Finance Act 2021
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Amendment of Part 16 of Principal Act (relief for investment in corporate trades) | ||
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26. (1) Part 16 of the Principal Act is amended— | ||
(a) in section 489, in paragraph (a) of the definition of “RICT group”, by the deletion of “but has since been disposed of”, | ||
(b) in section 502, by the insertion of the following subsection after subsection (4): | ||
“(5) In respect of shares issued on or after 1 January 2022, an amount equal to ten fortieths of the relief granted under subsection (2A) shall be withdrawn, unless in relation to a qualifying company and its qualifying subsidiaries— | ||
(a) (i) the employment relevant number exceeds the employment threshold number by at least one qualifying employee, and | ||
(ii) the relevant amount exceeds the threshold amount by at least the total emoluments of one qualifying employee in the year of assessment in which the subsequent period ends, | ||
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.”, | ||
(c) in section 505, by the substitution of the following subsection for subsection (2): | ||
“(2) The individual, in each of the 3 years of assessment preceding the year of assessment that precedes the year of assessment in which that individual makes a relevant investment (being that individual’s first such investment), may have been in receipt of income other than income chargeable to tax under— | ||
(a) Schedule E, or | ||
(b) Case III of Schedule D in respect of profits or gains from an office or employment held or exercised outside the State, | ||
not in excess of the lesser of— | ||
(i) the aggregate of the amounts, if any, of that individual’s income chargeable to tax under Schedule E and Case III of Schedule D in respect of the profits or gains referred to in paragraphs (a) and (b), and | ||
(ii) €50,000.”, | ||
(d) in section 508(1), by the substitution of the following paragraph for paragraph (a): | ||
“(a) makes a qualifying investment or has an amount of relief carried forward under this section in excess of— | ||
(i) €100,000 in respect of which relief is available under section 507, or | ||
(ii) the limits set out in section 502(3) in any other case, | ||
or”, | ||
(e) in section 508A— | ||
(i) in subsection (1), by the insertion of “or qualifying investment fund,” after “designated fund”, | ||
(ii) in subsection (3)(a)— | ||
(I) by the substitution of the following for subparagraph (iv): | ||
“(iv) where the investment is made through a designated fund or qualifying investment fund, the name, address and tax reference number of the designated fund or the qualifying investment fund, as the case may be,”, | ||
and | ||
(II) by the deletion of subparagraph (v), | ||
and | ||
(iii) by the substitution of the following subsection for subsection (4): | ||
“(4) A qualifying company may not issue a statement of qualification in respect of a qualifying investment more than 4 months after the end of the year of assessment in which the shares were issued.”, | ||
(f) in section 508C— | ||
(i) in subsection (3)(a), by the deletion of subparagraph (iv), and | ||
(ii) by the substitution of the following subsection for subsection (4): | ||
“(4) A qualifying company may not issue a statement of qualification (SURE) in respect of a relevant investment more than 4 months after the end of the year of assessment in which the shares were issued.”, | ||
(g) in section 508E(2), by the substitution of “not more than 4 months after the end of the year of assessment in which the shares were issued” for “within 60 days of the date referred to in section 508A(3)(a)(v)”, | ||
(h) in section 508F(2), by the substitution of the following paragraph for paragraph (d): | ||
“(d) where section 502(2)(b) applies, the date the conditions set out in section 508B(4)(a) are satisfied.”, | ||
(i) in section 508G(2)— | ||
(i) in paragraph (c), by the substitution of “investment.” for “investment;”, and | ||
(ii) by the deletion of paragraph (d), | ||
(j) by the substitution of the following title for the title to Chapter 7: | ||
“Investment Funds”, | ||
(k) by the insertion of the following section after section 508I: | ||
“Qualifying investment funds | ||
508IA. (1) In this Part— | ||
‘alternative investment fund manager’ has the meaning assigned to it by the European Union (Alternative Investment Fund Managers) Regulations 2013 ( S.I. No. 257 of 2013 ); | ||
‘investment limited partnership’ means a partnership authorised in accordance with the Investment Limited Partnerships Act 1994 ; | ||
‘limited partnership’ means a limited partnership registered in accordance with the Limited Partnerships Act 1907 and managed by an alternative investment fund manager in accordance with the European Union (Alternative Investment Fund Managers) Regulations 2013; | ||
‘partnership agreement’ means any valid written agreement of the partners governed by the law of the State and subject to the exclusive jurisdiction of the courts of the State as to the affairs of a limited partnership or an investment limited partnership that is a qualifying investment fund for the purposes of this Part and the conduct of its business as may be amended, supplemented or restated from time to time; | ||
‘qualifying investment fund’ means an investment limited partnership or a limited partnership that meets the requirements of subsection (2). | ||
(2) A limited partnership or an investment limited partnership, as the case may be, shall be a qualifying investment fund for the purposes of this Part if— | ||
