Finance Act 2018

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Relief for investment in corporate trades

25. (1) The Principal Act is amended by substituting the following for Part 16:

“PART 16

Relief for Investment in Corporate Trades

Chapter 1

Interpretation (Part 16)

Interpretation

488. (1) In this Part—

‘associate’ has the same meaning in relation to a person as it has by virtue of subsection (3) of section 433 in relation to a participator;

‘company’ means a body corporate;

‘compliance period’ means the pre-investment period and the relevant period;

‘control’ shall be construed in accordance with subsections (2) to (6) of section 432;

‘director’ shall be construed in accordance with section 433(4);

‘emoluments’ has the same meaning as in section 983;

‘General Block Exemption Regulation’ means Commission Regulation (EU) No. 651/2014 of 17 June 2014⁵ ;

‘innovation’ means process innovation or organisational innovation;

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

‘organisational innovation’ means the implementation of a new organisational method in an undertaking’s business practices, workplace organisation or external relations, other than—

(a) changes that are based on organisational methods already in use in the undertaking,

(b) changes in management strategy, mergers and acquisitions, or

(c) any of the following—

(i) ceasing to use a process,

(ii) simple capital replacement or extension,

(iii) changes resulting purely from changes in factor prices, customisation, localisation, regular, seasonal and other cyclical changes, or

(iv) trading of new or significantly improved products;

‘PPS Number’ has the meaning assigned to it in section 891B(1);

‘pre-investment period’, in relation to relief in respect of any eligible shares issued by a company, means the period beginning 2 years before the shares were issued, or if later, beginning on the date the first company in the RICT group was incorporated and ending immediately before the subscription for eligible shares;

‘process innovation’ means the implementation of a new or significantly improved production or delivery method (including significant changes in techniques, equipment or software), other than—

(a) minor changes or improvements,

(b) increases in production or service capabilities through the addition of manufacturing or logistical systems which are very similar to those already in use, or

(c) any of the following—

(i) ceasing to use a process,

(ii) simple capital replacement or extension,

(iii) changes resulting purely from changes in factor prices, customisation, localisation, regular, seasonal and other cyclical changes, or

(iv) trading of new or significantly improved products;

‘qualifying new venture’ means a venture consisting of relevant trading activities which are set up and commenced by a new company other than—

(a) activities which were previously carried on by another person and to which the company has succeeded, or

(b) a venture, the activities of which were previously carried on as part of another person’s trade or profession;

‘relevant period’, in relation to relief in respect of any eligible shares issued by a company, means the period beginning on the date on which the shares were issued and ending 4 years after that date;

‘relief’ means a deduction from total income granted under this Part, and includes relief granted on a share issue at any time after 6 April 1984 (and the foregoing reference to this Part includes this Part as it stood enacted at any time before the commencement of section 23 of the Finance Act 2018 or, as the case may be, the commencement of section 33 (1)(a) of the Finance Act 2011 ) and subsection (2) supplements this definition;

‘R&D+I’ means research and development activities (within the meaning of section 766) and innovation.

(2) In this Part a reference to relief under this Part is a reference to, as the case may be—

(a) relief as provided under this Part as it operates by virtue of section 502 or, where the context admits, as it operates by virtue of section 503 or, as appropriate, section 507, or

(b) relief as provided under all of those sections.

(3) References in this Part to a disposal of shares include references to a disposal of an interest or right in or over the shares, and an individual shall be treated for the purposes of this Part as disposing of any shares which the individual is treated by virtue of section 587 as exchanging for other shares.

(4) References in this Part to the reduction of any amount include references to its reduction to nil.

(5) A word or expression that is used in this Part and is also used in the General Block Exemption Regulation shall have the meaning in this Part that it has in that Regulation.

Chapter 2

Qualifying companies

Interpretation (Chapter 2)

489. In this Part—

‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993;

‘EEA State’ means a state which is a contracting party to the EEA Agreement;

‘financial activities’ means the provision of, and all matters relating to the provision of, financing or refinancing facilities by any means which involves, or has an effect equivalent to, the extension of credit;

‘financial assets’ includes shares, gilts, bonds, foreign currencies and all kinds of futures, options and currency and interest rate swaps, and similar instruments, including commodity futures and commodity options, invoices and all types of receivables, obligations evidencing debt (including loans and deposits), leases and loan and lease portfolios, bills of exchange, acceptance credits and all other documents of title relating to the movement of goods, commercial paper, promissory notes and all other kinds of negotiable or transferable instruments;

‘financing or refinancing facilities’ includes—

(a) loans, mortgages, leasing, lease rental and hire-purchase, and all similar arrangements,

(b) equity or other investment,

(c) the factoring of debts and the discounting of bills, invoices and promissory notes, and all similar instruments, and

(d) the underwriting of debt instruments and all other kinds of financial securities;

‘linked businesses’ means two or more businesses that are regarded as linked enterprises, within the meaning of Annex 1 of the General Block Exemption Regulation;

‘partner businesses’ means two or more businesses that are regarded as partner enterprises, within the meaning of Annex 1 of the General Block Exemption Regulation;

‘qualifying subsidiary’, in relation to a company, means a subsidiary of that company of a kind which a company may have by virtue of section 492;

‘relevant trading activities’ means activities carried on in the course of a trade the profits or gains of which are charged to tax under Case I of Schedule D, excluding activities related to—

(a) adventures or concerns in the nature of trade,

(b) dealing in commodities or futures or in shares, securities or other financial assets,

(c) financing activities,

(d) the provision of professional services (within the meaning of section 128F(1)),

(e) dealing in or developing land,

(f) the occupation of woodlands within the meaning of section 232,

(g) operating or managing hotels, guest houses, self catering accommodation or comparable establishments or managing property used as an hotel, guest house, self catering accommodation or comparable establishment, except where such activity is a tourist traffic undertaking (within the meaning of section 491),

(h) operations carried on in the coal industry or in the steel and shipbuilding sectors, and

(i) the production of a film (within the meaning of section 481);

‘RICT group’ means the company concerned (that is to say the company referred to in the provision concerned of this Part), its partner businesses and linked businesses, and references to a RICT group shall be taken to refer to any RICT group of which the company is part, and—

(a) for the purposes of section 496(5), includes any company that was, at any time, part of a RICT group with the qualifying company or its qualifying subsidiaries but has since been disposed of,

(b) for the purposes of sections 500, 508P and 508R, includes any company which is at any point during the compliance period a subsidiary of the qualifying company, whether it becomes a subsidiary before, during or after—

(i) the year of assessment in respect of which the individual concerned claims relief and whether or not it is such a subsidiary while he or she is a partner, director or employee, or has an interest in the capital of the company, mentioned in section 500(2)(b), or

(ii) the individual concerned receives any value from it;

‘SME’ means a RICT group that would fall within the SME category of Annex 1 of the General Block Exemption Regulation;

‘unlisted’, in respect of a company, means a company none of whose shares, stock or debentures (within the meaning of section 2 of the Companies Act 2014 ) are listed in the official list of a stock exchange, or quoted on an unlisted securities market of a stock exchange other than—

(a) on the market known as the Enterprise Securities Market of the Irish Stock Exchange, or

(b) on any similar or corresponding market of the stock exchange—

(i) in a Member State, or

(ii) in an EEA state other than the State.

Qualifying companies

490. (1) In this Part, a company shall be a qualifying company if it is incorporated in the State or in another EEA State and, in either case, complies with this section and section 491.

(2) At the time the eligible shares are issued—

(a) the RICT group shall—

(i) be an SME, and

(ii) not be an undertaking in difficulty,

(b) each company in the RICT group shall—

(i) be unlisted, and no arrangements shall be in existence at that time in relation to the company becoming a listed company, and

(ii) not be subject to an outstanding recovery order following a previous decision of the Commission that declared an aid illegal and incompatible with the internal market,

and

(c) the company shall hold a tax clearance certificate within the meaning of section 1095.

(3) Throughout the relevant period—

(a) the company shall—

(i) be resident in the State, or resident in an EEA State other than the State and carry on, or intend to carry on, relevant trading activities from a fixed place of business in the State, and

(ii) not at any time—

(I) control (or together with any person connected with it control) another company other than a qualifying subsidiary, or

(II) be under the control of another company (or of another company and any person connected with that other company), unless such control is exercised by the National Asset Management Agency, or by a company referred to in section 616(1)(g),

and no arrangements shall be in existence at any time in that period by virtue of which the company could fall within clause (I) or (II),

(b) no company in the RICT group shall have any part of its issued shares not fully paid up.

(4) (a) The company shall be—

(i) a company which exists wholly for the purpose of carrying on relevant trading activities, or

(ii) a company whose business consists wholly of—

(I) the holding of shares or securities of, or the making of loans to, one or more qualifying subsidiaries of the company, or

(II) both the holding of such shares or securities or the making of such loans and the carrying on of relevant trading activities where relevant trading activities are carried on from a fixed place of business in the State.

(b) Where a company raises any amount through the issue of eligible shares for the purposes of raising money for relevant trading activities which are being carried on by a qualifying subsidiary or which such a qualifying subsidiary intends to carry on, the amount so raised shall be used for the purpose of acquiring eligible shares in the qualifying subsidiary and for no other purpose.

(5) Subject to subsection (6), a company shall be regarded as having ceased to comply with this section if, before the end of the relevant period, a resolution is passed, or an order is made, for the winding up of the company (or, in the case of a winding up otherwise than under the Companies Act 2014 , any other act is done for the like purpose) or the company is dissolved without winding up.

(6) A company shall not be regarded as ceasing to comply with this section by reason only of the fact that it is wound up or dissolved without winding up if—

(a) it is shown that the winding up or dissolution is for bona fide commercial reasons and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and

(b) the company’s net assets, if any, are distributed to its members before the end of the relevant period or, in the case of a winding up, the end (if later) of 3 years from the commencement of the winding up.

Qualifying companies (supplemental)

491. (1) (a) In this subsection ‘internationally traded financial services’ means the services specified in the Schedule to the Industrial Development (Service Industries) Order 2010 ( S.I. No. 81 of 2010 ) other than those falling within the meaning of paragraph (b) or (c) of the definition of ‘relevant trading activities’.

(b) A company whose relevant trading activities includes internationally traded financial services shall not be a qualifying company unless a certificate has been provided to it by Enterprise Ireland to the effect that, in the opinion of Enterprise Ireland, the company’s activities are of a kind specified in the Schedule to the Industrial Development (Service Industries) Order 2010 ( S.I. No. 81 of 2010 ).

