Revenue Note for Guidance

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Revenue Note for Guidance

PART 9

Principal Provisions Relating to Relief for Capital Expenditure

CHAPTER 1

Industrial buildings or structures: industrial building allowances, writing-down allowances, balancing allowances and balancing charges

Overview

This Chapter provides, in the form of a system of capital allowances, relief in respect of capital expenditure incurred on the construction or refurbishment of “industrial buildings or structures” as defined in section 268. The system of capital allowances in the Chapter is also applied (in differing ways) in relation to other property based tax incentives schemes by the provisions of the various Chapters of Part 10 and by section 843 and 843A.

The types of capital allowances available in respect of qualifying capital expenditure incurred are industrial building (initial) allowances, annual writing-down allowances and accelerated writing-down allowances (free depreciation). Balancing allowances or balancing charges may also apply.

The use of capital allowances which arise directly under this Chapter, or by virtue of its application, is affected by limitations under other provisions e.g. the limitation on certain reliefs used by high income individuals as provided by Chapter 2A of Part 15 and Schedule 25B.

268 Meaning of “industrial building or structure”

Summary

Broadly, an industrial building or structure is a building or structure in use for the purpose of any of the following trades, namely, a trade carried on in a mill, factory or other similar premises, or in a laboratory the sole or main function of which is the analysis of minerals in connection with exploring for and extracting minerals; a dock undertaking; the growing of fruit, vegetables or other produce in the course of a trade of market gardening; the trade of hotel-keeping; the intensive production of cattle, sheep, poultry or eggs in the course of a trade other than farming; the operation or management of an airport; the operation or management of a registered private nursing home, including associated qualifying residential units for the aged or infirm; the operation or management of certain convalescent homes; the operation or management of a qualifying hospital, the operation or management of a qualifying sports injuries clinic and the operation or management of a qualifying mental health centre. The tax incentive schemes in relation to registered private nursing homes including associated qualifying residential units for the aged or infirm, convalescent homes, qualifying hospitals, qualifying sports injuries clinics and qualifying mental health centres have been terminated (please refer to subsection (3B) and (9) for the relevant dates). An airport runway or apron in use for the purposes of a trade consisting of the operation or management of an airport is also regarded as an industrial building or structure. Moreover, a building or structure provided by the person carrying on any of the trades mentioned above for the recreation and welfare of employees of that trade is also treated as an industrial building or structure. The Finance Act 2008 also provides that a building or structure in use for the purpose of the operation or management of a qualifying specialist palliative care unit may qualify – this provision requires EU approval and is subject to commencement by way of order of the Minister for Finance. Finally, a building or structure in use for the purpose of the maintenance, repair or overhaul of commercial aircraft or the dismantling of such aircraft for the purposes of the salvaging or recycling of parts or materials may also be treated as an industrial building. This provision was included by section 27 of the Finance Act 2015 and commenced by Financial Resolution on 13 October 2015.

Registered holiday camps are treated as being in use for the purposes of the trade of hotel-keeping and, thus, qualify as industrial buildings or structures. Registered holiday cottages were also so treated but, subject to transitional arrangements which end on 31 July 2008, they ceased to qualify as an industrial building or structure as respects capital expenditure incurred on or after 4 December 2002. Registered guest houses and registered holiday hostels are treated as being in use for the purposes of the trade of hotel-keeping as respects capital expenditure incurred on or after 3 February 2005 as are registered caravan and camping sites as respects capital expenditure incurred on or after 1 January 2008.

Restriction on the amount of expenditure in certain cases

By virtue of the provisions of sections 270 and 316 only 75 per cent of capital expenditure attributable to the year 2007 and 50 per cent of the capital expenditure attributable to the period 1 January 2008 to 31 July 2008 may qualify for relief in the case of the construction or refurbishment of registered hotels, holiday camps and holiday cottages. An overall cap also applies for the period 1 January 2007 to 31 July 2008. The restrictions to 75 per cent and 50 per cent also apply to capital expenditure incurred in relation to qualifying sports injuries clinics and qualifying residential units. However, in the case of such units, the 75 per cent restriction for 2007 applies from 25 March 2007 rather than from 1 January 2007. (Please refer to the notes on sections 270(4) to (7) and section 316(2B) for full details).

Following further changes made to the scheme of capital allowances for qualifying residential units in the Finance Act 2007, capital expenditure incurred under contracts entered into on or after 1 May 2007 will qualify only in relation to 50 per cent of the expenditure incurred in the period 1 May 2007 to 30 April 2010 in the case of individuals and in relation to 75 per cent of the expenditure incurred in that period in the case of companies.

