ has the meaning assigned to it by subsection (23);

‘the Minister’ means the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media;

‘undertaking’ means the relevant economic unit that would be regarded as an undertaking for the purposes of the Rescuing and Restructuring Guidelines;

‘undertaking in difficulty’ shall be construed in accordance with section 2. 2 of the Rescuing and Restructuring Guidelines.

(2) Subject to the provisions of this section, a digital games development company may make an application to the Minister—

(a) in relation to a digital game that is to be developed by the company, for the issue by the Minister of an interim certificate, or

(b) in relation to a digital game that is developed and completed by the company, for the issue by the Minister of a final certificate.

(3) An application for an interim or final certificate under subsection (2) shall be in a form approved by the Minister for that purpose and shall contain such information as may be specified in regulations made under subsection (17).

(4) The Minister may, following an application by a digital games development company under subsection (2)(a), subject to subsection (5) and in accordance with regulations made under subsection (17), issue to the digital games development company a certificate (in this section referred to as an ‘interim certificate’) stating—

(a) that the certificate is an interim certificate,

(b) that the digital game is to be treated as an interim digital game for the purposes of this section, and

(5) In considering whether to issue the interim certificate referred to in subsection (4), the Minister shall have regard to—

(a) whether the digital game as proposed is likely to be an eligible digital game when completed, and

(b) the contribution which the development of the digital game is expected to make to the promotion and expression of Irish and European culture, by reference to the following:

(i) the cultural content of the game, including its setting, principal characters, language and subject matter;

(ii) any cultural creativity employed in the development of the game, including innovation in the portrayal of Irish or European culture, the use of materials written or created in Ireland or Europe as the basis for the game, technological innovation or the use of music created by a composer who is a national of or ordinarily resident in Ireland or another EEA state;

(iii) the contribution of the game to the development of a concentration of cultural activity, by reference to such matters as the proportion of the creative work carried out in Ireland or another EEA state, the number of key positions in the development of the game occupied by persons who are nationals of or ordinarily resident in Ireland or another EEA state, and the proportion of the members of the development team who are nationals of or ordinarily resident in Ireland or another EEA state;

(iv) the concomitant cultural contribution of the game, by reference to matters including the educational content of games aimed at children and the inclusion of themes relating to diversity and equality;

(v) whether the content of the game promotes the protection, restoration and promotion of sustainable use of Irish or European terrestrial ecosystems or the raising of awareness of the exigencies of increasing environmental sustainability and minimising climate change.

(6) Where an interim certificate is issued, the Minister, having regard to the criteria specified in subsection (5), shall specify in the interim certificate such conditions, as the Minister may consider proper, including conditions—

(a) in relation to the employment-related responsibilities of the digital games development company in the development of that digital game, or

(b) in relation to, in respect of the Communication from the Commission (2013/C 332/01)[^5], the maximum aid intensity.

(7) The Minister may amend or revoke any condition (including a condition added by virtue of this subsection) specified in an interim certificate, or add to such conditions, by giving notice in writing to the digital games development company concerned of the amendment, revocation or addition, as the case may be, and this section shall apply as if—

(a) a condition so amended or added by the notice was specified in the interim certificate, and

(b) a condition so revoked was not specified in the interim certificate.

(8) On the expiry of an interim certificate, the interim certificate will cease to have effect and is treated as never having had effect unless—

(a) an application has been made in advance of the expiry date to the Minister under subsection (2)(b), and

(b) on the determination of the application, a final certificate is issued by the Minister.

(9) The Minister may, following an application by a digital games development company under subsection (2)(b), subject to subsection (10) and in accordance with regulations made under subsection (17), issue to the digital games development company a certificate (in this section referred to as a ‘final certificate’) stating—

(a) that the certificate is a final certificate, and

(b) that the digital game is to be treated as a qualifying digital game for the purposes of this section.

(10) In considering whether to issue a final certificate, the Minister shall have regard to the following criteria—

(a) whether the digital game as completed is an eligible digital game,

(b) the contribution which the digital game makes to the promotion and expression of Irish or European culture, by reference to the matters referred to in subparagraphs (i) to (v) of subsection (5)(b), and

(c) where an interim certificate has been issued in respect of the digital game, whether the conditions specified in the interim certificate have been satisfied.

(11) Where a final certificate is issued, the Minister, having regard to the criteria specified in subsection (10), shall specify in the final certificate such conditions, as the Minister may consider proper, including a condition—

(a) in relation to the employment-related responsibilities of the digital games development company for the development of that digital game, and

(b) in relation to, in respect of the Communication from the Commission (2013/C 332/01), the maximum aid intensity.