(2) (a) In this subsection ‘tourist traffic undertaking’ means—

(i) the operation of tourist accommodation facilities for which the National Tourism Development Authority maintains a register in accordance with the Tourist Traffic Acts 1939 to 2003,

(ii) the operation of such other classes of facilities as may be approved of for the purpose of the relief by the Minister for Finance, in consultation with the Minister for Transport, Tourism and Sport, on the recommendation of the National Tourism Development Authority in accordance with specific codes of standards laid down by it, or

(iii) the promotion outside the State of—

(I) one or more tourist accommodation facilities for which the National Tourism Development Authority maintains a register in accordance with the Tourist Traffic Acts 1939 to 2003, or

(II) any of the facilities mentioned in subparagraph (ii).

(b) A company whose relevant trading activities includes one or more tourist traffic undertakings shall not be a qualifying company unless it has submitted to, and has had approved of by, the National Tourism Development Authority a 3 year development and marketing plan in respect of that undertaking or those undertakings, as the case may be, being a plan primarily designed and formulated to increase tourist traffic and revenue from outside the State.

(c) In considering whether to approve of such a plan, the National Tourism Development Authority shall have regard only to such guidelines in relation to such approval as may from time to time be agreed, with the consent of the Minister for Finance, between it and the Minister for Transport, Tourism and Sport, and those guidelines may, without prejudice to the generality of the foregoing, set out—

(i) the extent to which the company’s interests in land and buildings may form part of its total assets,

(ii) specific requirements which have to be met in order to comply with the objective mentioned in paragraph (b), and

(iii) the extent to which the money raised through the issue of eligible shares should be used in promoting outside the State the undertaking or undertakings, as the case may be.

(3) (a) In this subsection—

‘energy from renewable sources’ means energy from renewable non-fossil sources, that is to say wind, solar, aerothermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases and includes the development of any facilities for the storage of energy from renewable sources;

‘green energy activities’ means activities undertaken with a view to producing energy from renewable sources;

‘grid connection agreement’ means an agreement with the transmission system operator or distribution system operator (both within the meaning of the Electricity Regulation Act 1999 ), or an offer from the transmission system operator or distribution system operator to enter into an agreement for connection to, or use of, the transmission or distribution system.

(b) For the purposes of this Part, a company carrying on green energy activities shall be deemed to have commenced relevant trading activities when it has made an application for a grid connection agreement.

Qualifying subsidiaries

492. (1) In this Part, a qualifying subsidiary is one that—

(a) satisfies the conditions set out in subsection (2) and, except where provided in subsection (3), they continue to be so satisfied until the end of the relevant period, and

(b) is a company—

(i) to which section 490(3)(a)(i) relates, or

(ii) which exists solely for the purpose of carrying on any trade which consists solely of any one or more of the following relevant trading activities—

(I) the purchase of goods or materials for use by the qualifying company or its subsidiaries,

(II) the sale of goods or materials produced by the qualifying company or its subsidiaries, or

(III) the rendering of services to or on behalf of the qualifying company or its subsidiaries.

(2) The conditions referred to in subsection (1)(a) are—

(a) that the subsidiary is a 51 per cent subsidiary of the qualifying company,

(b) that no other person has control of the subsidiary, and

(c) that no arrangements are in existence by virtue of which the conditions specified in paragraphs (a) and (b) could cease to be satisfied.

(3) A company shall not be regarded as ceasing to be a qualifying subsidiary by reason only of the fact that it is wound up or dissolved without winding up if—

(a) it is shown that the winding up or dissolution is for bona fide commercial reasons and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and

(b) the company’s net assets, if any, are distributed to its members before the end of the relevant period or, in the case of a winding up, the end (if later) of 3 years from the commencement of the winding up.

Chapter 3

Qualifying investments

Interpretation (Chapter 3)

493. In this Chapter—

‘business plan’ means a written business plan which contains details of product, sales and profitability development, establishing ex-ante financial viability and which includes both quantitative and qualitative details of the activities the investment is sought to support;

‘expansion risk finance investment’ means the issue of eligible shares to fund entering a new product on the market or entering a new geographic market;

‘follow-on risk finance investment’ means the issue of eligible shares subsequent to an initial risk finance investment or an expansion risk finance investment;

‘initial risk finance investment’ means the first issue of eligible shares other than an expansion risk finance investment.

Eligible shares

494. (1) In this Part ‘eligible shares’ means new shares forming part of a company’s share capital and which comply with this section.

(2) Shares subscribed for, issued to, held by or disposed of for an individual by a nominee, shall be treated for the purposes of this Part as subscribed for, issued to, held by or disposed of by that individual where the nominee has complied with the requirements of sections 892 and 894 in respect of those shares.

(3) The shares, other than where relief under section 507 is claimed, may—

(a) carry a right to preferential rights to a dividend or to repayment of capital on a winding up, and

(b) be redeemable.

Anti-avoidance: eligible shares

495. (1) In this section ‘distribution’ has the same meaning as in the Corporation Tax Acts.

(2) For the purposes of this section, an amount specified or implied shall include an amount specified or implied in a foreign currency.

(3) This section applies to shares in a company where any agreement, arrangement or understanding exists which could reasonably be considered to substantially reduce the risk that the person beneficially owning those shares—

(a) might, at or after a time specified in or implied by that agreement, arrangement or understanding, be unable to realise directly or indirectly in money or money’s worth an amount so specified or implied, other than a distribution, in respect of those shares, or

(b) might not receive an amount so specified or implied of distributions in respect of those shares.

(4) The reference in this section to the person beneficially owning shares shall be deemed to be a reference to both that person and any person connected with that person.

(5) Relief from income tax shall not be allowed under this Part in respect of the amount subscribed for any shares to which this section applies.

(6) Without prejudice to the generality of subsection (3), such agreements, arrangements or understandings may include—

(a) the rights associated with the shares as set out in the company’s constitution other than those permitted under section 494(3),

(b) the terms of any shareholders agreement, or

(c) any other agreement, arrangement or understanding with any member of the RICT group or any person connected with any member of the RICT group, including but not limited to—

(i) personal guarantees from existing shareholders that the investor will be able to dispose of the shares after the relevant period, or

(ii) rights over the assets of the qualifying company or its qualifying subsidiaries, in the event that the investor is not able to dispose of the shares after the relevant period.

Qualifying investment (company perspective)

496. (1) In this Part, an investment shall be a qualifying investment where—

(a) an individual subscribes for eligible shares in a qualifying company, and

(b) the company employs the amount subscribed wholly or mainly for a qualifying purpose within the relevant period, and

(c) the investment complies with this section.

(2) In this Part, a qualifying purpose—

(a) includes employing the amounts in the qualifying company, ora qualifying subsidiary following an investment under section 490(4)(b)—

(i) for the purposes of carrying on relevant trading activities, or

(ii) in the case of a company which has not commenced to trade, for the purpose of carrying on R&D+I which is connected with and undertaken with a view to the carrying on of relevant trading activities,

where the use of the money will contribute directly to the creation or maintenance of employment in the company, and

(b) does not include employing the amounts on the acquisition (other than by way of subscription pursuant to section 490(4)(b)), directly or indirectly, of—

(i) an interest in another company such that that company becomes a qualifying subsidiary,

(ii) a further interest in a qualifying subsidiary, or

(iii) a trade.

(3) If only a portion of the amount subscribed is employed wholly or mainly for a qualifying purpose then references to a qualifying investment shall be read as referring to the corresponding proportion of that investment.

(4) An investment shall not be a qualifying investment unless it is based on a business plan.

(5) An initial risk finance investment shall only be a qualifying investment where the RICT group which issues the eligible shares made its first commercial sale less than 7 years prior to the initial risk finance investment.

(6) An expansion risk finance investment shall only be a qualifying investment where, based on a business plan prepared in view of entering a new product or geographical market, the amount to be raised through the issue of those shares is greater than 50 per cent of the RICT group’s average annual turnover in the preceding 5 years.

(7) A follow-on risk finance investment shall only be a qualifying investment where—

(a) the initial risk finance investment, or expansion risk finance investment, as the case may be, involved the issue of eligible shares on or after 6 April 1984 in respect of which relief was available under this Part, and

(b) the possibility of the first-mentioned investment was foreseen in the business plan upon which the initial risk finance investment, or expansion risk finance investment, as the case may be, was based.

Limits on amounts a qualifying company can raise

497. (1) For the purpose of this section—

(a) account shall not be taken of any amount subscribed for eligible shares by a person other than an individual who qualifies for relief,

(b) eligible shares includes any shares issued on or after 6 April 1984 in respect of which relief was available under this Part (including this Part as it stood enacted at any time before the commencement of section 23 of the Finance Act 2018 or, as the case may be, the commencement of section 33 (1)(a) of the Finance Act 2011 ), and

(c) account shall be taken of any amount subscribed for eligible shares in a company which was, at any time, part of a RICT group with the qualifying company, but no account shall be taken of amounts so raised once that company was no longer part of that RICT group.

(2) The maximum amount which a RICT group may raise through the issue of eligible shares is—

(a) €5,000,000 in any 12 month period, and

(b) €15,000,000 in total in respect of the issue of eligible shares.

(3) Where a member of the RICT group raises any amount through the issue of eligible shares (in this section referred to as the ‘relevant issue’) in excess of the amount specified in subsection (2)(a), the excess over that amount determined by the formula—

A - B

where—

A is €5,000,000,

and

B is the lesser of—

(a) the amount represented by A in the formula, and

(b) the aggregate of—

(i) the amount to be raised through the relevant issue, and

(ii) the amount or amounts, if any, raised through the issue of eligible shares other than the relevant issue, within the period of 12 months ending with the date of that relevant issue, by the members of the RICT group,

shall not be a qualifying investment.

(4) Where a member of the RICT group raises any amount through the issue of eligible shares (in this section referred to as the ‘relevant issue’) in excess of the amount specified in subsection (2)(b), the excess over that amount determined by the formula—

A - B

where—

A is €15,000,000,

and

B is the lesser of—

(a) the amount represented by A in the formula, and

(b) an amount equal to the aggregate of all amounts raised by the members of the RICT group through the issue of eligible shares at any time before the relevant issue,

shall not be a qualifying investment.