Details

Industrial building or structure – general meaning

(1) An industrial building or structure is a building or structure in use for the purposes of —

  • (1)(a) a trade carried on in a mill, factory or other similar premises or in a laboratory the sole or main function of which is the analysis of minerals in connection with the exploration for, or the extraction of, minerals,
  • (1)(b) a dock undertaking,
  • (1)(c) growing fruit, vegetables or other produce in the course of market gardening,
  • (1)(d) the trade of hotel-keeping (see subsections (2C), (2D), (3) and (11) to (15) also),
  • (1)(e) the intensive production of cattle, sheep, pigs, poultry or eggs in the course of a trade other than farming,
  • (1)(f) the trade of the operation or management of an airport, but this provision extends only to structures which are airport runways or airport aprons,
  • (1)(g) the trade of the operation or management of a registered private nursing home, (see also subsections (3A) to (3E) as respects capital expenditure incurred in the period 25 March 2002 to 30 April 2010 in relation to qualifying residential units for the aged or infirm),
  • (1)(h) the trade of the operation or management of an airport other than as regards runways or aprons,
  • (1)(i) the trade of the operation or management of a convalescent home which provides medical and nursing care for persons recovering from treatment in a hospital which treats acutely ill patients. Moreover, to qualify as an industrial building or structure, the Health Service Executive must be satisfied that the home satisfies the requirements of sections 4 and 6 of the Health (Nursing Homes) Act, 1990, and any regulations made under section 6 of that Act, as if it were a nursing home,
  • (1)(j) the trade of the operation or management of a qualifying hospital (but see subsection (1A) for certain exclusions),
  • (1)(k) the trade of the operation or management of a qualifying sports injuries clinic (but see subsection (1B) for certain exclusions),
  • (1)(l) the trade of the operation or management of a qualifying mental health centre (but see subsection (1D) for certain exclusions), or
  • (1)(m) the trade of the operation or management of a qualifying specialist palliative care unit (but see subsection (1E) for certain exclusions and subsection (9) regarding commencement), or
  • (1)(n) a trade which consists of the maintenance, repair or overhaul of aircraft used to carry passengers or cargo for hire or reward or the dismantling of such aircraft for the purposes of the salvaging or recycling of parts or materials (but see subsection (1F) and subsections (5A) to (5C) for certain exclusions, limitations and conditions). These buildings or structures are referred to as aviation services facilities throughout Part 9.

In addition, as respects capital expenditure incurred on or after 6 April, 1969, any building or structure which is provided by the person carrying on any of the trades or undertakings mentioned above for the recreation or welfare of the employees of that trade or undertaking and is in use for that purpose is an industrial building or structure.

Exclusion of qualifying hospitals, qualifying sports injuries clinics, qualifying mental health centres qualifying specialist palliative care unit and aviation services facilities where the relevant interest is held by certain persons

(1A), (1B), (1D) & (1F) A qualifying hospital, a qualifying sports injuries clinic, a qualifying mental health centre or a qualifying specialist palliative care unit will not be treated as an industrial building or structure as regards a claim for capital allowance by any of the following categories of persons where the relevant interest (see section 269) in relation to capital expenditure incurred on its construction or refurbishment is held by them. The excluded categories are:

  • a company,
  • the trustees of a trust,
  • an individual involved in the operation or management of the hospital, sports injuries clinic, mental health centre or qualifying specialist palliative care unit either as an employee or director or in any other capacity, or
  • a property developer or a person connected with a property developer, where the capital expenditure on the construction or refurbishment is incurred by either of those persons or it is incurred by some other person connected with the property developer.

Capital allowances will be denied only to the person or persons in the excluded category or categories. The rule applies whether the relevant interest in the construction or refurbishment expenditure is held by any such person in a sole capacity or jointly or in partnership with another person or persons.

(1)(F) Where the relevant interest in relation to capital expenditure incurred on the construction or refurbishment of an aviation services facility is held by a property developer or a connected person and where either the property developer or the connected person incurred the capital expenditure or it was incurred by some other person connected with the property developer, then the capital expenditure incurred will not be treated as specified capital expenditure for the purposes of the accelerated capital allowances provided under section 272(3)(k)(i). Again, this rule applies whether the relevant interest in the facility is held by the excluded category of person in a sole capacity or jointly or in partnership with another person or persons.

Meaning of qualifying mental health centre

(1C) A qualifying mental health centre is a centre (within the meaning of section 62 of the Mental Health Act 2001) which:

  • (1C)(a) is an approved centre (i.e. registered under Part 5 of the Mental Health Act 2001);
  • (1C)(b) provides day-patient and out-patient services and has a minimum of 20 in-patient beds for overnight accommodation;
  • (1C)(c) provides data regarding the investment being made in it to the Health Service Executive (HSE), for onward transmission to the Minister for Health and Children and the Minister for Finance, in order to assess the costs and benefits of the scheme (The data required includes amount of construction expenditure; number/nature of investors; amount invested by each; nature of structures put in place etc.), and
  • (1C)(d) gives an undertaking to the HSE to make 20 per cent of its capacity available (at a 10 per cent discount) for public patients, if that capacity is required by the HSE, and
  • (1C)(e) in respect of which the HSE certifies, on an annual basis for 15 years from first use, that it is satisfied that the above conditions have been complied with.

(1C)(I) & (II) Rooms used exclusively for the assessment or treatment of patients can qualify but no relief is available for the construction or refurbishment of consultants’ rooms and offices as these are specifically excluded from the definition.

