291A Intangible assets.

(1) In this section—

“authorised officer” means an officer of the Revenue Commissioners authorised by them in writing for the purposes of this section;

“intangible asset” shall be construed in accordance with generally accepted accounting practice;

“specified intangible asset” means an intangible asset, being—

(a) any patent, registered design, design right or invention,

(b) any trade mark, trade name, trade dress, brand, brand name, domain name, service mark or publishing title,

(c) any copyright or related right within the meaning of the Copyright and Related Rights Act 2000,

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(ca) computer software or a right to use or otherwise deal with computer software other than such software or such right construed in accordance with section 291(3),

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(d) any supplementary protection certificate provided for under Council Regulation (EEC) No. 1768/92 of 18 June 1992¹,

(e) any supplementary protection certificate provided for under Regulation (EC) No. 1610/96 of the European Parliament and of the Council of 23 July 1996²,

(f) any plant breeders’ rights within the meaning of section 4 of the Plant Varieties (Proprietary Rights) Act 1980, as amended by the Plant Varieties (Proprietary Rights) (Amendment) Act 1998,

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(fa) any application for the grant or registration of anything within paragraphs (a) to (f),

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(g) know-how within the meaning of section 768,

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(g) secret processes or formulae or other secret information concerning industrial, commercial or scientific experience, whether protected or not by patent, copyright or a related right, including know-how within the meaning of ^[11]>section 768^<[11][11]>section 768 and, except where such asset is provided directly or indirectly in connection with the transfer of a business as a going concern, customer lists^<[11],

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(h) any authorisation without which it would not be permissible for—

(i) a medicine, or

(ii) a product of any design, formula, process or invention,

to be sold for any purpose for which it was intended^[5]>, but this paragraph does not relate to a licence within the meaning of section 2 of the Intoxicating Liquor Act 2008^<[5],

(i) any rights derived from research, undertaken prior to any authorisation referred to in paragraph (h), into the effects of—

(i) a medicine, or

(ii) a product of any design, formula, process or invention,

(j) any licence in respect of an intangible asset referred to in any of paragraphs (a) to (i),

(k) any rights granted under the law of any country, territory, state or area, other than the State, or under any international treaty, convention or agreement to which the State is a party, that correspond to or are similar to those within any of paragraphs (a) to (j), or

(l) goodwill to the extent that it is directly attributable to anything within any of paragraphs (a) to (k);

“profit and loss account”, in relation to an accounting period of a company, has the meaning assigned to it by generally accepted accounting practice and includes an income and expenditure account where a company prepares accounts in accordance with international accounting standards.

(2) Where a company carrying on a trade ^[6]>incurs^<[6][6]>has incurred^<[6] capital expenditure on the provision of a specified intangible asset for the purposes of the trade, then, for the purposes of this Chapter and Chapter 4 of this Part—

(a) the specified intangible asset shall be treated as machinery or plant,

(b) such machinery or plant shall be treated as having been provided for the purposes of the trade, and

(c) for so long as the company is the owner of the specified intangible asset or, where the asset consists of a right, is entitled to that right, that machinery or plant shall be treated as belonging to that company.

(3) Subject to this section, where for any accounting period a wear and tear allowance is to be made under section 284 to a company which has incurred capital expenditure on the provision of a specified intangible asset for the purposes of a trade carried on by that company, subsection (2) of section 284 shall apply as if the reference in paragraph (ad) of that subsection to a rate per cent of 12.5 were a reference to a rate per cent determined by the formula—

where—

A is—

(a) the amount, computed in accordance with generally accepted accounting practice, charged to the profit and loss account of the company, for the period of account which is the same as the accounting period, in respect of the ^[7]>amortisation or depreciation^<[7][7]>amortisation and any impairment^<[7] of the specified intangible asset, or

(b) where the period of account beginning in the accounting period is not the same as that accounting period, so much of the amount, so computed and charged in that respect to the profit and loss account of the company for any such period of account, as may be apportioned to the accounting period on a just and reasonable basis taking account of the respective lengths of the periods concerned and the duration of use and ownership of the asset in each of those periods,

and

B is the actual cost, within the meaning of paragraph (ad) of section 284(2), of the specified intangible asset or, if greater than the actual cost, the value of that asset by reference to which ^[8]>amortisation or depreciation^<[8][8]>amortisation and any impairment^<[8] have been computed for the period of account referred to in paragraph (a) or (b).