(5) Where, as a consequence of subsection (3) or (4), the giving of relief would be precluded on claims in respect of shares issued to 2 or more individuals, the available relief shall be divided between them respectively in proportion to the amounts which have been subscribed by them for the shares to which their claims relate and which apart from this section would be eligible for relief.

Qualifying investment (investor perspective)

498. (1) Subject to section 598J(1), a subscription for eligible shares by an individual in a qualifying company of less than €250 in a year of assessment shall not be a qualifying investment.

(2) In the case of an individual who is a married person assessed to tax for a year of assessment in accordance with section 1017, or a nominated civil partner assessed to tax for a year of assessment in accordance with section 1031C, any amount subscribed by the individual’s spouse or civil partner for eligible shares issued to that spouse or civil partner in that year of assessment by the company shall be deemed to have been subscribed by the individual for eligible shares issued to the individual by the company.

Anti-avoidance: qualifying investment (investor perspective)

499. (1)(a) For the purposes of this Part, an investment shall not be a qualifying investment in respect of an individual to whom this subsection applies where at any time in the compliance period the company or any of its qualifying subsidiaries—

(i) begins to carry on a business previously carried on at any time in that period otherwise than by the company or any of its qualifying subsidiaries, or

(ii) acquires the whole or greater part of the assets used for the purposes of a business previously so carried on.

(b) This subsection applies to an individual where—

(i) any person or group of persons to whom an interest amounting in the aggregate to more than a 50 per cent share in the business (as previously carried on) belonged at any time in the compliance period is a person or a group of persons to whom such an interest in the business carried on by the company, or any of its subsidiaries, belongs or has at any such time belonged, or

(ii) any person or group of persons who controls or at any such time has controlled the company is a person or a group of persons who at any such time controlled another company which previously carried on the business,

and the individual is that person or one of those persons.

(2) An individual is not entitled to relief in respect of any shares in a company where—

(a) the company comes to acquire all of the issued share capital of another company at any time in the compliance period, and

(b) any person or group of persons who controls or has at any such time controlled the company is a person or a group of persons who at any such time controlled that other company,

and the individual is that person or one of those persons.

(3) For the purposes of subsection (1)(b)—

(a) the person or persons to whom a business belongs and, where a business belongs to 2 or more persons, their respective shares in that business shall be determined in accordance with paragraphs (a) and (b) of subsection (1), and subsections (2) and (3), of section 400, and

(b) any interest, rights or powers of a person who is an associate of another person shall be treated as those of that other person.

Chapter 4

Employment investment incentive

Qualifying investors

500. (1) In this Part, a qualifying investor is an individual who subscribes on his or her own behalf for eligible shares in a qualifying company and complies with this section.

(2) (a) An individual shall not be a qualifying investor if at any time in the compliance period he or she is connected, as determined in accordance with this section and section 501, with the company.

(b) In this Part, an individual shall be connected with a company if the individual or an associate of the individual—

(i) is a partner of the company, or any company in the RICT group,

(ii) subject to subsection (3), is a director or employee of the company, or any company in the RICT group, or

(iii) subject to subsection (5), has an interest in the capital of the company, or any company in the RICT group.

(3) Subsection (2)(b)(ii) shall only apply if the individual or the individual’s associate (or a partnership of which the individual or the individual’s associate is a member) receives a payment from a company in the RICT group during the relevant period, other than—

(a) any payment or reimbursement of travelling or other expenses wholly, exclusively and necessarily incurred by the individual or the individual’s associate in the performance of the duties of the individual or of the associate, as the case may be, as such director or employee,

(b) any interest which represents no more than a reasonable commercial return on money lent to a company in the RICT group,

(c) any dividend or other distribution paid or made by a company in the RICT group which does not exceed a normal return on the investment,

(d) any payment for the supply of goods in the course of a trade or business, which does not exceed their market value, and

(e) any reasonable and necessary remuneration which—

(i) (I) is paid for services rendered to a member of the RICT group in the course of a trade or profession, not being secretarial or managerial services or services of a kind provided by any company in the RICT group, and

(II) is taken into account in computing the profits or gains of the trade or profession under Case I or II of Schedule D or would be so taken into account if it fell in a period on the basis of which those profits or gains are assessed under that Schedule,

or

(ii) in a case where the individual is a director or an employee of a company in the RICT group and is not otherwise connected with any company in the RICT group, is paid for services rendered to the company of which the individual is a director or an employee, in the course of the directorship or the employment.

(4) Subsection (3) shall apply to payments—

(a) which a person is entitled to receive in respect of the relevant period as it applies to payments made in that period, or

(b) made to the individual indirectly or to the individual’s order or for the individual’s benefit.

(5) (a) Subject to subsection (6), for the purposes of this section, an individual shall have an interest in the capital of a company in the RICT group if that individual, or that individual’s associate, directly or indirectly possesses or is entitled to acquire—

(i) any of the issued share capital of any such company,

(ii) any of the loan capital of any such company,

(iii) any of the voting power in any such company, or

(iv) rights to the assets on a winding up of any such company.

(b) For the purposes of paragraph (a)(ii) and section 505(4)(b)(ii), the loan capital of a company shall be treated as including any debt incurred by the company—

(i) for any money borrowed or capital assets acquired by the company,

(ii) for any right to receive income created in favour of the company, or

(iii) for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the amount of the debt (including any premium on the debt),

but shall not include a debt incurred by the company by overdrawing an account with a person carrying on a business of banking if the debt arose in the ordinary course of that business.

(c) (i) For the purposes of paragraph (a)(iv), an individual shall have a right to the assets on a winding up if that individual, or an associate of the individual, has rights as would, in the event of the winding up of a company or in other circumstances, entitle the individual to receive any of the assets of the company which would at that time be available for distribution to equity holders of the company, and for the purposes of this subsection—

(I) the persons who are equity holders of the company, and

(II) the percentage of the assets of the company to which the individual would be entitled,

shall be determined in accordance with sections 413 and 415, with references in section 415 to the first company being construed as references to an equity holder and references to a winding up being construed as including references to any other circumstances in which assets of the company are available for distribution to its equity holders.

(ii) In applying sections 413 and 415 in determining the percentage of share capital or other amount which a shareholder beneficially owns or is beneficially entitled to under subparagraph (i), no regard shall be had to the provisions of section 411(1)(c).

(d) (i) For the purposes of this section, an individual shall have an interest in the capital of the company if he or she has control of it within the meaning of section 11.

(ii) For the purposes of this section, an individual shall be treated as having an interest in the capital of the company if he or she has at any time in the compliance period had control, within the meaning of section 11, of another company which has since that time and before the end of the relevant period become a subsidiary of the company.

(6) For the purposes of subsection (5), no account shall be taken of—

(a) shares in the company concerned which are held by the individual concerned, or an associate of that individual, where—

(i) that individual or that associate, as the case may be, was entitled to relief under this Part in respect of the acquisition of those shares, and

(ii) that individual, or a person connected with that individual, does not at any time in the compliance period control the company concerned,

or

(b) shares subscribed for upon the formation of the company concerned where—

(i) the company has issued no shares other than those subscribed for on formation, and

(ii) the company has not yet commenced carrying on, or made preparations for the carrying on of, any trade or business.

(7) For the purposes of this section an individual shall be treated as entitled to acquire anything which he or she is entitled to acquire at a future date or will at a future date be entitled to acquire, and there shall be attributed to any person any rights or powers of any other person who is an associate of that person.

Anti-avoidance: qualifying investors

501. Where an individual subscribes for shares in a company with which the individual is not connected, then he or she shall nevertheless be treated as connected with it if he or she subscribes for the shares as part of any arrangement which provides for another person to subscribe for shares in another company with which the individual or any other individual who is a party to the arrangement is connected.

The relief (Chapter 4)

502. (1) In this section—

‘basic pay rate’, in relation to a qualifying employee of a qualifying company, or a qualifying subsidiary as the case may be, means the employee’s emoluments (other than non-pecuniary emoluments) per hour from the company in respect of an employment held with the company;

‘employment relevant number’ means the total number of qualifying employees in receipt of emoluments from the qualifying company, or a qualifying subsidiary as the case may be, in the year of assessment in which, in relation to a subscription for eligible shares, a subsequent period ends;

‘employment threshold number’ means the total number of qualifying employees in receipt of emoluments from the qualifying company, or a qualifying subsidiary as the case may be, in the year of assessment preceding the year of assessment in which the subscription for eligible shares was made;

‘qualifying employee’, in relation to a qualifying company, or a qualifying subsidiary as the case may be, means an employee (within the meaning of section 983), other than a director, of that company—

(a) who throughout his or her period of employment with that company is employed by that company for at least 30 hours duration per week, and

(b) his or her employment is capable of lasting at least 12 months;

‘relevant amount’ means total emoluments (other than non-pecuniary emoluments) paid by a qualifying company, or a qualifying subsidiary as the case may be, to qualifying employees as referred to in the definition of ‘employment relevant number’, in the year of assessment in which, in relation to a subscription for eligible shares, a subsequent period ends;

‘threshold amount’ means the total of the emoluments (other than non- pecuniary emoluments) paid by a qualifying company, or a qualifying subsidiary as the case may be, to the qualifying employees referred to in the definition of ‘employment threshold number’, in the year of assessment preceding the year of assessment in which the subscription for eligible shares was made but where there was a general reduction in the basic pay rate of qualifying employees then the threshold amount shall be reduced accordingly;

‘subsequent period’ means the period beginning on the date on which the shares were issued and ending 3 years after that date.

(2) A qualifying investor who makes a qualifying investment in a qualifying company shall be entitled, subject to this section, to relief for—

(a) thirty fortieths of the amount subscribed, which shall be given, subject to section 508J(4), as a deduction from his or her total income for the year of assessment in which the shares are issued, and

(b) subject to subsection (4), ten fortieths of the amount subscribed, which shall be given as a deduction from his or her total income for the year of assessment following the year of assessment in which the subsequent period ends.

(3) In a year of assessment the maximum qualifying investment in respect of which an investor may claim relief under this Part is €150,000.

(4) An amount shall not be given as a deduction under subsection (2)(b) unless in relation to a qualifying company and its qualifying subsidiaries—

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

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

or

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

The relief: start-up capital incentive

503. (1) Section 500(5) shall not apply in respect of associates of an investor if the company and the investment comply with this section.