Meaning of dock undertaking

(2) A dock includes any harbour, wharf, pier, jetty or other works in or at which vessels can ship or unship merchandise or passengers, but does not include a pier or jetty used primarily for recreation, and “dock undertaking” is to be construed accordingly.

Meaning of qualifying hospital

(2A) A qualifying hospital is a hospital which meets all of the following conditions:

  • (2A)(a) it is a private hospital (within the meaning of the Health Insurance Act, 1994 (Minimum Benefits) Regulations, 1996 (S.I. No. 83 of 1996)),
  • (2A)(c) it has the capacity to, and normally does, provide medical and surgical services to persons every day of the year,
  • (2A)(d) it has the capacity to provide:
    • out-patient services and accommodation on an over-night basis of not less than 70 in-patient beds, or
    • in the case of capital expenditure incurred on the construction or refurbishment of a building or structure on or after 28 March 2003, day-case out-patient medical and surgical services and accommodation for such services of not less than 40 beds,
  • (2A)(e) it contains at least one operating theatre and related on-site diagnostic and therapeutic facilities,
  • (2A)(f) it contains facilities to provide not less than 5 of the following services, namely, accident and emergency; cardiology and vascular; eye, ear, nose and throat; gastroenterology; geriatrics; haematology; maternity; medical; neurology; oncology; orthopaedic; respiratory; rheumatology; paediatric; and, as respects capital expenditure incurred on or after 1 January 2006, mental health services.
  • (2A)(fa) it provides data regarding the investment being made in it to the Health Service Executive (HSE), for onward transmission to the Minister for Health and Children and the Minister for Finance, in order to assess the costs and benefits of the scheme (This applies to buildings and structures that are first used, or first used after refurbishment, on or after 1 February 2007 and the data required includes amount of construction expenditure; number/nature of investors; amount invested by each; nature of structures put in place etc.),
  • (2A)(g) it undertakes to the Health Service Executive —
    • to make available annually, for the treatment of persons who have been awaiting in-patient or out-patient hospital services as public patients, not less than 20 per cent of its capacity, subject to service requirements to be specified by the Health Service Executive in advance and to the condition that the Health Service Executive will not be required to take up all or any part of the capacity so made available to it, and
    • that the fees to be charged for treatment afforded to any such person will not be more than 90 per cent of the fees which would be charged in respect of similar treatment afforded to a person who has private medical insurance,
  • (2A)(h) the Health Service Executive, in consultation with the Minister for Health and Children and with the consent of the Minister for Finance, must give an annual certificate in writing during the period of 15 years from first use stating that it is satisfied that the hospital complies with the conditions mentioned above. This 15-year period applies to buildings and structures that are first used (or first used after refurbishment) on or after 1 February 2007. The certification period for buildings and structures in use prior to that date is 10 years.

(2A)(I) & (II) Rooms used exclusively for the assessment or treatment of patients can qualify but no relief is available for the construction or refurbishment of consultants’ rooms and offices as these are specifically excluded from the definition.

Meaning of qualifying sports injuries clinics

(2B) A qualifying sports injuries clinic is a medical clinic which meets certain conditions. The conditions are that —

  1. (2B)(a) the clinic must not, other than in accordance with (e)(i) below, provide health care services to public patients pursuant to their entitlements under the Health Act, 1970,
  2. (2B)(b) the sole or main business of the clinic must be the provision of health care consisting of the diagnosis, alleviation and treatment of sports-related injuries, and this care must be provided by or under the control of medical or surgical specialists,
  3. (2B)(c) the clinic must have the capacity to provide day-patient, in-patient and out-patient medical and surgical services and not less than 20 in-patient beds,
  4. (2B)(d) the clinic must contain at least one operating theatre and related on-site diagnostic and therapeutic facilities,
  5. (2B)(e) the clinic must undertake to the Health Service Executive —
    1. to make available annually, for the treatment of persons who have been awaiting day-patient, in-patient or out-patient hospital services as public patients, not less than 20 per cent of its capacity, subject to service requirements to be specified by the Health Service Executive in advance and to the condition that the Health Service Executive will not be required to take up all or any part of the capacity so made available to it, and
    2. that the fees to be charged in respect of the treatment afforded to any such person will not be more than 90 per cent of the fees which would be charged in respect of similar treatment afforded to a person who has private medical insurance,
  6. (2B)(f) the Health Service Executive, in consultation with the Minister for Health and Children and with the consent of the Minister for Finance, must give an annual certificate in writing stating that it is satisfied that the clinic complies with the conditions mentioned above. The annual certificate must be given each year during the period of 10 years from first use.

(2B)(I) & (II) Rooms used exclusively for the assessment or treatment of patients can qualify but no relief is available for the construction or refurbishment of consultants’ rooms and offices as these are specifically excluded from the definition.

Meaning of qualifying specialist palliative care unit

(2BA) The definitions of “palliative care” and “qualifying specialist palliative care unit” set out the meaning and requirements in relation to qualifying units.

