Revenue Note for Guidance

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Revenue Note for Guidance

739V Transfer of IREF business to a company

Summary

Where an IREF transfers some or all of its IREF business to a company, then the tax arising on the IREF taxable event can be deferred, subject to certain conditions, for a period of up to 10 years.

Details

(1) Definition subsection:

‘The Acts’ is defined as the CGT Acts and the Tax Acts.

‘Specified company’ is defined as a company formed under the laws of and registered in a Member State or an EEA State.

‘Transferred business’ is defined as the IREF business, including the relevant IREF assets and other assets ancillary to the IREF business, transferred under this section.

(2) This section applies

  1. (a) to an investment undertaking, or a sub-fund thereof, which transfers either the whole of its IREF business or, if it carries out both land development and other activities, it transfers all of the IREF business related to its land development activities to a specified company. The specified company must be within the charge to corporation tax in respect of any trading, rental or other income and within the charge to capital gains tax on the disposal of assets, where that disposal is not within the charge to corporation tax.
  2. (b) Where ordinary shares, all with equal rights, in the specified company are issued to the unit holders in proportion to their unit holding, and the investment undertaking, or sub fund, receives no consideration for the transfer other than that the specified company takes over its relevant liabilities.
  3. (c) Where the investment undertaking, or sub fund, has no assets that relate to the transferred business after the transfer.
  4. (d) Where the shares issued are issued before 1 July 2017
  5. (e) Where the investment undertaking, or sub fund, does not carry on any business similar to the transferred business after the date of the transfer.

(3) In respect of a transfer done in accordance with this section:

  1. (a) The investment undertaking, or sub fund, will be treated as having disposed of the assets of the transferred business for their value in the accounts.
  2. (b)
    1. the specified company will be treated as if it had historically carried on the transferred business, for the purposes of determining entitlement to capital allowances, interest deductibility etc.
    2. for CGT purposes, the specified company will be treated as having acquired those transferred assets for the value at which the investment undertaking, or sub fund, disposed of them under (a), i.e. the value in the accounts of the fund.
  3. (c) The unit holder’s acquisition of the units will be treated as the acquisition of the shares, for the purposes of determining base cost and acquisition date.

(4) The transfer of the assets from the IREF into the company will constitute an IREF taxable event but the resultant IREF withholding tax will be deferred until the earlier of:

  1. a date within 60 days of the disposal of the shares by the investor;
  2. the 10th anniversary of the transfer;
  3. the appointment of a liquidator to the company or
  4. the company ceasing to be resident in the EEA.

Within 21 days of each anniversary of the transfer, the company must provide an annual statement to Revenue providing details relevant to the deferral of the IREF withholding tax.

(5) Instruments giving effect to a transfer under this section are not stampable.

Relevant Date: Finance Act 2021