(2) At the time the shares concerned were issued—

(a) the qualifying company shall—

(i) be a micro-enterprise, within the meaning of Annex 1 of the General Block Exemption Regulation, and

(ii) exist solely for the purpose of carrying on a qualifying new venture,

(b) the qualifying company shall not—

(i) have commenced carrying on, or made preparations for the carrying on of, any trade or business more than 7 years prior to the share issue date, or

(ii) have any partner business or linked business.

(3) The maximum amount which a qualifying company may raise, in respect of which relief is only available pursuant to this section, is €500,000 in total in respect of the issue of eligible shares on or after 6 April 1984 (including relief granted under this Part as it stood enacted at any time before the commencement of section 23 of the Finance Act 2018 or, as the case may be, the commencement of section 33 (1)(a) of the Finance Act 2011 ) and section 497 shall apply with any necessary modifications.

Chapter 5

Start-up relief for entrepreneurs (SURE)

Interpretation (Chapter 5)

504. In this Chapter—

‘employment period’ means, as respects a relevant employment, the period beginning on the date on which the shares are issued or, if later, the date on which the employment commences and ending 12 months after that date;

‘full-time employee’ and ‘full-time director’ in relation to a company, mean an employee or director, as the case may be, who is required to devote substantially the whole of his or her time to the service of the company;

‘relevant employment’, in relation to a specified individual, means employment throughout the employment period by the company in which the specified individual makes a relevant investment (being that individual’s first such investment in that company) and where the specified individual is a full-time employee or full-time director of the company;

‘relevant investment’, in relation to a specified individual, means the amount or the aggregate of the amounts of the qualifying investments made in a year of assessment by the specified individual for eligible shares in a qualifying company;

‘specified individual’ has the meaning assigned to it by section 505;

‘specified period’ means, as respects a specified individual, the period beginning on the date on which the shares are issued and ending either one year after that date or, where the company was not at that date carrying on relevant trading activities, one year after the date on which it subsequently began to carry on such activities.

Specified individuals

505. (1) In this Part, a specified individual is an individual who subscribes on his or her own behalf for eligible shares in a qualifying company and complies with this section.

(2) The individual, in each of the 3 years of assessment preceding the year of assessment that precedes the year of assessment in which that individual makes a relevant investment (being that individual’s first such investment), shall not have been in receipt of income chargeable to tax otherwise than under—

(a) Schedule E, or

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

in excess of the lesser of—

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

(ii) €50,000.

(3) (a) The individual shall throughout the specified period possess at least 15 per cent of the issued ordinary share capital of the company in which that individual makes a relevant investment.

(b) An individual shall not be regarded as having ceased to comply with this subsection merely by reason of the fact that the company in which the individual makes a relevant investment is wound up, or dissolved without winding up, before the end of the relevant period but only if it is shown that the winding up or dissolution is for bona fide commercial reasons and is not part of a scheme or arrangement the main purpose or one of the main purposes of which was the avoidance of tax.

(4) (a) For the purposes of paragraph (b) and subsections (5) and (6), ‘specified date’, in relation to a relevant investment in a company, means—

(i) where the investment consists of the subscription of only one amount for eligible shares, the date of that subscription, or

(ii) where that investment consists of the subscription of more than one amount for eligible shares, the date of the last such subscription.

(b) Subject to subsections (5) and (6), the individual at the specified date, in relation to that individual’s first relevant investment in a company, or within the period of 12 months immediately preceding that date, either directly or indirectly, shall not possess or have possessed, or shall not be or have been entitled to acquire, more than 15 per cent of—

(i) the issued ordinary share capital,

(ii) the loan capital (within the meaning of section 500(5)(b)) and the issued share capital, or

(iii) the voting power,

of any company other than—

(I) the company in which that individual makes that relevant investment, or

(II) a company to which subsection (5) applies.

(5) This subsection applies to a company which during a period of 3 years ending on the specified date in relation to an individual’s first relevant investment in a company—

(a) was not entitled to any assets, other than cash on hand or a sum of money on deposit (within the meaning of section 895) not exceeding €130,

(b) did not carry on a trade, profession, business or other activity including the making of investments, and

(c) did not pay charges on income within the meaning of section 243.

(6) (a) For the purposes of paragraph (b) ‘accounting period’ means an accounting period determined in accordance with section 27.

(b) A company shall be regarded as a company which carries on wholly or mainly relevant trading activities referred to in paragraph (c)(i) only if in each of the 3 accounting periods referred to in paragraph (c)(ii) the total amount receivable from sales made or services rendered in the course of such activities is not less than 75 per cent of the total amount receivable by the company from all sales made and services rendered in the course of tourist traffic undertaking and 90 per cent of the total amount receivable by the company from all sales made and services rendered in the course of other relevant trading activities.

(c) An individual shall not be regarded as failing to satisfy the requirements of subsection (4) merely by reason of the fact that the individual does not satisfy those requirements in relation to only one company (other than the company in which the individual makes his or her first relevant investment or a company to which subsection (5) applies)—

(i) which exists wholly or mainly for the purpose of carrying on relevant trading activities, and

(ii) where the total amount receivable by that company from sales made and services rendered in the course of that company’s relevant trading activities did not exceed €127,000 in each of that company’s 3 accounting periods immediately preceding the accounting period of that company in which the specified date occurs in relation to that individual’s first relevant investment.

Anti-avoidance: qualifying company (SURE)

506. (1) A company shall not be a qualifying company for the purposes of relief under this Chapter if, in the case of a company in which a relevant investment is made by a specified individual (being that individual’s first such investment in that company), any transaction in the relevant period between the company and another company (being the immediate former employer of the individual), or a company which controls or is under the control of that other company, is otherwise than by means of a transaction at arm’s length, or if—

(a) (i) an individual has acquired a controlling interest in the company’s trade after 5 April 1984, and

(ii) at any time in the compliance period the individual has or has had a controlling interest in another trade,

and

(b) the trade carried on by the company or a substantial part of that trade—

(i) is concerned with the same or similar types of property or parts of property or provides the same or similar services or facilities as the other trade, or

(ii) serves substantially the same or similar outlets or markets as the other trade.

(2) For the purposes of this section, a person has a controlling interest in a trade—

(a) in the case of a trade carried on by a company, if—

(i) such person controls the company,

(ii) the company is a close company for the purposes of the Corporation Tax Acts and such person or an associate of such person is a director of the company and the beneficial owner of, or able directly or through the medium of other companies or by any other indirect means to control, more than 30 per cent of the ordinary share capital of the company, or

(iii) not less than 50 per cent of the trade could, in accordance with section 400(2), be regarded as belonging to such person,

or

(b) in any other case, if such person is entitled to not less than 50 per cent of the assets used for, or the income arising from, the trade.

(3) For the purposes of subsection (2), there shall be attributed to any person any rights or powers of any other person who is an associate of that person.

(4) In subsection (1), references to a company’s trade include references to the trade of any of its subsidiaries.

The relief (Chapter 5)

507. (1) Notwithstanding section 502, a specified individual who makes a relevant investment in a qualifying company, the activities of which constitute a qualifying new venture, shall be entitled, subject to subsections (2) and (3), to relief in respect of that relevant investment, which shall be given as a deduction from his or her total income for the year of assessment in which the shares are issued.

(2) In a year of assessment, the maximum relevant investment in respect of which a specified person can make a claim under subsection (1) is €100,000.

(3) (a) Subject to this subsection, a specified individual may, in relation to a relevant investment made by such individual (being that individual’s first such investment), elect by notice in writing to a Revenue officer to have the relief due given as a deduction from such individual’s total income for any one of the 6 years of assessment immediately before the year of assessment in which the eligible shares in respect of that investment are issued which such individual nominates for the purpose, instead of (as provided for in subsection (1)) as a deduction from the specified individual’s total income for the year of assessment in which the shares are issued, and accordingly, subject to subsection (2) and paragraphs (c) and (d), for the purpose of granting such relief (but for no other purpose of this Part) the shares shall be deemed to have been issued in the year of assessment so nominated.

(b) Where the specified individual makes a subsequent relevant investment (being that individual’s second such investment)—

(i) in the same company as such individual’s first such investment, and

(ii) within either the year of assessment following the end of the year of assessment in which such individual’s first such investment was made or the year of assessment subsequent to that year,

then, the specified individual may, in relation to such individual’s second such investment, elect by notice in writing to a Revenue officer to have the relief due given as a deduction from such individual’s total income for any one of the 6 years of assessment immediately before the year of assessment in which the eligible shares in respect of such individual’s first such investment were issued which such individual nominates for the purpose, instead of (as provided for in subsection (1)) as a deduction from such individual’s total income for the year of assessment in which the eligible shares in respect of such individual’s second such investment are issued and, accordingly, subject to subsection (2) and paragraphs (c) and (d), for the purpose of granting such relief (but for no other purpose of this Part) the shares issued in respect of the second such investment shall be deemed to have been issued in the year of assessment so nominated.

(c) Where any of the years of assessment following the year of assessment nominated under paragraph (a) or (b), as the case may be, precede the year of assessment in which the eligible shares in respect of the specified individual’s first relevant investment are in fact issued, section 508 shall operate to give relief in such years of assessment as may be nominated by such individual for that purpose.

(d) To the extent that the amount of the relief which would be due in respect of the specified individual’s first relevant investment or second relevant investment, as the case may be, has not been given in accordance with paragraphs (a) to (c) it shall, subject to section 508, be given for the year of assessment in which the eligible shares in respect of the first such investment or the second such investment, as the case may be, are in fact issued or, if appropriate, a subsequent year of assessment.

(e) This subsection applies in respect of not more than 2 relevant investments made by a specified individual on or after 2 June 1995.

(f) This subsection applies notwithstanding any limitation in section 865(4) or section 959V(6) on the time within which a claim for a repayment of tax is required to be made, and section 865(6) shall not prevent the Revenue Commissioners from repaying an amount of tax as a consequence of an election made under paragraph (a) or (b) where the specified individual has made a timely claim for relief in accordance with section 508G and a valid claim for a repayment of tax within the meaning of section 865(1)(b).

(4) References in this section to the amount of the relief are references to the amount of the deduction given under subsection (1) or (3), as may be appropriate.

(5) Where a specified individual claims relief under this section, no relief shall be granted to that individual under section 502 in respect of the same qualifying company.