“palliative care” means the active total care of patients who suffer from illnesses or diseases which are active, progressive and advanced in nature and which are no longer curable by means of the administration of existing or available medical treatments;

Subject to subsection (2BB), “qualifying specialist palliative care unit” is a building or structure:

  • (a) which is a hospital, hospice (within the meaning of section 47 (as amended) of the Public Health (Tobacco) Act 2002) or similar facility which has palliative care as its main activity,
  • (b) which is approved by the Health Service Executive, with the consent of the Minister for Health and Children, as being in accordance with national development plans or national needs assessments for palliative care facilities, before a legal commitment is entered into for its design, commissioning, construction or refurbishment,
  • (c) which, in relation to palliative care, has the capacity to provide day-patient and out-patient services with a minimum of 8 in-patient beds for overnight accommodation;
  • (d) in respect of which data regarding the investment being made in it (including construction costs etc. and any grants received) is provided to the Health Service Executive (HSE), for onward transmission to the Minister for Health and Children and the Minister for Finance, in order to assess the costs and benefits of the scheme,
  • (e) in relation to which an undertaking is given to the HSE—
    • to make available annually, for the palliative care of persons who have been awaiting day-patient, in-patient or out-patient palliative care services as public patients, not less than 20 per cent of its capacity, subject to service requirements to be specified by the Health Service Executive in advance and to the condition that the Health Service Executive will not be required to take up all or any part of the capacity so made available to it, and
    • that the fees to be charged in respect of the palliative care afforded to any such person will not be more than 90 per cent of the fees which would be charged in respect of similar palliative care afforded to a person who has private medical insurance,
    • (f) in respect of which the HSE certify, on an annual basis for 15 years from first use, that it is satisfied that the above conditions have been complied with.

(2BB) Rooms used exclusively for the assessment, treatment and care of patients can qualify but consultants’ rooms and offices are specifically excluded from qualifying i.e. no relief is available for the construction or refurbishment of these. Likewise no relief applies in relation to any part of a unit where the majority of persons being maintained are being treated for acute illnesses.

Registered guest houses and registered holiday hostels

(2C) For the purposes of making capital allowances available under Part 9, a guest house or holiday hostel registered in the appropriate register kept under the Tourist Traffic Acts 1939 to 2003 is deemed to be a building or structure in use for the purposes of the trade of hotel-keeping. This provision applies as respects capital expenditure incurred on or after 3 February 2005 on the construction or refurbishment of the building involved. By virtue of the provisions of section 272, capital expenditure on these buildings will qualify for capital allowances at a rate of 4 per cent per annum.

Registered caravan and camping sites

(2D) For the purposes of making capital allowances available under Part 9, buildings and structures which are comprised in, and are in use as part of, premises which are registered in the register of caravan sites and camping sites kept under the Tourist Traffic Acts 1939 to 2003 are deemed to be buildings and structures in use for the purposes of the trade of hotel-keeping. This provision applies as respects capital expenditure incurred on or after 1 January 2008 on the construction or refurbishment of the building involved. By virtue of the provisions of section 272, capital expenditure on these buildings will qualify for capital allowances at a rate of 4 per cent per annum.

Registered holiday camps and registered holiday cottages

(3) For the purposes of making capital allowances available under Part 9, a building or structure in use as a holiday camp registered in the register of holiday camps under the Tourist Traffic Acts 1939 to 2003 is deemed to be in use for the purposes of the trade of hotel-keeping. As respects capital expenditure incurred on or after 1 July 1968 and, subject to transitional arrangements (see subsection (13) for these), before 4 December 2002 a registered holiday cottage was, for such purposes, also deemed to be in use for the purposes of the trade of hotel-keeping.

“qualifying residential units” for the aged or infirm which are associated with a registered nursing home

(3A) A qualifying residential unit means a house which satisfies a number of conditions. The conditions are that the house —

  • (3A)(a) is constructed on the site of, or on a site which is immediately adjacent to the site of, a registered nursing home.
  • (3A)(b) is either:
    • a single storey house, or
    • as respects capital expenditure incurred on or after 4 February 2004, a house which is comprised in a larger building of any number of storeys provided that a fire safety certificate is required and issued in relation to the building by the relevant building control authority, prior to the commencement of the construction works on the building,

    where:
    • the house and any building in which it is comprised are designed and constructed to meet the needs of persons with disabilities, including in particular persons confined to wheelchairs, and
    • the house consists of 1 or 2 bedrooms, a kitchen, a living room, bath or shower facilities, toilet facilities and a nurse call system linked to the registered nursing home.
  • (3A)(c) is comprised in a development of at least 10 qualifying residential units (or, as respects capital expenditure incurred before 4 February 2004, 20 such units) where—
    1. that development also includes a day-care centre,
    2. those units are operated or managed by the registered nursing home and an on-site caretaker is provided,
    3. back-up medical care (including nursing care) is provided by the registered nursing home to the occupants of those units when required by those occupants,
    4. not less than 20 per cent of those units are made available for renting to persons who are eligible for a rent subsidy from the Health Service Executive, subject to the service requirements of the Health Service Executive and at its discretion, and
    5. the rent to be charged in respect of any such unit made available in accordance with the above condition is not more than 90 per cent of the rent which would be charged if that unit were rented to a person who is not in receipt of such a rent subsidy,

    and
  • (3A)(d) is leased to a person or persons who has or have been certified by a medical practitioner as requiring such accommodation by reason of old age or infirmity. With effect from 1 January 2006, a house may be leased directly to a registered nursing home – provided that it is leased on condition that it is subsequently leased by the registered nursing home to an elderly or infirm person and, in fact, it is used for no other purposes.
    In relation to capital expenditure incurred under contracts entered into on or after 1 May 2007, a qualifying residential unit may be leased to a person and, if applicable, the spouse or civil partner of that person provided that:
    • neither person is connected with the lessor,
    • their selection as occupants was made by the registered nursing home, and
    • a Medical Practitioner certified one of them as requiring the accommodation by reason of old age or infirmity.