(12) The Minister may amend or revoke any condition (including a condition added by virtue of this paragraph) specified in a final certificate, or add to such conditions, by giving notice in writing to the digital games development company concerned of the amendment, revocation or addition, as the case may be, and this section shall apply as if—

(a) a condition so amended or added by the notice was specified in the final certificate, and

(b) a condition so revoked was not specified in the final certificate.

(13) A digital games development company shall not make a claim for an interim digital games corporation tax credit under subsection (19) or a digital games corporation tax credit under subsection (20) where—

(a) there has not been issued to the digital games development company either an interim certificate, as respects claims made under subsection (19), or a final certificate, as respects claims made under subsection (20), by the Minister in respect of the digital game concerned,

(b) as respects claims made under subsection (19), the interim certificate has expired,

(c) the digital games development company, any company controlled by the digital games development company and each person who is either the beneficial owner of, or able directly or indirectly to control, more than 15 per cent of the ordinary share capital of the digital games development company (in this paragraph referred to as a ‘relevant person’), as the case may be, is not in compliance with all of the obligations imposed by the Tax Acts, the Capital Gains Tax Acts or the Value-Added Tax Consolidation Act 2010 in relation to—

(i) the payments or remittances of taxes, interest or penalties required to be paid or remitted under those Acts,

(ii) the delivery of returns, and

(iii) requests to supply to an officer of the Revenue Commissioners accounts of, or other information about, any business carried on, by the digital games development company, or relevant person, as the case may be,

(d) as respects a claim made under subsection (20), the qualifying expenditure amount is less than €100,000,

(e) the digital games development company is an undertaking in difficulty, or

(f) any company in an undertaking of which the digital games development company is part is subject to an outstanding recovery order following a previous decision of the European Commission that declared an aid illegal and incompatible with the internal market.

(14) A digital games development company shall not make a claim for an interim digital games corporation tax credit under subsection (19) or a digital games corporation tax credit under subsection (20) where—

(a) it would be reasonable to consider that any particular item of expenditure in the claim is inflated,

(b) the company has obtained relief under Part 29 in respect of the expenditure,

(d) the expenditure has been met directly or indirectly by grant assistance or any other assistance which is granted by or through—

(i) the State or another Member State of the European Union,

(ii) any board established by statute, any public or local authority or any other agency of the State or another relevant Member State or an institution, office, agency or other body of the European Union, or

(iii) a state, other than the State or a Member State referred to in subparagraph (i), and any board, authority, institution, office, agency or other body in such state,

(e) there is no commercial rationale for the corporate structure of the digital games development company—

(i) for the development, financing, distribution or sale of the digital game, or

(ii) for all of the purposes referred to in subparagraph (i),

(f) the corporate structure of the digital games development company would hinder the Revenue Commissioners in verifying compliance with any of the provisions governing the relief, or

(g) prior to making a claim, the company does not have such information and records as the Revenue Commissioners may reasonably require for the purposes of determining whether that claim complies with this section.

(15) In carrying out their functions under this section, the Revenue Commissioners may—

(a) consult with any person, agency or body of persons, as in their opinion may be of assistance to them,

(b) notwithstanding any obligation as to secrecy or other restriction on the disclosure of information imposed by, or under, the Tax Acts or any other statute or otherwise, disclose any detail in an application or claim of a digital games development company under this section which they consider necessary for the purposes of such consultation, and

(c) where they have reason to believe that financial arrangements have been entered into in contravention of subsection (16)(a), the Revenue Commissioners may seek any information they consider appropriate in relation to the arrangements or in relation to any person who is, directly or indirectly, a party to the arrangements.

(16) A company shall not be regarded as a digital games development company in respect of an interim digital game or a qualifying digital game for the purposes of this section—

(a) where the financial arrangements which the company enters into in relation to the interim digital game or the qualifying digital game are—

(i) financial arrangements of any type with a person resident, registered or operating in a territory other than—

(I) a Member State of the European Communities, or

(II) a territory with the government of which, arrangements having the force of law by virtue of section 826(1), have been made,

(ii) financial arrangements under which funds are channelled, directly or indirectly, to, or through, a territory other than a territory referred to in clause (I) or (II) of subparagraph (i),

other than where—

(A) those arrangements relate to the development of part of the interim digital game or the qualifying digital game in a territory other than a territory referred to in clause (I) or (II) of subparagraph (i),

(B) the digital games development company has sufficient records to enable the Revenue Commissioners to verify, in the case of development of an interim digital game or a qualifying digital game in such a territory, the amount of each item of expenditure on the development of the interim digital game or the qualifying digital game expended in the territory, whether expended by the digital games development company or by any other person, and

(C) the digital games development company has such records in place to substantiate such expenditure in advance of making a claim under either or both of subsection (19) and subsection (20),