Chapter 6

Administrative requirements and reporting obligations

Carry forward of unused relief

508. (1) Where in a year of assessment an individual—

(a) makes a qualifying investment or has an amount of relief carried forward under this section, in excess of €100,000 in respect of which relief is available under section 507 or €150,000 in any other case, or

(b) has insufficient total income against which to offset the deductions available under section 502 or section 507, as the case may be,

then the individual may claim to have the amount which was not offset against his or her total income in that year carried forward and, in so far as may be, deducted from his or her total income in subsequent years of assessment.

(2) In a year of assessment, relief shall be given to an individual in the following order:

(a) relief in respect of amounts carried forward from an earlier year of assessment and, in respect of such an amount so carried forward, for an earlier year of assessment in priority to a later year of assessment; and

(b) only thereafter, in respect of any other amount for which relief is to be given in that year of assessment with relief under section 502(2)(b) given in priority to relief under section 502(2)(a).

Statement of qualification by qualifying company

508A. (1) A qualifying company shall issue to a qualifying investor, or managers of a designated fund as the case may be, a statement of qualification in respect of a qualifying investment.

(2) For the purposes of this Part, a ‘statement of qualification’ is a statement by the company to the effect that—

(a) the company is a qualifying company, and

(b) the investment is a qualifying investment within the meaning of section 496.

(3) The statement of qualification shall also—

(a) contain—

(i) in respect of the company, the company’s name, address and tax reference number,

(ii) in respect of the share issue, the date of the share issue, the class of share issued, the amount subscribed and the number of shares issued,

(iii) where the investment is made by an individual, the individual’s name, address and PPS Number,

(iv) where the investment is made through a designated fund, the designated fund’s name, address and tax reference number,

(v) the date on which 30 per cent of the amount raised has been expended on a qualifying purpose,

(vi) the amount of the investment which qualifies for relief under section 502(2)(a), after any reduction required by section 497 or section 508R, and

(vii) such other information as the Revenue Commissioners may reasonably require,

(b) be in such form as the Revenue Commissioners may direct, and

(c) contain a declaration that it is a ‘statement of qualification’ made under this section.

(4) A qualifying company may not issue a statement of qualification in respect of a qualifying investment—

(a) until it has spent 30 per cent of the amount raised on a qualifying purpose, or

(b) more than two years after the end of the year of assessment in which the shares were issued.

Statement of qualification (second stage relief) by qualifying company

508B. (1) A qualifying company shall issue to a qualifying investor, or managers of a designated fund as the case may be, a statement of qualification (second stage relief) in respect of a qualifying investment that qualifies for relief under section 502(2)(b).

(2) For the purposes of this Part a ‘statement of qualification (second stage relief)’ is a statement by the company to the effect that—

(a) the company is a qualifying company,

(b) the investment is a qualifying investment within the meaning of section 496.

(3) The statement of qualification (second stage relief) shall also—

(a) contain—

(i) in respect of the company, the company’s name, address and tax reference number,

(ii) in respect of the share issue, the date of the share issue, the class of share issued, the amount subscribed and the number of shares issued,

(iii) where the investment is made by an individual, the individual’s name, address and PPS Number,

(iv) where the investment is made through a designated fund, the designated fund’s name, address and tax reference number,

(v) confirmation that conditions for relief under section 502(2)(b) have been satisfied,

(vi) the amount of the investment which qualifies for relief under section 502(2)(b), after any reduction required by section 497 or section 508R, and

(vii) such other information as the Revenue Commissioners may reasonably require,

(b) be in such form as the Revenue Commissioners may direct, and

(c) contain a declaration that it is a ‘statement of qualification (second stage relief)’ made under this section.

(4) A qualifying company may not issue a statement of qualification (second stage relief) in respect of a qualifying investment—

(a) until the relevant period has ended and it has satisfied the condition set out in section 502(4), or

(b) more than two years after the end of the year of assessment in which the conditions referred to in paragraph (a) were satisfied.

Statement of qualification (SURE) by qualifying company

508C. (1) A qualifying company shall issue to a specified individual a statement of qualification (SURE) in respect of a relevant investment.

(2) For the purposes of this Part a ‘statement of qualification (SURE)’ is a statement by the company to the effect that the company is a qualifying company.

(3) The statement of qualification (SURE) shall also—

(a) contain—

(i) in respect of the company, the company’s name, address and tax reference number,

(ii) in respect of the share issue, the date of share issue, the class of share issued, the amount subscribed and the number of shares issued,

(iii) in respect of the individual, the individual’s name, address and PPS Number,

(iv) the date on which 30 per cent of the amount raised has been expended on a qualifying purpose,

(v) the amount of the investment which qualifies for relief under section 507, after any reduction required by section 497 or section 508R, and

(vi) such other information as the Revenue Commissioners may reasonably require,

(b) be in such form as the Revenue Commissioners may direct, and

(c) contain a declaration that it is a ‘statement of qualification (SURE)’ made under this section.

(4) A qualifying company may not issue a statement of qualification (SURE) in respect of a relevant investment—

(a) until it has spent 30 per cent of the amount raised on a qualifying purpose, or

(b) more than two years after the end of the year of assessment in which the shares were issued.

Confirmation of compliance with certain conditions

508D. (1) Prior to issuing a statement of qualification a company may apply to the Revenue Commissioners for confirmation that the following conditions are satisfied in respect of an investment in eligible shares:

(a) the condition set out in section 490(2)(a)(ii) ; and

(b) the conditions set out in subsections (4) to (7), as appropriate, of section 496.

(2) The application referred to in subsection (1) shall be a statement made by the company to the Revenue Commissioners and that statement shall—

(a) contain all relevant facts and circumstances, and

(b) be in such form as the Revenue Commissioners direct.

Reporting of relief by qualifying companies

508E. (1) A qualifying company shall include details of the qualifying investment in a return required under Part 41A for the accounting period in which the eligible shares were issued, and the company shall, notwithstanding anything to the contrary in Part 41A or section 1084, be deemed for that accounting period to be a chargeable person for the purposes of Chapter 3 of Part 41A.

(2) A qualifying company shall, within 60 days of the date referred to in section 508A(3)(a)(v) for a qualifying investment, provide to the Revenue Commissioners, through such electronic means as they make available, such information—

(a) as they may require for the purposes of the annual reports required in accordance with Article 11 of the General Block Exemption Regulation, including—

(i) the name of the company,

(ii) the address of the company,

(iii) the Companies Registration Office number of the company,

(iv) the amount of finance raised, and

(v) the date of the share issue and type of relief,

and

(b) as they may require for the administration of relief under this Part, including—

(i) the investor’s name, address and PPS Number, and

(ii) the amount of the relevant investment per investor.

(3) Notwithstanding section 851A, the Revenue Commissioners—

(a) may furnish the information obtained in accordance with subsection (2)(a) to the person submitting the annual reports referred to in that subsection, and

(b) shall publish the following information in relation to all qualifying companies:

(i) the name of the company;

(ii) the address of the company;

(iii) the Companies Registration Office number of the company;

(iv) the amount of finance raised;

(v) the date of the share issue and type of relief.

(4) Where a company fails to comply with a requirement to furnish information in accordance with this section, that company shall be liable to a penalty of €2,000 and, if that failure continues after the date on which the return shall be filed under Part 41A, or 30 days, as appropriate, a further penalty of €50 for each day on which the failure so continues.

Claims for relief by qualifying investors

508F.(1) An individual who is a qualifying investor shall not claim relief in respect of a qualifying investment—

(a) under 502(2)(a) until a statement of qualification, or

(b) under 502(2)(b) until a statement of qualification (follow-on relief),

has been received from the company.

(2) A claim for relief under this Part shall include:

(a) the name and tax reference number of the company in which the qualifying investment was made;

(b) the date the qualifying investment was made;

(c) the amount of the qualifying investment;

(d) the date referred to in section 508A(3)(a)(v), or the date the conditions set out in section 508B(4)(a) are satisfied, as the case may be.

Claims for relief by specified individuals

508G. (1) An individual who is a specified individual shall not claim relief in respect of a relevant investment under section 507 until a statement of qualification (SURE) has been received from the company.

(2) A claim for relief under this Part shall include:

(a) the name and tax reference number of the company in which the relevant investment was made;

(b) the date the relevant investment was made;

(c) the amount of the relevant investment;

(d) the date referred to in section 508C(3)(iv).

Chapter 7

Designated funds

Authorised officers

508H.The Revenue Commissioners may nominate in writing a Revenue officer to perform any acts and discharge any functions authorised by this Chapter and section 508D to be performed or discharged by the Revenue Commissioners.

Designated investment funds

508I.(1) The Revenue Commissioners may, if they think fit, having regard to the facts of the particular case and after such consultation, if any, as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them, and subject to such conditions, if any, as they think proper to attach to the designation, designate an investment fund for the purposes of this Part and a fund that for the time being stands so designated is referred to in this Part as a ‘designated fund’.

(2) (a) The Revenue Commissioners may, by notice in writing given to the managers of a designated investment fund, withdraw the designation given for the purposes of this section to the fund in accordance with subsection (1) and, on the giving of the notice, the fund ceases to be a designated fund as respects any subscriptions made after the date of the notice referred to in paragraph (b).

(b) Where the Revenue Commissioners withdraw the designation of any fund for the purposes of this section, notice of the withdrawal shall be published as soon as may be in Iris Oifigiúil.

(3) Without prejudice to the generality of subsection (1), the Revenue Commissioners shall designate a fund for the purposes of this Part only if they are satisfied that—

(a) the fund is established under irrevocable trusts for the sole purpose of investing in qualifying companies, and

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

(i) the entire fund is to be invested without undue delay in eligible shares,

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

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

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

(v) audited accounts of the fund are submitted annually to the Revenue Commissioners as soon as may be after the end of each period for which accounts of the fund are made up,

(vi) the managers, the trustees of the fund and any of their associates are not for the time being connected either directly or indirectly with any company whose shares comprise part of the fund,

(vii) any discounts on eligible shares received by the trustees or managers of the fund are accepted solely for the benefit of the participants,

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

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

Relief for investment through designated investment funds

508J. (1) (a) Relief under section 502 shall be given, and section 498(1) shall not apply, in respect of an amount subscribed as nominee for an individual by a person or persons having the management of an investment fund designated by the Revenue Commissioners for the purposes of this Chapter (in this Part referred to as the ‘managers of a designated fund’) where the amount so subscribed forms part of the fund.