“Qualifying residential units” – provision to trigger capital allowances.

(3B)(a) A “house” in the context of a qualifying residential unit has the same meaning as in section 372AK.

(3B)(b) For the purposes of making capital allowances available under Part 9, but subject to subsection (3C) and sections 270 and 316, a qualifying residential unit is deemed to be a building or structure in use for the purposes of a trade as referred to in subsection (1)(g) (i.e. registered nursing home trade). This rule, which is a mechanism to make the same regime of capital allowances available for qualifying residential units as applies to registered nursing homes, does not affect the nature of the income that arises from the property involved. [Because of the requirement in subsection (3A) above that the residential unit must be leased to qualify, the income arising from the leasing of the property itself will therefore be rental income chargeable under Case V]. This provision applies in relation to capital expenditure incurred in the period beginning on 25 March 2002 and ending on 30 April 2010.

(3C) Capital allowances will not be available where any part of the expenditure incurred on the construction of a qualifying residential unit has been or is to be met by grant assistance from the State or any of its agencies.

(3D) Where a company owns all qualifying residential units in a development the provisions of paragraphs (c)(iv) and (v) of subsection (3A) do not apply. These provisions require a minimum of 20 per cent of units to be made available to the HSE at a 10 per cent discount.

“Qualifying residential units” HSE certification, provision of information and annual report

(3E) A house will not be a qualifying residential unit, as respects capital expenditure incurred under a contract or agreement for the construction, refurbishment or development of a qualifying residential unit which is entered into on or after 1 May 2007, unless:

  • the person who is entitled to claim capital allowances provides information to the HSE regarding the investment in the house (this includes the amount of capital expenditure incurred; the number and nature of the investors; the amount invested by each and the nature of the structures used to facilitate the investment. This information will be made available to the Minister for Health and Children and to the Minister for Finance),
  • the HSE give a certificate in writing after first letting which certifies that the house complies with the various conditions in subsection (3A) and that the information in relation to the investment in the house has been provided, and
  • an annual report in writing is provided by the person who is entitled to claim capital allowances which confirms whether the conditions of subsection (3A) are still being satisfied and which provides details of the level of occupation of the house for the previous year including the age and, as applicable, the nature of the infirmity of the occupants.

Preparation of land for installation of machinery or plant

(4) If capital expenditure is incurred on preparing, cutting, tunnelling or levelling land for the purposes of the installation of machinery or plant, the machinery or plant in question is treated as an industrial building or structure in relation to that expenditure.

Buildings or structures outside the State

(5) Expenditure incurred on or after 23 April 1996 on the construction of, or on the acquisition of the relevant interest in, a building or structure outside the State is not to be treated as expenditure on an industrial building or structure. However, this provision does not apply where —

  • the person who incurs the expenditure entered into a binding contract in writing for the acquisition of the site for the building or structure, or an agreement in writing in relation to an option to acquire that site, before 23 April, 1996,
  • that person entered into a binding contract in writing for the construction of the building or structure on or before 1 July, 1996,
  • the construction of the building or structure commenced on or before 1 July, 1996 and is completed before 30 September, 1998, and
  • the building or structure will be used for the purposes of a trade, the profits or gains from which are taxable in the State.

Aviation services facilities

(5A)(a) The tax relief available under the scheme of accelerated allowances for specialist aviation services is restricted so that the aid granted per project does not breach the de minimis limits as set by the European Commission. The de minimis Guidelines stipulate that the aid granted must not exceed the €200,000 limit over any three consecutive fiscal years. In order to ensure that this level of aid is not breached, a cap on the amount of expenditure that can qualify for tax relief at the accelerated rate (specified capital expenditure) is imposed. The limits are €1.25 million for an individual and €5 million for a company. These limits reflect the fact that individuals are taxed at a higher rate than companies. These limits are per project and not per investor and were arrived at based on the Net Present Value of the aid, discounted at 1.44% as per European requirements.

(5A)(b) In addition, there is a requirement that before any relief can be claimed in relation to this expenditure, the following information must be provided to the Revenue Commissioners:

  • name, address and tax reference number of the claimant,
  • the address of the building or structure in respect of which the specified capital expenditure was incurred, and
  • details of the aggregate amount of specified capital expenditure which was incurred by the claimant.

This information is necessary to ensure that the level of expenditure does not exceed the limits provided for in the EU de minimis Guidelines.