(a) it is established under a partnership agreement and has as its principal business, to be expressed in the partnership agreement establishing the qualifying investment fund, the investment of its funds in accordance with a defined investment policy for the benefit of its investors, and | ||
(b) under the terms of the partnership agreement it is provided that— | ||
(i) the funds to be invested in eligible shares are to be invested without undue delay, | ||
(ii) pending investment in eligible shares, any moneys subscribed for the purchase of shares are to be placed on deposit in a separate account with a bank licensed to transact business in the State, | ||
(iii) any amounts received by means of dividends or interest are, subject to a commission in respect of management expenses at a rate not exceeding a rate which shall be specified in the partnership agreement under which the qualifying investment fund has been established, to be paid without undue delay to the partners, | ||
(iv) any charges to be made by means of management or other expenses in connection with the establishment, running, winding down or termination of the qualifying investment fund shall be at a rate not exceeding a rate which shall be specified in the partnership agreement under which the qualifying investment fund is established, | ||
(v) audited accounts of the qualifying investment fund are prepared annually and submitted to the Revenue Commissioners when requested, | ||
(vi) the alternative investment fund manager, and any associate of that manager is not for the time being connected either directly or indirectly with any company whose shares comprise part of the qualifying investment fund, | ||
(vii) any discounts on eligible shares received by the alternative investment fund manager of the qualifying investment fund are accepted solely for the benefit of the partners, | ||
(viii) if a limit is placed on the size of the qualifying investment fund or a minimum amount for investment is stipulated, any subscriptions not accepted are to be returned without undue delay, and | ||
(ix) no partner is allowed to have any eligible shares in any company in which the qualifying investment fund has invested transferred into his or her name until 4 years have elapsed from the date of the issue of the shares to the fund.”, | ||
(l) in section 508J— | ||
(i) in subsection (1)(a), by the substitution of “or by a person or persons having the management of a qualifying investment fund for the purposes of this Chapter (in this section referred to as the ‘fund managers’)” for “for the purposes of this Chapter (in this Part referred to as the ‘managers of a designated fund’)”, | ||
(ii) in subsections (2), (3) and (4)(a), by the substitution of “fund managers” for “managers of a designated fund” in each place where it occurs, and | ||
(iii) in subsection (4), by the insertion of “or the qualifying investment fund” after “designated fund” in each place where it occurs, | ||
(m) in section 508P, by the insertion of the following subsection after subsection (8): | ||
“(9) Where during a compliance period in respect of a qualifying investor’s investment in a qualifying company, that company redeems shares of that individual, where the compliance period for that share issue has ended, or purchases shares from that individual, where the compliance period for that share issue has ended (either of which is referred to in this subsection as ‘the redemption’), then, notwithstanding subsection (7), the relief that individual is entitled to, other than pursuant to section 503 or 507, shall not be reduced where— | ||
(a) the most recent qualifying investment, in respect of which a claim for relief under this Part is made, in a company in the RICT group was more than 18 months prior to the date of the redemption, | ||
(b) there is no qualifying investment, in respect of which a claim for relief under this Part is made, in a company in the RICT group within the period of 12 months after the date of the redemption, and | ||
(c) there is no qualifying investment by that individual, in respect of which a claim for relief under this Part is made, in a company in the RICT group within the period of 5 years after the date of the redemption.”, | ||
(n) in section 508U— | ||
(i) by the insertion of the following subsection after subsection (3): | ||
“(3A) Where any relief is to be withdrawn under section 502(5) that relief shall be withdrawn by the making of an assessment on the qualifying company to corporation tax under Case IV of Schedule D for the year of assessment following the year of assessment in which the subsequent period ends, in an amount equal to 0. 4 times the amount referred to in section 502(5).”, | ||
and | ||
(ii) in subsection (4)— | ||
(I) in paragraph (b) by the deletion of “or”, | ||
(II) in paragraph (c) by the substitution of “ends, or” for “ends.”, and | ||
(III) by the insertion of the following paragraph after paragraph (c): | ||
“(d) in the case of relief withdrawn in accordance with subsection (3A), the year of assessment following the year of assessment in which the subsequent period ends.”, | ||
(o) in section 508Y(2)(c), by the substitution of “designated fund or qualifying investment fund, the managers of the designated fund or qualifying investment fund” for “designated fund, the managers of the designated fund”, and | ||
(p) in section 508Z, by the substitution of “2024” for “2021” in each place where it occurs. | ||
(2) Paragraphs (e)(ii)(II), (e)(iii), (f), (g), (h) and (i)(ii) of subsection (1) shall have effect as respects shares issued on or after 1 January 2022. |