(b) Except where provided by paragraph (a), relief shall not be given in respect of an amount subscribed as nominee for an individual by a person or persons having the management of an investment fund where the amount so subscribed forms part of the fund.

(2) The managers of a designated fund shall, by 30 June in each year, deliver to the Revenue Commissioners a return of the holdings of eligible shares shown on statements of qualification received by them in the previous year of assessment.

(3) Where an individual claims relief in respect of eligible shares in a company which have been issued to the managers of a designated fund as nominee for the individual, then section 508F(1) applies as if it required the claim for relief to be accompanied by a certificate issued by the managers, in such form as the Revenue Commissioners may authorise, furnishing such information as the Revenue Commissioners may require and certifying that the managers hold statements issued to them by the companies concerned, for the purposes of section 508F(1) in respect of the holdings of eligible shares shown on the managers’ certificate.

(4) Where—

(a) relief is due in respect of an amount subscribed as nominee for a qualifying individual by the managers of a designated fund,

(b) the eligible shares in respect of which the amount is subscribed are issued in the year of assessment following the year of assessment in which that amount was subscribed to the designated fund, and

(c) the fund is a closed fund, the closing date for participation in which precedes the making of the first investment,

then the individual may elect by notice in writing to the Revenue Commissioners to have the relief due under section 502(2)(a) given as a deduction from his or her total income for the year of assessment in which the amount was subscribed to the designated fund, instead of (as provided for in section 502(2)(a)) as a deduction from his or her total income for the year of assessment in which the shares are issued.

Chapter 8

Capital gains tax implications

Capital gains tax

508K. (1) The sums allowable as deductions from the consideration in the computation for the purposes of capital gains tax of the gain or loss accruing to an individual on the disposal of shares in respect of which any relief has been given and not withdrawn shall be determined without regard to that relief, except that where those sums exceed the consideration they shall be reduced by an amount equal to the lesser of—

(a) the amount of that relief, and

(b) the excess,

but this subsection does not apply to a disposal to which section 1028(5) or 1031M(5) relates.

(2) In relation to shares in respect of which relief has been given and not withdrawn, any question—

(a) as to which of any such shares issued to a person at different times a disposal relates, or

(b) whether a disposal relates to such shares or to other shares,

shall for the purposes of capital gains tax be determined as for the purposes of section 508M.

(3) Where an individual holds shares in a company and the relief has been given in respect of some of the shares but not others, then, if there is a reorganisation (within the meaning of section 584) affecting those shares, section 584(3) shall apply separately to the shares in respect of which the relief has been given and to the other shares (so that the shares of each kind shall be treated as a separate holding of original shares and identified with a separate new holding).

(4) There shall be made all such adjustments of capital gains tax, whether by means of assessment or by means of discharge or repayment of tax, as may be required in consequence of the relief being given or withdrawn.

(5) Subject to this section, no account shall be taken of the relief, in so far as it is not withdrawn, in determining whether any sums are excluded by virtue of section 554 from the sums allowable as a deduction in the computation of gains and losses for the purposes of the Capital Gains Tax Acts.

Chapter 9

Anti-avoidance

Prevention of misuse

508L.An individual shall not be entitled to relief in respect of any shares unless—

(a) the raising of risk aid financing by the company, and

(b) the subscription for shares by the individual,

is for bona fide commercial purposes and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.

Chapter 10

Clawback events

Disposals of shares

508M. (1) Where an individual disposes of any eligible shares before the end of the compliance period, then—

(a) where the disposal is otherwise than by means of a bargain made at arm’s length, the individual shall not be entitled to any relief in respect of those shares, and

(b) in any other case, the amount of relief to which the individual is entitled in respect of those shares shall be reduced by the amount or value of the consideration which the individual receives for those shares.

(2) Subsection (1) shall not apply—

(a) to a disposal made by a married person to his or her spouse at a time when he or she is treated as living with his or her spouse for income tax purposes in accordance with section 1015, or

(b) to a disposal by a civil partner to the other civil partner at a time when he or she is treated as living with his or her civil partner for income tax purposes in accordance with section 1031A,

but where shares issued to one of them have been transferred to the other by a transaction inter vivos—

(i) that subsection shall apply on the disposal of the shares by the transferee to a third person, and

(ii) if at any time the married person ceases to be treated as living with his or her spouse for income tax purposes in accordance with section 1015, or the civil partner ceases to be treated as living with his or her civil partner for income tax purposes in accordance with section 1031A, and any of those shares have not been disposed of by the transferee before that time, any assessment for withdrawing relief in respect of those shares shall be made on the transferee.

(3) Where an individual holds shares of any class in a company and relief has been given in respect of some shares of that class but not others, then any disposal by the individual of shares of that class in the company, not being a disposal to which section 512(2) applies, shall be treated for the purposes of this section and section 508N as relating to those in respect of which relief has been given under this Part rather than to others.

(4) Where relief has been given to an individual in respect of shares of any class in a company which have been issued to the individual at different times, then any disposal by the individual of shares of that class shall be treated for the purposes of this section and section 508N as relating to those issued earlier rather than to those issued later.

(5) Where shares in respect of which relief was given have by virtue of any such allotment mentioned in subsection (1) of section 584 (not being an allotment for payment) been treated under subsection (3) of that section as the same asset as a new holding, then—

(a) the new holding shall be treated for the purposes of subsection (4) as shares in respect of which the relief has been given, and

(b) a disposal of the whole or part of the new holding shall be treated for the purposes of this section and section 508N as a disposal of the whole or a corresponding part of those shares.

(6) Shares in a company shall not be treated for the purposes of this section and section 508N as being of the same class unless they would be so treated if dealt in on a stock exchange in the State.

Anti-avoidance: disposal of shares

508N. (1) For the purposes of this section, references to an option or an agreement includes references to a right or obligation to acquire or grant an option or enter into an agreement, and references to the exercise of an option includes references to the exercise of an option which may be acquired or granted by the exercise of such a right or under such an obligation.

(2) Where in the compliance period any of the acts described in subsection (3) is, either directly or indirectly, done by an individual, then the individual is not entitled to any relief in respect of the shares to which the relevant option or agreement referred to in that subsection relates.

(3) Each of the following is an act mentioned in subsection (2), namely the individual—

(a) (i) acquires an option where the exercise of the option, either under the terms of the option or under the terms of any arrangement or undertaking subject to which or otherwise in connection with which the option is acquired, would—

(I) bind the person from whom the option was acquired or any other person, or

(II) cause that person or such other person,

to purchase or otherwise acquire any eligible shares for a price which, having regard to the terms of the option or the terms of such arrangement or undertaking and the net effect of those terms considered as a whole, is other than the market value of the eligible shares at the time the purchase or acquisition is made, or

(ii) enters into an agreement where, either under the terms of the agreement or under the terms of any arrangement or understanding subject to which or otherwise in connection with which the agreement is made, it would—

(I) bind the person with whom the agreement is made or any other person, or

(II) cause that person or such other person, to purchase or otherwise acquire any eligible shares in the manner described in subparagraph (i),

or

(b) (i) grants to any person an option where the exercise of the option, either under the terms of the option or under the terms of any arrangement or understanding subject to which or otherwise in connection with which the option is granted, would bind the individual to dispose, or cause the individual to dispose, of any eligible shares to the person to whom the individual granted the option or any other person for a price which, having regard to the terms of the option or the terms of such arrangement or understanding and the net effect of those terms considered as a whole, is other than the market value of the eligible shares at the time the disposal is made, or

(ii) enters into an agreement where, either under the terms of the agreement or under the terms of any arrangement or understanding subject to which or otherwise in connection with which the agreement is made, it would bind the individual to dispose, or cause the individual to dispose, of any eligible shares to the person with whom the agreement is made or any other person in the manner described in subparagraph (i).

Anti-avoidance: disposal of a qualifying subsidiary

508O. (1) This section applies where before the end of the relevant period for a qualifying investment, a qualifying company disposes of a qualifying subsidiary (including on a winding up or dissolution referred to in section 492(3)), where the amounts raised from the qualifying investment were, in accordance with section 490(4)(b), invested in eligible shares of that qualifying subsidiary, and the amounts raised from that disposal were not returned to the qualifying investors without undue delay.

(2) For the purposes of section 508M, the qualifying investors who made the qualifying investment that was so employed, shall be treated as if, on the date of that disposal, they partially disposed of the shares that they hold in the qualifying company for an amount equal to the portion (attributable to their shareholding in respect of their eligible shares) of the market value of the qualifying subsidiary on the date it is disposed of, or the amount for which it was disposed if higher.

Anti-avoidance: qualifying investor receiving value from the company

508P. (1) In this section ‘ordinary trade debt’ means any debt for goods or services supplied in the ordinary course of a trade or business where the credit period given is not longer than that normally given to the customers of the person carrying on the trade or business, and in any event does not exceed 6 months.

(2) In this section—

(a) any reference to a payment or transfer to an individual includes a reference to a payment or transfer made to the individual indirectly or to his or her order or for his or her benefit, and

(b) any reference to an individual includes a reference to an associate of the individual and any reference to the company includes a reference to the RICT group and any person connected with the RICT group.

(3) An individual receives value from a qualifying company where the company—

(a) repays, redeems or purchases any of its share capital or securities which belong to the individual or makes any payment to the individual for giving up his or her right to any of the company’s share capital or any security on its cancellation or extinguishment,

(b) repays any debt owed to the individual other than—

(i) an ordinary trade debt incurred by the company, or

(ii) any other debt incurred by the company—

(I) on or after the earliest date on which the individual subscribed for the shares in respect of which the relief is claimed, and

(II) otherwise than in consideration of the extinguishment of a debt incurred before that date,

(c) makes to the individual any payment for giving up his or her right to any debt on its extinguishment other than—

(i) a debt in respect of a payment of the kind mentioned in paragraph (d) or (e) of section 500(3), or

(ii) a debt of the kind mentioned in subparagraph (i) or (ii) of paragraph (b),

(d) releases or waives any liability of the individual to the company or discharges, or undertakes to discharge, any liability of the individual to a third person, and a company shall be treated as having released or waived a liability where the liability is not discharged by payment within 12 months of the time when it ought to have been discharged by payment,

(e) makes a loan or advance to the individual, and there shall be treated as if it were a loan made by the company to the individual—

(i) the amount of any debt (other than an ordinary trade debt) incurred by the individual to the company, and

(ii) the amount of any debt due from the individual to a third person which has been assigned to the company,

(f) provides a benefit or facility for the individual,

(g) transfers an asset to the individual for no consideration or for consideration less than its market value or acquires an asset from the individual for consideration exceeding its market value, or

(h) makes to the individual any other payment except a payment of the kind mentioned in paragraph (a), (b), (c), (d) or (e) of section 500 (3) or a payment in discharge of an ordinary trade debt.