(5B) Notwithstanding the general prohibition on Revenue under section 851A on the disclosure of information relating to taxpayers, any information which has been submitted in accordance with subsection (5A)(b) may be disclosed by Revenue to one or more persons. However, this can only be done where the information is needed to ensure that the claim for relief is in compliance with the provisions of this Part and any European Commission guidelines, regulations or other reporting requirements that may be relevant. This essentially means that Revenue may disclose this information to officials of the European Commission, who are responsible for monitoring and supervising the de minimis Guidelines.

(5C) The amount of capital expenditure that will qualify as specified capital expenditure where a number of individuals or companies or both invest in a project will be determined by a formula. The specified capital expenditure must not exceed an amount that will give rise to tax relief greater than €625,000. This is the maximum amount of relief from corporation tax that is allowable given that a cap of €5 million of qualifying expenditure incurred over 7 years applies to a company. The formula reflects that individuals are taxed at a higher rate than companies. Revenue will not prescribe how the specified capital expenditure is actually apportioned between the individual or the company but rather imposes a cap on the maximum amount of relief that can be claimed over 7 years i.e. €625,000.

Buildings or structures in use for part of a trade

(6) To qualify as an industrial building or structure, a building or structure must be in use for the purposes of any of the trades or undertakings referred to in subsection (1). Where only part of a trade comes within subsection (1), a building or structure is not an industrial building or structure unless it is in use for the purposes of that part of the trade.

Exclusion of dwelling houses, shops etc.

(7) Certain buildings and structures are specifically excluded from qualification as an industrial building or structure. These are dwelling houses (other than registered holiday cottages (see subsection (3)) and qualifying residential units (see subsections (3A) to (3E)), retail shops, showrooms, offices and any buildings or structures in use for any purpose ancillary to such excluded dwelling houses, retail shops, showrooms and offices.

(8) Where, however, part of a building or structure qualifies as an industrial building or structure and part does not, the whole of the building or structure will still qualify as an industrial building or structure if the capital expenditure incurred on the construction of the “non-qualifying” part does not exceed 10 per cent of the total capital expenditure incurred on the construction of the whole building or structure.

Application dates of various schemes

(9) The dates from which certain types of buildings and structures qualify as an industrial building or structure (and accordingly for capital allowances) are as follows:

  • (9)(a) capital expenditure on a laboratory for analysing minerals must be incurred on or after 25 January 1984,
  • (9)(b) capital expenditure on a building or structure for the intensive production of cattle, sheep, pigs, poultry or eggs must be incurred on or after 6 April 1971,
  • (9)(c) capital expenditure on airport runways and airport aprons must be incurred on or after 24 April 1992,
  • (9)(d) capital expenditure on registered nursing homes must be incurred in the period 3 December 1997 to 31 December 2009. However, where the conditions of subsection (17) are satisfied, expenditure up to 30 June 2010 or 30 June 2011 may qualify.
  • (9)(e) capital expenditure on airports (other than runways and aprons) must be incurred —
    1. by “Dublin Airport Authority” on or after “vesting day” (see subsection (10) for the meaning of both of these terms), and
    2. by any other person, on or after 27 March 1998, i.e. the date of the passing of the Finance Act 1998,
  • (9)(f) capital expenditure on convalescent homes must be incurred in the period 2 December 1998 to 31 December 2009. However, where the conditions of subsection (17) are satisfied, expenditure up to 30 June 2010 or 30 June 2011 may qualify.
  • (9)(g) capital expenditure on qualifying hospitals must be incurred in the period 15 May 2002 or 28 March 2003 (hospitals that provide day-case and out-patient services) to 31 December 2009. However, where the conditions of subsection (17) are satisfied, expenditure up to 30 June 2010 or 31 December 2013 may qualify.
  • (9)(h) capital expenditure on qualifying sports injuries clinics must be incurred in the period 15 May 2002 to 31 December 2006. However, where the conditions of subsection (16) are satisfied, expenditure up to 31 July 2008 may qualify.
  • (9)(i) capital expenditure on qualifying mental health centres must be incurred in the period 23 January 2007 to 31 December 2009. However, where the conditions of subsection (17) are satisfied, expenditure up to 30 June 2010 or 30 June 2011 may qualify.
  • (9)(j) capital expenditure on qualifying specialist palliative care units must be incurred on or after 13 March 2008. However, the commencement of this scheme is awaiting the necessary EU approval and order of the Minister for Finance.
  • (9)(k)(i) specified capital expenditure (i.e. expenditure qualifying for the accelerated capital allowances under section 272(3)(k)(i)) on aviation services facilities must be incurred in the period starting from 13 October 2015 and ending on 13 October 2020.
  • (9)(k)(ii) capital expenditure (other than specified capital expenditure) on aviation services facilities must be incurred on or after 13 October 2015.

Meaning of “Dublin Airport Authority” and “Vesting Day”

(10) The term “Dublin Airport Authority” means the public limited company of that name but also includes the Cork Airport Authority or/and the Shannon Airport Authority where a day has been appointed under section 5 of the State Airports Act 2004 in relation to either or both of those companies.

