Finance Act, 1998
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SCHEDULE 2 Provisions Amending Principal Act in Consequence of a Change in the Currency of Certain States | ||
The Taxes Consolidation Act, 1997 , is hereby amended in accordance with the following provisions of this Schedule. | ||
1. In section 79(1), after paragraph (b) there shall be inserted the following paragraph: | ||
“(c) For the purposes of this section a gain or loss arising to a company which results directly from a change in a rate of exchange shall include a gain or loss which results directly from an event which substitutes for the currency of a State another currency of that State where the other currency, as a result of the event, becomes the functional currency (within the meaning of section 402) of the company.”. | ||
2. In section 80(1), in the definition of “specified rate”, for paragraph (a) there shall be substituted the following paragraph: | ||
“(a) the rate known as the 3 month European Interbank Offered Rate, or”. | ||
3. In section 110(1), in the definition of “qualifying asset”, in paragraph (a), for subparagraph (i) there shall be substituted the following subparagraph: | ||
“(i) which consists of, or of an interest in or a contractual right to, any loan, lease, trade or consumer receivable or other debt or receivable whether secured or unsecured, and”. | ||
4. In section 133(13)— | ||
(a) in paragaph (b), for “the rate known as the 3 month Dublin Interbank Offered Rate on Irish pounds (in this subsection referred to as the “3 month Dublin Interbank Offered Rate”) a record of which is maintained by the Central Bank of Ireland” there shall be substituted “the rate known as the 3 month European Interbank Offered Rate”, | ||
(b) in paragraph (c)— | ||
(i) in subparagraph (i), | ||
and | ||
(ii) in subparagraph (iii), | ||
for “the 3 month Dublin Interbank Offered Rate” in each case, there shall be substituted “the rate known as the 3 month European Interbank Offered Rate”. | ||
5. In section 402(1), after paragraph (c) there shall be inserted the following paragraphs: | ||
“(d) In this section references to an amount having been incurred in, or computed in terms of, a currency other than the functional currency of a company shall not include a reference to an amount having been incurred in, or computed in terms of, the currency of a state, which currency has been substituted by another currency of that state, where that other currency is the functional currency of the company. | ||
(e) For the purposes of this section where at any time, in relation to a state, the currency (hereafter in this paragraph referred to as ‘the old currency’) is substituted by another currency, the representative rate of exchange of the currency of that state for the currency of another state at any previous time shall mean the representative rate of exchange of the old currency of that state for the currency of that other state.”. | ||
6. In section 404(1)— | ||
(a) in paragraph (a), in the definition of “relevant lease payment”, in paragraph (ii), for “a rate known as the Dublin Interbank Offered Rate and a record of which is kept by the Central Bank of Ireland” there shall be substituted “a rate known as the European Interbank Offered Rate”, | ||
and | ||
(b) in paragraph (b)(ii), for “the rate known as the 6 month Dublin Interbank Offered Rate and a record of which is maintained by the Central Bank of Ireland” there shall be substituted “the rate known as the 6 month European Interbank Offered Rate”. | ||
7. In section 445, after subsection (2) there shall be inserted the following: | ||
“(2A) An operation which would fall within any class or kind of operation specified in a certificate under subsection (2) to be a relevant trading operation but for the fact that it involves the currency of the State shall, with effect from the commencement of section 47 of the Finance Act, 1998, in relation to paragraph 7 of Schedule 2 to that Act, be deemed to fall within that class or kind of operation and to have been specified in that certificate as a relevant trading operation.”. | ||
8. In section 446— | ||
(a) after subsection (2) there shall be inserted the following: | ||
“(2A) An operation which would fall within any class or kind of operation specified in a certificate under subsection (2) to be a relevant trading operation but for the fact that it involves the currency of the State shall, with effect from the commencement of section 47 of the Finance Act, 1998, in relation to paragraph 8 of Schedule 2 to that Act, be deemed to fall within that class or kind of operation and to have been specified in that certificate as a relevant trading operation.”, | ||
and | ||
(b) in subsection (7)(c)— | ||
(i) for subparagraph (i) there shall be substituted the following subparagraph: | ||
“(i) the provision for persons not ordinarily resident in the State of services which are of a type normally provided by a bank in the ordinary course of its trade,”, | ||
(ii) in subparagraph (ii)— | ||
(I) for clause (II) there shall be substituted the following clause: | ||
“(II) international dealings in currencies and in futures, options and similar financial assets,”, | ||
and | ||
(II) for clause (III) there shall be substituted the following clause: | ||
“(III) dealings in bonds, equities and similar instruments,”. | ||
9. After section 541, there shall be substituted the following section: | ||
“Treatment of debts on a change in currency. | ||
541A.— (1) Where on any day a debt (to which section 541 does not apply by virtue of subsection (6) of that section) owed to a person in a currency other than Irish currency, becomes a debt in Irish currency as a result of the currency of a State being substituted by another currency, which other currency also on that day becomes Irish currency, then, subject to subsection (2), that debt shall be deemed, for the purposes of the Capital Gains Tax Acts, on the day preceding that day, to be disposed of by the person and immediately reacquired by the person at its market value. | ||
(2) Notwithstanding any other provision of the Capital Gains Tax Acts, where in respect of a debt a chargeable gain accrues to a person by virtue of subsection (1), that chargeable gain shall be assessed and charged as if it were a chargeable gain which accrued to the person at the time of the disposal of the debt and shall not be assessed and charged otherwise. | ||
(3) For the purposes of subsection (2), in relation to a debt owed to a person, the satisfaction of the debt or part of the debt shall be treated as a disposal of the debt or of that part at the time when the debt or that part is satisfied.”. | ||
10. In section 552, after subsection (1) there shall be inserted the following subsection: | ||
“(1A)(a) In this subsection ‘rate of exchange’ means a rate at which 2 currencies might reasonably be expected to be exchanged for each other by persons dealing at arm's length. | ||
(b) For the purposes of subsection (1) where a sum allowable as a deduction was incurred in a currency other than the currency of the State, it shall be expressed in terms of the currency of the State by reference to the rate of exchange of the currency of the State for the other currency at the time that the sum was incurred.”. |