(4) For the purposes of this section, an individual receives value from the company where the individual receives any payment or asset in a winding up or in connection with a dissolution of the company, being a winding up or dissolution within section 490(6), in respect of shares held by the individual.

(5) For the purposes of this section, an individual receives value from the company where any person, who is treated as connected with the company for the purposes of section 500—

(a) purchases any of its share capital or securities which belong to the individual, or

(b) makes any payment to the individual for giving up any right in relation to any of the company’s share capital or securities.

(6) The value received by an individual shall be—

(a) in a case within paragraph (a), (b) or (c) of subsection (3), the amount receivable by the individual or, if greater, the market value of the shares, securities or debt in question,

(b) in a case within subsection (3)(d), the amount of the liability,

(c) in a case within subsection (3)(e), the amount of the loan or advance,

(d) in a case within subsection (3)(f), the cost to the company of providing the benefit or facility less any consideration given for it by the individual,

(e) in a case within subsection (3)(g), the difference between the market value of the asset and the consideration (if any) given for it,

(f) in a case within subsection (3)(h), the amount of the payment,

(g) in a case within subsection (4), the amount of the payment or, as the case may be, the market value of the asset, and

(h) in a case within subsection (5), the amount receivable by the individual or, if greater, the market value of the shares or securities in question.

(7) Where an individual receives value from a company during a compliance period, then the amount of the relief to which that individual is entitled shall be reduced by the value so received.

(8) Where by virtue of this section any relief is withheld or withdrawn in the case of an individual to whom shares in a company have been issued at different times, the relief shall be withheld or withdrawn in respect of shares issued earlier rather than in respect of shares issued later.

Qualification to section 508P for specified persons

508Q. (1) A specified individual shall not have received value from a company by virtue of section 508P(3)(b) where—

(a) the specified individual has made an investment in the company by way of a loan,

(a) the specified individual has made an investment in the company by way of a loan,

(b) the loan is converted into eligible shares within one year of the making of the loan, and

(c) the specified individual provides a statement by a statutory auditor, within the meaning of section 2 of the Companies Act 2014 , certifying that, in his or her opinion, the money raised by the company by way of the loan was used, and only used, by it for a qualifying purpose.

(2) Where subsection (1) applies, the conversion of the loan into eligible shares shall, notwithstanding any other provision of this Part, be treated as the making of a relevant investment by the specified individual on the date of the making of the loan.

Value received by persons other than qualifying investors

508R. (1) The relief to which an individual is entitled in respect of any shares in a company shall be reduced in accordance with subsection (2) if at any time in the compliance period—

(a) the company repays, redeems or purchases any of its share capital which belongs to any member other than—

(i) that individual, or

(ii) another individual whose relief is thereby reduced by virtue of section 508P(3),

or makes any payment to any such member for giving up such member’s right to any of the company’s share capital on its cancellation or extinguishment, or

(b) a company in the RICT group acquires any of the share capital in the qualifying company from any member other than—

(i) that individual, or

(ii) another individual whose relief is thereby reduced by virtue of section 508P(3),

or makes any payment to any such member for giving up such member’s right to any of the qualifying company’s share capital on its cancellation or extinguishment.

(2) Where subsection (1) applies, the amount of relief to which an individual is entitled shall be reduced by the amount receivable by the member or, if greater, the nominal value of the share capital in question and, where apart from this subsection, 2 or more individuals would be entitled to relief, the reduction shall be made in proportion to the amounts of relief to which those individuals would have been entitled apart from this subsection.

(3) Where at any time in the compliance period a member of a company receives or is entitled to receive any value from the company within the meaning of this subsection, then, for the purposes of section 500(5) in its application to any subsequent time—

(a) the amount of the company’s issued share capital, and

(b) the amount of the part of that capital which consists of the shares relevant to section 500(5) and the amount of the part consisting of the remainder,

shall each be treated as reduced in accordance with subsection (6).

(4) The amount of each of the parts mentioned in subsection (3)(b) shall be treated as equal to such proportion of that amount as the amount subscribed for that part less the relevant value bears to the amount subscribed, and the amount of the issued share capital shall be treated as equal to the sum of the amounts treated under this subsection as the amount of those parts respectively.

(5) In subsection (3)(b), the reference to the part of the capital which consists of the shares relevant to section 500(5) is a reference to the part consisting of shares which (within the meaning of that section) the individual directly or indirectly possesses or is entitled to acquire, and in subsection (4) the ‘relevant value’, in relation to each of the parts mentioned in that subsection, means the value received by the member or members entitled to the shares of which that part consists.

(6) For the purposes of subsection (3), a member of a company receives or is entitled to receive value from the company within the meaning of that subsection in any case in which an individual would receive value from the company by virtue of paragraph (d), (e), (f), (g) or (h) of section 508P(3) (but treating as excepted from that paragraph (h) all payments made for full consideration), and the value received shall be determined as for the purposes of that section.

(7) For the purposes of subsection (6), a person shall be treated as entitled to receive anything which the person is entitled to receive at a future date or will at a future date be entitled to receive.

(8) Where by virtue of this section any relief is withheld or withdrawn in the case of an individual to whom shares in the company have been issued at different times, the relief shall be withheld or withdrawn in respect of shares issued earlier rather than in respect of shares issued later.

(9) Where during a compliance period in respect of a qualifying investor’s investment in a qualifying company, that company redeems shares of any member other than that individual or purchases shares from any member other than that individual (either of which is referred to in this subsection as the ‘redemption’) then, notwithstanding subsection (1)(a), the relief that individual is entitled to, other than pursuant to section 503 or 507, shall not be reduced where—

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

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

Failure to commence a relevant employment (relief under section 508G)

508S. In the case of a claim under 508G before a specified individual commences a relevant employment with the company in which that individual has made a relevant investment (being that individual’s first such investment), the relief shall be withdrawn if the specified individual fails to commence such employment—

(a) within the year of assessment in which the investment is made, or

(b) if later, within 6 months of the date of—

(i) where the investment consists of the subscription of only one amount for eligible shares, that subscription, or

(ii) where the investment consists of the subscription of more than one amount for eligible shares, the last such subscription.

Chapter 11

Withdrawing relief

Withdrawing relief - general

508T. (1) Subject to this section and without prejudice to section 959AD, any assessment for withdrawing relief which is made by reason of an event occurring after the date of the claim may be made within 4 years after the end of the year of assessment in which that event occurs, and any additional tax arising shall be due and payable as set out in this Chapter.

(2) No assessment for withdrawing relief in respect of shares issued to any person shall be made by reason of any event occurring after his or her death.

(3) Where a person has, by a disposal or disposals to which section 508M(1)(b) applies, disposed of all the shares issued to the person by a company, no assessment for withdrawing relief in respect of any of those shares shall be made by reason of any subsequent event unless it occurs at a time when the person is connected with the company within the meaning of section 500.

Assessments for withdrawing relief claimed under Chapter 4 - company

508U. (1) Where a statement of qualification issued by a company is incorrect, any relief claimed by an individual in excess of the relief which would have been claimed had a correct statement of qualification been furnished shall be withdrawn by the making of an assessment on the qualifying company to corporation tax under Case IV of Schedule D for the year of assessment for which the relief was given, in an amount equal to 1.2 times the amount in section 508A(3)(a)(vi), or such part of that amount as does not qualify for relief.

(2) (a) This subsection applies where any relief claimed under Chapter 4 is no longer due because within the relevant period—

(i) the company has ceased to be a qualifying company,

(ii) an investment has ceased, or partially ceased, to be a qualifying investment (within the meaning of section 496), or

(iii) the amount of relief available is to be reduced by section 508R.

(b) Where this subsection applies, any relief that has been given which is subsequently found not to have been due, shall be withdrawn by the making of an assessment to corporation tax under Case IV of Schedule D for the year of assessment for which the relief was given, in an amount equal to 1.2 times the amount in section 508A(3)(a)(vi), or such part of that amount as no longer qualifies for relief.

(3) Where a statement of qualification (second stage relief) issued by a company is incorrect, any relief claimed by an individual in excess of the relief which would have been claimed had a correct statement of qualification (second stage relief) been furnished shall be withdrawn by the making of an assessment on the qualifying company to corporation tax under Case IV of Schedule D for the year of assessment for which the relief was given, in an amount equal to 0.4 times the amount in section 508B(3)(a)(vi), or such part of that amount as does not qualify for relief.

(4) In its application to an assessment made by virtue of this section, section 1080 applies as if the date on which the corporation tax charged by the assessment becomes due and payable were—

(a) in the case of relief withdrawn in accordance with subsection (1), the date referred to in section 508A(3)(a)(ii),

(b) in the case of relief withdrawn in accordance with subsection (2), the date of the event the happening of which causes the relief to be withdrawn, or

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

(5) An amount chargeable to tax under this section shall be treated—

(a) as income against which no loss, deficit, expense or allowance may be set off, and

(b) as not forming part of the income of the company for the purposes of calculating a surcharge under section 440.

Assessments for withdrawing relief under Chapter 4 - investor

508V. (1) This section applies where any relief is claimed under Chapter 4 and the relief—

(a) is subsequently found not to have been due other than in circumstances to which section 508U applies, or

(b) is no longer due because within the relevant period—

(i) the relief is to be withdrawn by virtue of section 495,

(ii) the investment ceases to be a qualifying investment by virtue of section 499,

(iii) the amount of relief is subject to a reduction under Chapter 10 (other than section 508R),

(iv) the relief is withdrawn because of section 508L, or

(v) the investor ceases to be a qualifying investor.

(2) Where any relief is to be withdrawn under this section that relief shall be withdrawn by the making of an assessment on the investor to income tax under Case IV of Schedule D for the year of assessment for which the relief was given.