“vesting day” means―

in relation to the Dublin Airport Authority, the day appointed by order under section 9(6) of the State Airports Act 2004,

in relation to the Cork Airport Authority or/and the Shannon Airport Authority, such other day or days as may be appointed by order or orders under section 5 of that Act.

Exclusion of certain hotels from meaning of industrial building or structure

(11) A building or structure in use for the purposes of the trade of hotel-keeping will not be treated as an industrial building or structure,

  • in the case of capital expenditure incurred on or after 20 March 2001, if any part of that expenditure is met, directly or indirectly, by way of grant assistance, from the State or any other person, and
  • in the case of capital expenditure incurred on or after 1 January 2002, if any part of that expenditure is met, directly or indirectly, by the State or any of its agencies.

(11A) Capital expenditure which has been incurred on the construction or refurbishment of an industrial building or structure for the purposes of aviation services facilities shall not be treated as specified capital expenditure where any part of that expenditure is met, directly or indirectly, by way of grant assistance, from the State or any of its agencies.

(12) There is a requirement to obtain approval from the European Commission before capital allowances can be given for certain large projects. Under its State Aid rules the Commission must be notified where the potential level of aid, in the form of capital allowances, exceeds a certain threshold. In approving a project the Commission may reduce the amount of the expenditure that can qualify for capital allowances below the expenditure that was actually incurred and that would otherwise have qualified for capital allowances. Accordingly, a hotel will not be treated as an industrial building or structure unless the National Tourism Development Authority (Fáilte Ireland) certifies in writing—

  • (12)(a) that it has received a declaration from the person as to whether or not the person is —
    • a small or medium-sized enterprise within the meaning of Annex 1 to Commission Regulation (EC) No. 70/2001 [see page 33 of OJ No. L10 of 13 January 2001] on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises, or
    • a micro, small or medium-sized enterprise within the meaning of the Annex to Commission Recommendation of 6 May 2003 [see page 36 of OJ No. L124 of 20 May 2003],
  • (12)(b) in the case of expenditure incurred on or after 1 January 2002, that the expenditure concerned falls within the meaning of ‘initial investment’ contained in point 4.4 of the ‘Guidelines on National Regional Aid’ prepared by the European Commission,
  • (12)(c) in the case of expenditure incurred on or after 1 January 2003 on a building or structure provided for the purposes of a project which is subject to the notification requirements of the ‘Multisectoral framework on regional aid for large investment projects’ prepared by the European Commission and dated either 7 April 1998 or 19 March 2002, that approval of the potential capital allowances involved has been received from that Commission by the Minister for Finance, or by such other Minister of the Government, agency or body as may be nominated for that purpose by the Minister for Finance. [The rules of each framework will decide as to which is applicable in any case. The new framework is effective from 1 January 2004],
  • (12)(d) that such person has undertaken to furnish to the Minister for Finance, or to such other Minister of the Government, agency or body as may be nominated for that purpose by the Minister for Finance, upon request in writing by the Minister concerned or by that agency or body, such further information as may be necessary to enable compliance with the reporting requirements of:
    • the Regulation or Recommendation referred to in paragraph (a) or in the case of expenditure incurred on or after 1 January 2002, the Multisectoral framework referred to in paragraph (c),
    • in the case of expenditure incurred on or after 1 January 2002, ‘Community guidelines on State aid for rescuing and restructuring firms in difficulty’ prepared by the European Commission [page 2 of OJ No. C288 of 9 October 1999 or page 2 of OJ No. C244 of 1 October 2004], or
    • any other European Communities Regulation or Directive under the European Communities Treaty governing the granting of State aid in specific sectors.

These certification requirements apply in the case of capital expenditure incurred on the construction or refurbishment of hotel buildings where construction or refurbishment first commenced on or after 6 April 2001 and annual allowances greater than 4% are involved. They apply to actual hotel buildings but do not apply to buildings deemed to be in use for the purposes of the trade of hotel-keeping.

(12A) Investors in large hotel projects will not be denied capital allowances because of delays in receiving European Commission approval. While capital allowances cannot be claimed until Commission approval is received, they will apply retrospectively if, and when, approval is given and the certificate is received, from the date that the hotel began operating as a hotel following the construction or refurbishment work. Any necessary adjustments to assessments for earlier years will be made at that stage. For the purposes of Part 9, including the reference to “the net price paid” in section 279(2)(b), where the Commission has put a cap on the amount of capital allowances that can be given for a particular project, that lower amount is to be substituted for the amount of expenditure that would otherwise have qualified for capital allowances.

Registered Holiday Cottages – termination of relief

(13)(a) A registered holiday cottage may not, as respects capital expenditure incurred on its construction (including, by virtue of section 270, its refurbishment) on or after 4 December 2002, be regarded as a building is use for the trade of hotel-keeping. However this provision will not apply as respects capital expenditure incurred by 31 December 2006 or by 31 July 2008 where certain conditions are met.