(4) (a) Notwithstanding subsection (3), where a company makes an election under this subsection in respect of capital expenditure incurred on the provision of a specified intangible asset for the purposes of a trade carried on by the company, subsection (2) of section 284 shall apply as if the reference in paragraph (ad) of that subsection to 12.5 per cent were a reference to 7 per cent.

(b) An election by a company under paragraph (a) shall—

(i) be made in the return required to be made under ^[10]>section 951^<[10][10]>Chapter 3 of Part 41A^<[10] for the accounting period of the company in which the expenditure on the provision of the specified intangible asset is first incurred, and

(ii) apply to all capital expenditure incurred on the asset.

(5) ^[9]>(a) So much of the activities of a company carried on as part of a trade (in this subsection referred to as “relevant activities”) which consist of managing, developing or exploiting a specified intangible asset or specified intangible assets in respect of which allowances under this Chapter have been made to the company, including activities which comprise the sale of goods or services that derive the greater part of their value from such assets, shall be treated for the purposes of the Tax Acts, other than any provision of those Acts relating to the commencement or cessation of a trade, as a separate trade (in this subsection and subsection (6) referred to as a “relevant trade”), which is distinct from any other trade or part of a trade carried on by the company.^<[9]

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(a) In relation to the activities of a company carried on as part of a trade—

(i) the whole of such activities, if any, that—

(I) comprise the sale of goods or services which are goods or services that derive the greater part of their value from, or

(II) consist of managing, developing or exploiting,

a specified intangible asset or specified intangible assets in respect of which allowances under this Chapter have been made to the company, and

(ii) such parts of other such activities, if any, being parts that—

(I) consist of managing, developing or exploiting such assets, or

(II) contribute to the value of goods or services by using such assets,

are referred to in paragraph (b) as “relevant activities” and shall be treated for the purposes of the Tax Acts, other than any provisions of those Acts relating to the commencement or cessation of a trade, as a separate trade (in paragraph (b) and subsection (6) referred to as a “relevant trade”) which is distinct from any other trade or part of a trade carried on by the company.

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(b) For the purposes of treating relevant activities as a separate trade in accordance with paragraph (a), any necessary apportionment shall be made so that income shall be attributed to the relevant trade on a just and reasonable basis and the amount of that income shall not exceed the amount which would be attributed to a distinct and separate company, engaged in the relevant activities, if it were independent of, and dealing at arm’s length with, the company mentioned in paragraph (a).

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(c) Where the trade of a company consists wholly of the carrying on of relevant activities (within the meaning of paragraph (a)), then the trade shall, for the purposes of subsection (6), be treated as a relevant trade.

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(6) (a) Subject to ^[17]>paragraphs (b) and (c)^<[17][17]>paragraphs (b), (ba) and (c)^<[17], the aggregate amount for an accounting period of—

(i) any allowances to be made to a company under section 284 as applied by this section, and

(ii) any interest incurred in connection with the provision of a specified intangible asset by reference to which allowances referred to in subparagraph (i) are made,

shall not ^[16]>exceed^<[16][16]>exceed 80 per cent of^{<[16] [12]>}80 per cent of^<[12] the amount which would be the amount of the trading income from the relevant trade carried on by the company for that accounting period if no such allowances were to be made to the company and no such interest were to be deducted in computing that income for that accounting period and, for the purposes of this paragraph, the whole or part of any such allowances shall not be allowed for that accounting period and, only if it is then necessary for the purposes of this paragraph, the whole or part of any such interest shall not be deducted for that accounting period.

(b) (i) The amount of any allowances which, by virtue of ^[18]>paragraph (a)^<[18][18]>paragraph (a) and, where applicable, paragraph (ba)^<[18], remains unallowed for an accounting period (in this subparagraph referred to as the “excess amount”) shall be carried forward and treated as an allowance within the meaning of paragraph (a)(i) for the succeeding accounting period to be added to the amount of any allowances within that meaning which, subject to ^[19]>paragraph (a)^<[19][19]>paragraphs (a) and (ba)^<[19], are available for offset against trading income of the relevant trade for that succeeding accounting period and any excess amount in that succeeding accounting period shall, in turn, be carried forward and treated as an allowance within the meaning of paragraph (a)(i) for the next succeeding accounting period to be added to the amount of any allowances within that meaning which, subject to ^[19]>paragraph (a)^<[19][19]>paragraphs (a) and (ba)^<[19], are available for offset against trading income of the relevant trade for that accounting period and so on for each succeeding accounting period.