(3) In its application to an assessment made by virtue of this section, section 1080 applies as if the date on which the income tax charged by the assessment becomes due and payable were—

(a) in the case of relief withdrawn in accordance with subsection (1)(a), the date on which the relief was claimed,

(b) in the case of relief withdrawn in accordance with subsection (1)(b)(i), the date the agreements, arrangements or understandings were entered into,

(c) in the case of relief withdrawn in accordance with subsection (1)(b)(ii), the date of the event the happening of which causes the relief to be withdrawn,

(d) in the case of relief withdrawn in accordance with subsection (1)(b)(iii), the date of disposal, or the date on which the value was received, as the case may be, or

(e) in the case of relief withdrawn in accordance with subsection (1)(b)(iv) —

(i) in so far as effect has been given to the relief in accordance with regulations under section 986, the 31st day of December in the year of assessment in which effect was so given, and

(ii) in so far as effect has not been so given, the date on which the relief was claimed.

(4) For the purposes of subsection (3), the date on which the relief is claimed is the date on which a repayment of tax for giving effect to the relief was made or, if there was no such repayment, the date on which the claim was made to the Revenue Commissioners.

(5) (a) Where any relief given in respect of shares for which either a married person or his or her spouse has subscribed, and which were issued while the married person was assessed in accordance with section 1017, is to be withdrawn by virtue of a subsequent disposal of those shares by the person who subscribed for them and at the time of the disposal the married person is not so assessable, any assessment for withdrawing that relief shall be made on the person making the disposal and shall be made by reference to the reduction of tax flowing from the amount of the relief regardless of any allocation of that reduction under subsections (2) and (3) of section 1024 or of any allocation of a repayment of income tax under section 1020.

(b) Where any relief given in respect of shares for which either a nominated civil partner or the other civil partner has subscribed, and which were issued while the nominated civil partner was assessed in accordance with section 1031C, is to be withdrawn by virtue of a subsequent disposal of those shares by the person who subscribed for them and at the time of the disposal the nominated civil partner is not so assessable, any assessment for withdrawing that relief shall be made on the person making the disposal and shall be made by reference to the reduction of tax flowing from the amount of the relief regardless of any allocation of that reduction under subsections (2) and (3) of section 1031I or of any allocation of a repayment of income tax under section 1031E.

(6) Where an individual claimed relief pursuant to section 503 and—

(a) an assessment is made on the company pursuant to section 508U,

(b) the tax payable under that assessment remains unpaid, and

(c) it is reasonable to consider that there were arrangements in place the main purpose, or one of the main purposes, of which was to avoid paying any tax arising on such an assessment,

then, notwithstanding subsection (1)(a) and section 508U, that relief may be withdrawn in accordance with subsection (2).

Assessments for withdrawing relief under Chapter 5

508W. (1)This section applies where any relief claimed under Chapter 5—

(a) is subsequently found not to have been due because—

(i) the company was not a qualifying company,

(ii) the investment was not a relevant investment, or

(iii) the individual was not a specified person,

or

(b) is no longer due because—

(i) the relief is to be withdrawn by virtue of section 495,

(ii) the investment ceases to be a qualifying investment by virtue of section 499,

(iii) the amount of relief is subject to a reduction under Chapter 10,

(iv) the relief is withdrawn because of section 508L,

(v) a specified individual failed or ceased to hold a relevant employment, or

(vi) an individual ceased to be a specified individual.

(2) Where any relief is to be withdrawn under this section that relief shall be withdrawn by the making of an assessment on the investor to income tax under Case IV of Schedule D for the year of assessment for which the relief was given.

(3) In its application to an assessment made by virtue of this section, section 1080 applies as if the date on which the income tax charged by the assessment becomes due and payable were—

(a) in the case of relief withdrawn in accordance with subsection (1)(a), the date on which the relief was claimed,

(b) in the case of relief withdrawn in accordance with subsection (1)(b)(i), the date the agreements, arrangements or understandings were entered into,

(c) in the case of relief withdrawn in accordance with subsection (1)(b)(ii), the date of the event the happening of which causes the relief to be withdrawn,

(d) in the case of relief withdrawn in accordance with subsection (1)(b)(iii), the date of disposal, or the date on which the value was received, as the case may be,

(e) in the case of relief withdrawn in accordance with subsection (1)(b)(iv) —

(i) in so far as effect has been given to the relief in accordance with regulations made under section 986, the 31st day of December in the year of assessment in which effect was so given, and

(ii) in so far as effect has not been so given, the date on which the relief was claimed,

or

(f) in the case of relief withdrawn in accordance with subparagraph (v) or (vi) of subsection (1)(b), the date of the failure or the cessation, as the case may be.

(4) For the purposes of subsection (3), the date on which the relief is claimed is the date on which a repayment of tax for giving effect to the relief was made or, if there was no such repayment, the date on which the claim was made to the Revenue Commissioners.

Treatment of statement of qualification as a return

508X. (1) Section 1077E shall apply to statements made under Chapter 6, and the following provisions shall apply:

(a) in subsections (2) and (5) of section 1077E, the provision to an investor of—

(i) a statement of qualification,

(ii) a statement of qualification (follow-on relief), or

(iii) a statement of qualification (SURE),

shall be treated as the making or delivery of a return by the company;

(b) for the purposes of subsections (4) and (7) of section 1077E—

(i) 25 per cent of the amount referred to in subsections (1) and (3) of section 508U shall be treated as an amount calculated under section 1077E(11) ;

(ii) where an assessment is made pursuant to section 508W(1)(a)(i), the amount calculated in accordance with section 1077E(11) shall be treated as a tax liability of the company which provided the statement to the specified individual;

and

(c) subsection (11) of section 1077E shall have effect as if—

(i) references to ‘the person concerned’ were references to ‘the qualifying investor’ or ‘specified individual’, as the case may be, and

(ii) references to ‘that person’ were references to ‘the company which provided the statement to the investor’.

(2) For the purposes of section 1086, where an assessment is made pursuant to section 508W(1)(a)(i) —

(a) any interest arising under section 1080 shall be treated as interest payable by, and

(b) the amount calculated under subsection (1)(b)(ii) shall be treated as a tax liability of,

the company which provided the statement to the specified individual.

Information

508Y. (1) The Revenue Commissioners may require the qualifying company to provide to them such evidence as they consider necessary and may consult with such persons or body of persons as in their opinion may be of assistance to them, to enable them to verify that the conditions necessary for the claiming and granting of the relief have been satisfied.

(2) Where an event occurs by reason of which any relief in respect of any shares in a company is to be withdrawn—

(a) the company,

(b) any person connected with the company who has knowledge of that matter, and

(c) where the investment was made through a designated fund, the managers of the designated fund who have knowledge of the matter,

shall within 60 days of the event or, in the case of a person falling within paragraph (b), of that person coming to know of the matter, give a notice in writing to a Revenue officer containing particulars of the event.

(3) Where relief is claimed in respect of shares in a company and a Revenue officer has reason to believe that it may not be due by reason of any arrangement or scheme mentioned in section 490(6), 492, 495, 501 or 508L, the officer may by notice in writing require any person concerned to furnish him or her within such time (not being less than 60 days) as may be specified in the notice with—

(a) a declaration in writing stating whether or not, according to the information which that person has or can reasonably obtain, any such arrangement or scheme exists or has existed, and

(b) such other information as the officer may reasonably require for the purposes of the provision in question and as that person has or can reasonably obtain.

(4) References in subsection (3) to the person concerned are, in relation to sections 501 and 508L, references to the claimant and, in relation to sections 490(6), 492, 501 and 508L, references to the company and any person controlling the company.

(5) Where relief has been given in respect of shares in a company—

(a) any person who receives from the company any payment or asset which may constitute value received (by that person or another) for the purposes of section 508P or 508R(3), and

(b) any person on whose behalf such a payment or asset is received,

shall, if so required by a Revenue officer, state whether the payment or asset received by that person or on that person’s behalf is received on behalf of any person other than that person and, if so, the name and address of that other person.

(6) Where relief has been claimed in respect of shares in a company, any person who holds or has held shares in the company and any person on whose behalf any such shares are or were held shall, if so required by a Revenue officer, state whether the shares which are or were held by that person or on that person’s behalf are or were held on behalf of any person other than that person and, if so, the name and address of that other person.

(7) No obligation as to secrecy imposed by statute or otherwise shall preclude a Revenue officer from disclosing to a company that relief has been given or claimed in respect of a particular number or proportion of its shares.

Chapter 12

Application of this Part

Application of this Part

508Z. (1) Relief under this Part shall apply only to eligible shares which are issued on or before 31 December 2021.

(2) Relief cannot be carried forward, under section 508, into any year of assessment subsequent to the year of assessment 2021.”.

(2) The Principal Act is amended—

(a) in section 128F(1), in the definition of “financial activities”, by substituting “section 489” for “section 488”,

(b) in section 479(5) by substituting “section 508M” for “section 498 but without regard to the reference in subsection (4) (as amended by the Finance Act 1998 ) of that section to subsection (3) of this section”,

(c) in section 591(1) by deleting “ ‘eligible shares’ and ‘ordinary shares’ have the same meanings respectively as in section 488;” and inserting the following definitions:

“ ‘eligible shares’ means new ordinary shares which carry no present or future preferential right to dividends or to a company’s assets on its winding up and no present or future preferential right to be redeemed;

‘ordinary shares’ means shares forming part of a company’s ordinary share capital;”,

(d) in section 597A(1), in the definition of “relevant trading activities”, by substituting “section 489” for “section 488”,

(e) in section 458, in Part 1 of the Table—

(i) by substituting “section 502” for “section 489”, and

(ii) by substituting “section 507” for “section 493”,

(f) in section 737(9)(c) by substituting “section 508I” for “section 508”,

(i) by substituting “section 591(1) ” for “section 488”, and

(ii) by substituting “section 490” for “section 495”,

(h) by deleting Schedule 10, and

(i) in Schedule 29—

(i) in Column 1, by inserting the following after “section 531AF”:

“Section 508A

Section 508B

Section 508C”,

and

(ii) in Column 2, by deleting—

“section 503(3) and (4) (as substituted by section 33 of the Finance Act 2011 )

section 505(3) and (4) (before the coming into operation of section 33 of the Finance Act 2011 )”.

(3) Subsection (1) and paragraphs (h) and (i) of subsection (2) shall have effect as respects shares issued on or after 1 January 2019.

⁵ OJ No. L187, 26.6.2014, p. 43