(13)(b) Capital expenditure incurred by 31 December 2006 on the construction or refurbishment of a holiday cottage may qualify if:

  • a planning application (other than for outline permission), in so far as planning permission is required, in respect of the holiday cottage is made in accordance with the Planning and Development Regulations 2001 to 2002, the planning authority acknowledge under article 26(2) of the Planning and Development Regulations 2001 that the application was received on or before 31 December 2004, and the application is not an invalid application under article 26(5) of those regulations,
  • a planning application (other than for outline permission), in so far as planning permission was required, in respect of the holiday cottage was made in accordance with the Local Government (Planning and Development) Regulations 1994, the planning authority acknowledge under article 29(2)(a) of those regulations that the application was received on or before 10 March 2002, and the application was not an invalid application under article 29(2)(b)(i) of those regulations, or
  • the construction or refurbishment work represented by the expenditure is exempted development for the purposes of the Planning & Development Act 2000, by virtue of section 4 of that Act or by virtue of Part 2 of the Planning and Development Regulations 2001 (S.I. No. 600 of 2001) and the following conditions are satisfied not later than 31 December 2004:
    • a detailed plan in relation to the development work is prepared,
    • a binding contract in writing exists under which the expenditure on the development is incurred, and
    • work to the value of 5 per cent of the development costs is carried out.

(13)(c) Capital expenditure incurred by 31 July 2008 on the construction or refurbishment of a holiday cottage may qualify if:

  • the relevant planning application etc. condition in paragraph (b) was met,
  • work to the value of at least 15 per cent of the actual construction or refurbishment costs is carried out by 31 December 2006,
  • a binding contract in writing in relation to the construction or refurbishment is in place by 31 July 2006, and
  • any other conditions, relating to compliance with State aid issues, which the Minister for Finance may specify in regulations, have been satisfied.

By virtue of paragraphs (a) and (b) of section 270(7) (as inserted by section 26 of the Finance Act 2006) local authority certification is required in respect of the condition that work to the value of at least 15 per cent of the construction or refurbishment costs is carried out by 31 December 2006. Such certification must include details of actual expenditure incurred to 31 December 2006 and of projected expenditure post 31 December 2006

Requirement to be registered as an hotel

(14) A building or structure in use for the purposes of the trade of hotel-keeping will not be regarded as an industrial building or structure, as respects capital expenditure incurred on or after 3 February 2005 on its construction or refurbishment, unless it is registered in the register of hotels kept under the Tourist Traffic Acts 1939 to 2003. This provision is subject to transitional arrangements [see subsection (15)] which maintain the previous rules up to 31 July 2006.

(15) The provisions of subsection (14) do not apply as respects capital expenditure incurred on or before 31 July 2006 on the construction or refurbishment of a building or structure where:

  • (15)(a) & (b) a valid planning application (other than for outline permission), in so far as planning permission was required, was received by the planning authority:
    • by 31 December 2004, where the application was made in accordance with the Planning & Development Regulations 2001 to 2004, or
    • by 10 March 2002, where the application was made in accordance with the Local Government (Planning and Development) Regulations 1994,
  • (15)(c) the work involved is exempted development for the purposes of the Planning and Development Act 2000 and the following conditions had been met on or before 31 December 2004:
    • a detailed plan in relation to the development work was prepared,
    • a binding contract in writing existed under which the expenditure on the development was incurred, and
    • work to the value of 5 per cent of the development costs was carried out,

    or
  • (15)(d) the construction or refurbishment of the building or structure is development in respect of which a valid application is made for a certificate under section 25(7)(a)(ii) of the Dublin Docklands Development Authority Act 1997 and the application is acknowledged by the Dublin Docklands Development Authority as having been received on or before 31 December 2004.

Sports Injuries Clinics – extension to 31 July 2008

(16) This subsection applies in relation to capital expenditure incurred on the construction or refurbishment of a sports injuries clinic where work to the value of at least 15 per cent of the actual construction or refurbishment costs is carried out by 31 December 2006 and the person who carried out the work or, where that person sells the clinic, the person who is claiming the capital allowances can show that this 15 per cent condition was satisfied.

Where these conditions are satisfied then the termination date for incurring qualifying expenditure on the sports injuries clinic involved is 31 July 2008 rather than 31 December 2006 – see subsection (9)(h) above.

Certain health-related facilities – extension beyond 31 December 2009

(17) This subsection applies to determine the termination date for incurring qualifying capital expenditure in relation to the construction or refurbishment of a registered nursing home, a convalescent home, a qualifying hospital or a qualifying mental health centre where development has reached a certain stage by 31 December 2009. Where the work to be carried out does not require planning permission as, for example, with certain types of refurbishment work, the termination date will be 30 June 2010 so long as at least 30% of the construction or refurbishment cost has been incurred on or before 31 December 2009. Where the work to be carried out requires planning permission, a termination date beyond 31 December 2009 will apply so long as a full and valid application for planning permission has been submitted on or before that date and is acknowledged by the relevant planning authority. Where this latter condition is met, the termination date will be 30 June 2011 in the case of registered nursing homes, convalescent homes and mental health centres and 31 December 2013 in the case of qualifying hospitals.

Relevant Date: Finance Act 2020