COVID-19: Close company surcharge

May 18, 2020
The close company surcharge 18-month distribution period, will on application to Revenue, be extended by a further 9 months.  This extension is available in response to COVID-19 circumstances affecting the company.  It will apply for accounting periods ending from 30 September 2018 onwards, for which distributions to avoid the surcharge would be due by 31 March 2020 onwards.

Section 440 Taxes Consolidation Act (TCA) 1997 provides for an additional charge of corporation tax (referred to as a “surcharge”) on close companies at the rate of 20 per cent of the excess of the aggregate of the distributable investment income and the distributable estate income over the distributions made for an accounting period. Section 441 TCA provides for a 15 per cent surcharge on certain undistributed income of close service companies. The surcharges apply to income of close companies that is not distributed within 18 months from the end of the accounting period in which the income arose.

In recognition of the Covid-19 circumstances which may require many companies to retain cash to support their business Revenue will, on application, extend the 18-month period for distributions by a further 9 months.

Details of this temporary measures are set out in the Revenue information note.  Revenue Tax and Duty Manual Part 13-02-05 has been amended to include reference to such extensions and the action to be taken on receipt of an application for an extension.