(b) without prejudice to the generality of section 886, where the company fails to provide, when requested to do so by the Revenue Commissioners, for the purposes of verifying compliance with the provisions governing the relief or with any condition specified in a certificate issued by the Minister under subsection (4) or subsection (9), evidence to vouch each item of expenditure in the State or elsewhere on the development of the interim digital game and the qualifying digital game, whether expended by the digital games development company or by any other person engaged, directly or indirectly, by the digital games development company to provide goods, services or facilities in relation to such development and, in particular, such evidence shall include—

(i) records required to be kept or retained by the digital games development company by virtue of section 886, and

(ii) records, in relation to the development of the interim digital game and the qualifying digital game, required to be kept or retained by that other person by virtue of section 886, or which would be so required if that other person were subject to the provisions of that section,

(c) in relation to a claim under subsection (20), where the company fails to provide, when requested to do so by the Revenue Commissioners, for the purposes of verifying compliance with the provisions governing the relief or with any condition specified in a certificate issued by the Minister under subsection (9), a copy of the digital game in such format and manner required under paragraph (d)(ii),

(d) where the company, within such time as is specified in the regulations made under subsection (17)—

(i) fails to notify the Minister in writing of the date of completion of the development of the qualifying digital game, and

(ii) fails to provide to the Minister a copy of the completed digital game in such format and manner as may be specified in those regulations,

(e) unless the company makes a claim under subsection (20), within the time referred to in paragraph (d), and has available, prior to making that claim, a compliance report, in such format and manner as is specified in the regulations made under subsection (17), which provides proof that—

(i) the provisions of this section in so far as they apply in relation to the company have been met,

(ii) where an interim certificate has been issued to the company in relation to an interim digital game, any conditions attaching to the interim certificate have been fulfilled, and

(iii) any conditions attaching to the final certificate issued to the company in relation to a qualifying digital game have been fulfilled,

(f) where the company ceases to carry on the trade referred to in paragraph (b) of the definition of ‘digital games development company’ before a time which is 12 months after the date referred to in paragraph (d).

(17) The Revenue Commissioners, with the consent of the Minister for Finance and, in relation to the matters specified in paragraphs (a) to (d), with the consent of the Minister, shall make regulations with respect to the administration by the Revenue Commissioners of the relief under this section and, without prejudice to the generality of the foregoing, regulations under this subsection may include provisions—

(a) governing the application for interim certification or final certification, the timing of such applications, and the information and documents to be provided in or with such applications,

(b) the information required to be included in the application made to the Minister by a digital games development company,

(c) specifying the time within which a digital games development company shall notify the Minister of the date of completion of the development of a qualifying digital game,

(d) specifying the time within which, and the format, number of copies and manner in which, a qualifying digital game shall be provided to the Minister,

(e) governing the records that a digital games development company shall maintain or provide to the Revenue Commissioners,

(f) governing the period for which, and the place at which, such records shall be maintained,

(g) specifying the form and content of the compliance report that must be available in accordance with subsection (16)(e), the manner in which such report shall be made and verified, and the documents to accompany the report,

(h) specifying the type of expenditure which may be treated as qualifying or eligible expenditure on the development of an interim digital game or a qualifying digital game,

(i) specifying the currency exchange rate to be applied to expenditure on the development of an interim digital game or a qualifying digital game,

(j) governing financial arrangements in accordance with subsection (16)(a), and

(k) governing the payment of the specified amount by the Revenue Commissioners to the digital games development company.

(18) The Revenue Commissioners shall, for the purpose of making regulations under subsection (17) in relation to the matter referred to in paragraph (h) of that subsection have regard to—

(a) whether the type of expenditure relates to design, production or testing and the stage of development of the game in which the expenditure is incurred,

(b) whether the type of expenditure is directly related to design, production and testing, and

(c) the extent to which the type of expenditure is incurred directly by the digital games development company on design, production or testing.

(19) Where the Minister has issued an interim certificate in relation to an interim digital game to a digital games development company and the provisions of this section have been complied with, a digital games development company may, in advance of the date of completion, make a claim for the interim digital games corporation tax credit where—

(a) the claim is made within 12 months of the end of the accounting period in which the expenditure giving rise to the claim is incurred,

(b) the interim certificate has not expired, and

(20) Where the Minister has issued a final certificate in relation to a qualifying digital game to a digital games development company and the provisions of this section have been complied with, a digital games development company may make a claim for the digital games corporation tax credit, less the amount, if any, already claimed in respect of the qualifying digital game under subsection (19).

(21) A claim under subsection (19) or (20) shall be made in the return required under Part 41A, the specified return date of which immediately precedes the making of the claim.

(22) Where a digital games development company makes a claim under subsection (19) or (20), the corporation tax of the company, for the qualifying period, shall be reduced by so much of an amount equal to the interim digital games corporation tax credit or the digital games corporation tax credit, as the case may be, as does not exceed that corporation tax and where the qualifying period is a period referred to in paragraph (b) of the definition of ‘qualifying period’, the corporation tax of an earlier accounting period shall be reduced in priority to the corporation tax of a later accounting period.

