Finance Act 2024
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Amendment of Part 16 of Principal Act (relief for investment in corporate trades) | ||
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37. (1) Part 16 of the Principal Act is amended— | ||
(a) in section 489— | ||
(i) by the deletion of the definition of “financial activities”, and | ||
(ii) by the insertion of the following definition: | ||
“ ‘financing 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;”, | ||
(b) in section 496(5)— | ||
(i) by the substitution of the following paragraph for paragraph (a): | ||
“(a) An initial risk finance investment shall only be a qualifying investment where each member of the RICT group, at the time the eligible shares are issued— | ||
(i) has not been operating in any market, or | ||
(ii) has been operating in any market for— | ||
(I) less than 10 years following— | ||
(A) in the case of a company, the date of its incorporation, or | ||
(B) in the case of a member other than a company, the date it commenced carrying on any enterprise required to be included in the RICT group, | ||
or | ||
(II) less than 7 years after its first commercial sale.”, | ||
and | ||
(ii) by the substitution of the following paragraph for paragraph (c): | ||
“(c) For the purposes of paragraph (b), references to financial year shall be construed— | ||
(i) in the case of businesses that are companies, in accordance with Chapter 3 of Part 6 of the Companies Act 2014 , and | ||
(ii) in the case of businesses other than companies, as references to year of assessment.”, | ||
(c) in section 502— | ||
(i) in subsection (2A)— | ||
(I) in paragraph (b), by— | ||
(A) the substitution of the following subparagraph for subparagraph (ii): | ||
“(ii) 87.5 per cent of the amount subscribed where the qualifying investment is made pursuant to— | ||
(I) section 496(5)(a)(ii), or | ||
(II) section 496(7) and, at the time the eligible shares are issued, each member of the RICT group has been operating in any market within a period referred to in clause (I) or (II) of section 496(5)(a)(ii),”, | ||
(B) the substitution of the following subparagraph for subparagraph (iv): | ||
“(iv) 50 per cent of the amount subscribed where the qualifying investment is made pursuant to section 496(7) and, at the time the eligible shares are issued, any member of the RICT group has been operating in any market for a period greater than both of the periods referred to in clauses (I) and (II) of section 496(5)(a)(ii), or”, | ||
and | ||
(C) the substitution of “subject to paragraph (c) and section 508J(4)” for “subject to section 508J(4)”, | ||
and | ||
(II) by the insertion of the following paragraph after paragraph (b): | ||
“(c) The relief as provided under paragraph (b) shall be given only insofar as the difference in the amount of income tax to be paid by the qualifying investor on the making of the deduction under paragraph (b) from the qualifying investor’s total income for that year and the amount of income tax which would be payable by him or her for that year if the deduction under paragraph (b) was not made is not in excess of the maximum tax relief thresholds as provided for in paragraphs 5 and 6 of Article 21a of the General Block Exemption Regulation.”, | ||
(ii) in subsection (3)(a)— | ||
(I) in subparagraph (ii)(II), by the substitution of “investments,” for “investments, and”, | ||
(II) by the substitution of the following subparagraph for subparagraph (iii): | ||
“(iii) €500,000 in respect of the year of assessment 2024, and”, | ||
and | ||
(III) by the insertion of the following subparagraph after subparagraph (iii): | ||
“(iv) €1,000,000 in respect of the year of assessment 2025 and each subsequent year of assessment.”, | ||
and | ||
(iii) by the substitution of the following subsection for subsection (5): | ||
“(5) (a) In respect of shares issued on or after 1 January 2022 and on or before 31 December 2024, 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— | ||
(i) (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 | ||
(ii) 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. | ||
(b) In respect of shares issued on or after 1 January 2025, 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— | ||
(i) the employment relevant number exceeds the employment threshold number by at least one qualifying employee in the year of assessment in which the subsequent period ends, or | ||
(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 | ||
(iii) 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.”, | ||
(d) in section 504— | ||
(i) by the substitution of “In this Chapter, and in Chapters 6 and 10” for “In this Chapter”, and | ||
(ii) by the insertion of the following definition: | ||
“ ‘first relevant investment’ means a relevant investment made within 2 years of the end of the year of assessment in which the qualifying company was incorporated, and references to ‘first such investment’ shall be construed accordingly;”, | ||
(e) in section 507— | ||
(i) by the substitution of the following subsection for subsection (1): | ||
“(1) (a) 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 for— | ||
(i) 125 per cent of the amount subscribed where the relevant investment is made pursuant to section 496(5)(a)(i), | ||
(ii) 87.5 per cent of the amount subscribed where the relevant investment is made pursuant to— | ||
(I) section 496(5)(a)(ii), or | ||
(II) section 496(7) and, at the time the eligible shares are issued, each member of the RICT group has been operating in any market within a period referred to in clause (I) or (II) of section 496(5)(a)(ii), | ||
(iii) 50 per cent of the amount subscribed where the relevant investment is made pursuant to section 496(6), or | ||
(iv) 50 per cent of the amount subscribed where the relevant investment is made pursuant to section 496(7) and, at the time the eligible shares are issued, any member of the RICT group has been operating in any market for a period greater than both of the periods referred to in clauses (I) and (II) of section 496(5)(a)(ii), | ||
which shall be given, subject to paragraph (b), as a deduction from his or her total income for the year of assessment in which the shares are issued. | ||
(b) The relief as provided under paragraph (a) shall be given only insofar as the difference in the amount of income tax to be paid by the specified individual on the making of the deduction under paragraph (a) from the specified individual’s total income for that year and the amount of income tax which would be payable by him or her for that year if the deduction under paragraph (a) was not made is not in excess of the maximum tax relief thresholds as provided for in paragraph 5 of Article 21a of the General Block Exemption Regulation.”, | ||
and | ||
(ii) in subsection (2), by the substitution of “€140,000” for “€100,000”, | ||
(f) in section 508(1)(a), by the substitution of the following subparagraph for subparagraph (i): | ||
“(i) €140,000 in respect of which relief is available under section 507, or”, | ||
(g) in section 508A, 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 after 31 December in the year of assessment following the year of assessment in which the shares were issued.”, | ||
(h) in section 508C, 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 after 31 December in the year of assessment following the year of assessment in which the shares were issued.”, | ||
(i) in section 508Q, by the substitution of the following subsection for subsection (2): | ||
“(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 conversion of the loan into eligible shares provided that the business plan (within the meaning of section 493) on which the relevant investment is based was prepared in advance of the loan.”, | ||
(j) in section 508W(1)(a)— | ||
(i) in subparagraph (ii), by the deletion of “or”, | ||
(ii) in subparagraph (iii), by the substitution of “a specified person, or” for “a specified person,”, and | ||
(iii) by the insertion of the following subparagraph after subparagraph (iii): | ||
“(iv) the relief claimed was not in accordance with section 507,”, | ||
and | ||
(k) in section 508Z— | ||
(i) in subsection (1), by the substitution of “31 December 2026” for “31 December 2024”, and | ||
(ii) in subsection (2), by the substitution of “year of assessment 2026” for “year of assessment 2024”. | ||
(2) Paragraph (a) of subsection (1) shall have effect as respects shares issued on or after 1 January 2025. | ||
(3) Paragraphs (b), (c)(i)(I)(C), (c)(i)(II), (e)(i), (i) and (j) of subsection (1) shall apply on and from the date of the passing of this Act. | ||
(4) Subclauses (A) and (B) of paragraph (c)(i)(I) of subsection (1) shall have effect as respects shares issued on or after 1 January 2024. |