Finance Act, 1993

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Taxation of certain foreign currency transactions.

47.—(1) In this section—

“relevant liability”, in relation to an accounting period, means relevant principal—

(a) denominated in a currency other than the currency of the State, and

(b) the interest in respect of which—

(i) falls to be treated as a distribution for the purposes of the Corporation Tax Act, 1976 , and

(ii) is computed on the basis of a rate which, at any time in that accounting period, exceeds 80 per cent. of the specified rate at that time;

“relevant principal” means an amount of money advanced to a borrower by a company the ordinary trading activities of which include the lending of money where—

(a) the consideration given by the borrower for that amount is a security falling within subparagraph (ii), (iii) (I) or (v) of section 84 (2) (d) of the Corporation Tax Act, 1976 , and

(b) interest or any other distribution is paid out of the assets of the borrower in respect of that security;

“specified rate” means—

(a) the rate known as the three month Dublin Interbank Offered Rate a record of which is maintained by the Central Bank of Ireland, or

(b) where such a record was not maintained, the rate known as the Interbank market three month fixed rate as published in the statistical appendices of the bulletins and annual reports of the Central Bank of Ireland.

(2) Notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts, a profit or loss from any foreign exchange transaction, being a profit or loss which arises in an accounting period—

(a) in connection with relevant principal which, in relation to the accounting period, is a relevant liability, and

(b) to a company which, in relation to the said relevant liability, is the borrower,

shall, for the purposes of those Acts, be deemed to be a profit or gain or a loss, as the case may be, of the trade carried on by the borrower in the course of which trade the relevant liability is used.

(3) Section 39 of the Finance Act, 1980 , is hereby amended by the insertion, after subsection (1CC9), of the following subsection—

“(1CC10) The following provisions shall apply, for the purposes of relief under this Chapter, to a company to which a profit or loss specified in section 47 of the Finance Act, 1993, arises:

(a) the amount of any profit which is deemed by that section to be a profit or gain of the trade carried on by the company shall be regarded as an amount receivable from the sale of goods, and

(b) subsection (ID) shall have effect as respects the company in relation to a claim by it for relief from tax by virtue of this subsection as it has effect as respects a company in relation to a claim by it for relief from tax by virtue of subsection (IB) or (1C).”.

(4) This section shall have and be deemed to have had effect in relation to a company—

(a) as respects subsection (2), for all accounting periods (within the meaning of section 9 of the Corporation Tax Act, 1976 ) of the company, and

(b) as respects subsection (3), for any relevant accounting period (within the meaning of section 38 of the Finance Act, 1980 ) of the company.