(23) Subject to subsection (31), where a digital games development company has made a claim under subsection (19) or (20), and the amount of the credit exceeds the corporation tax of the qualifying period, as reduced by the corporation tax paid by the company in respect of that period, but before any reduction under subsection (22), the excess (in this section referred to as the ‘specified amount’) shall be paid to the digital games development company by the Revenue Commissioners.

(24) An amount payable by the Revenue Commissioners to a digital games development company under subsection (23) shall be deemed to be an overpayment of corporation tax, for the purposes only of section 960H(2).

(25) A claim in respect of a specified amount shall be deemed, for the purposes of section 1077F, to be a claim in connection with a credit and, for the purposes of determining an amount in accordance with section 1077F(3) or 1077F(5), a reference to an amount of tax that would have been payable for the relevant periods by the person concerned shall be read as if it were a reference to a specified amount.

(26) Where the Revenue Commissioners have paid a specified amount to a digital games development company and it is subsequently found that payment of all or part of the amount is not authorised by this section (in this section referred to as the ‘unauthorised amount’), then—

(a) the company,

(b) any director of the company, or

may be charged to tax under Case IV of Schedule D for the accounting period, or year of assessment, as the case may be, in respect of which the payment was made, in an amount equal to—

(i) in the case of a company, 4 times, and

(ii) in the case of an individual, one hundred fortieths,

of so much of the specified amount as is not so authorised.

(27) The circumstances in which an unauthorised amount arises shall include any circumstances where the amount was claimed under either or both subsection (19) and subsection (20), or paid in accordance with subsection (23) and—

(a) the company made a claim contrary to either or both subsection (19) and subsection (20), or

(b) the digital games development company—

(i) fails to satisfy or comply with any condition or obligation under this section or regulations made under this section,

(ii) fails to satisfy or comply with any condition or obligation specified in a certificate, or

(iii) at any time on or before the time referred to in subsection (16)(f) fails to comply with any of the obligations referred to in subsection (13)(c).

(28) Where, in accordance with subsection (26), an assessment is made or amended in respect of a specified amount, the amount so charged shall for the purposes of section 1080 be deemed to be tax due and payable and shall carry interest as determined in accordance with subsection (2)(c) of section 1080 as if a reference to the date when the tax became due and payable were a reference to the date the amount was paid by the Revenue Commissioners.

(29) Notwithstanding section 851A, where a digital games development company is in receipt of relief from tax under this section, the Revenue Commissioners may disclose the following taxpayer information in accordance with State aid transparency requirements:

(a) the name of the company;

(b) the name of the digital game;

(d) in respect of the principal activity carried on by the company, the NACE classification code, as determined in accordance with Regulation (EC) No. 1893/2006 of the European Parliament and of the Council of 20 December 2006[^6] establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No. 3037/90 as well as certain EC Regulations on specific statistical domains;

(e) the amount of interim digital games corporation tax credit or digital games corporation tax credit, as the case may be, granted, by reference to ranges set out in page 30, paragraph 166(vi) of the Guidelines on State Aid to Promote Risk Finance[^7], inserted by Communication from the Commission (2014/C 198/02)[^8];

(f) whether the company is—

(i) a category of enterprise referred to in Article 2. 1 of Annex 1 to Commission Regulation (EU) No. 651/2014 of 17 June 2014[^9], or

(ii) a category of enterprise which is larger than the categories of enterprise referred to in subparagraph (i);

(g) the territorial unit, within the meaning of the NUTS Level 2 classification specified in Annex 1 to Regulation (EC) No. 1059/2003 of the European Parliament and of the Council of 26 May 2003[^10] amended by Regulation (EC) No. 1888/2005 of the European Parliament and of the Council of 26 October 2005[^11], Commission Regulation (EC) No. 105/2007 of 1 February 2007[^12], Regulation (EC) No. 176/2008 of the European Parliament and of the Council of 20 February 2008[^13], Regulation (EC) No. 1137/2008 of the European Parliament and of the Council of 22 October 2008[^14], Commission Regulation (EU) No. 31/2011 of 17 January 2011[^15], Council Regulation (EU) No. 517/2013 of 13 May 2013[^16], Commission Regulation (EU) No. 1319/2013 of 9 December 2013[^17], Commission Regulation (EU) No. 868/2014 of 8 August 2014[^18], Commission Regulation (EU) No. 2066/2016 of 21 November 2016[^19], Regulation (EU) 2017/2391 of the European Parliament and of the Council of 12 December 2017[^201], and Commission Delegated Regulation 2019/1755 of 8 August 2019[^21], in which the company is located;

(h) the date on which the interim digital games corporation tax credit or digital games corporation tax credit, as the case may be, is granted.

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