(ii) The amount of any interest for which relief cannot be given, by virtue of ^[18]>paragraph (a)^<[18][18]>paragraph (a) and, where applicable, paragraph (ba)^<[18], for an accounting period (in this subparagraph referred to as “excess interest”) shall be carried forward and treated as interest within the meaning of paragraph (a)(ii) for the succeeding accounting period to be added to the amount of any interest within that meaning for which relief, subject to ^[19]>paragraph (a)^<[19][19]>paragraphs (a) and (ba)^<[19], can be given for that succeeding accounting period and any excess interest in that succeeding accounting period shall, in turn, be carried forward and treated as interest within the meaning of paragraph (a)(ii) for the next succeeding accounting period to be added to the amount of any interest within that meaning, for which relief, subject to ^[19]>paragraph (a)^<[19][19]>paragraphs (a) and (ba)^<[19], can be given for that accounting period and so on for each succeeding accounting period.

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(ba) Where the relevant trade (referred to in paragraph (a)) carried on by the company for an accounting period comprises relevant activities relating to a specified intangible asset or specified intangible assets the capital expenditure on which asset or assets includes—

(i) capital expenditure incurred by the company before 11 October 2017 (referred to in this paragraph as ‘the earlier period’), and

(ii) capital expenditure incurred by the company on or after 11 October 2017 (referred to in this paragraph as ‘the later period’),

then, the trading income from the relevant trade for the accounting period shall, for the purposes of paragraphs (a) and (b), be deemed to consist of two separate income streams, the first income stream consisting of so much of the trading income from the relevant trade for the accounting period as relates to capital expenditure incurred in the earlier period (referred to in this paragraph and the following paragraph as the ‘first income stream’), and the second income stream consisting of so much of the trading income from the relevant trade for the accounting period as relates to capital expenditure incurred in the later period (referred to in this paragraph and the following paragraph as the ‘second income stream’). The amount of income to be attributed to each separate income stream shall be determined in accordance with paragraph (bb)(i), and paragraph (a) shall apply with any necessary modifications such that—

(I) the aggregate of the amounts referred to in subparagraphs (i) and (ii) of paragraph (a) which relate to capital expenditure incurred in the earlier period shall not exceed the amount of the first income stream, and

(II) the aggregate of the amounts referred to in subparagraphs (i) and (ii) of paragraph (a) which relate to capital expenditure incurred in the later period shall not exceed 80 per cent of the amount of the second income stream.

(bb) (i) For the purposes of paragraph (ba) the trading income from the relevant trade for the accounting period shall, as necessary, be apportioned between the first income stream and the second income stream on a just and reasonable basis, and any amount to be attributed to the first income stream shall not exceed an arm’’s length amount.

(ii) The company shall maintain and have available such records as may reasonably be required for the purposes of determining whether any such apportionment referred to in subparagraph (i) is made on a just and reasonable basis and whether any amount attributed to the first income stream exceeds an arm’’s length amount.

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(c) In computing, for the purposes of this subsection, the trading income from a relevant trade for an accounting period of a company, no account shall be taken of any income which is disregarded for the purposes of the Tax Acts.

(7) This section shall not apply to capital expenditure incurred by a company—

(a) for which any relief or deduction under the Tax Acts may be given or allowed other than by virtue of this section,

(b) to the extent that the expenditure incurred on the provision of a specified intangible asset exceeds the amount which would have been paid or payable for the asset in a transaction between independent persons acting at arm’s length, or

(c) that is not made wholly and exclusively for bona fide commercial reasons and that was incurred as part of a scheme or arrangement of which the main purpose or one of the main purposes is the avoidance of, or reduction in, liability to tax.

(8) (a) ^[13]>The Revenue Commissioners or an authorised officer^<[13][13]>An authorised officer^<[13] may, in relation to an allowance made or to be made to a company under section 284 as applied by this section in respect of capital expenditure incurred on a specified intangible asset—

(i) consult with any person (in this subsection referred to as an “expert”) who in their opinion may be of assistance in ascertaining the extent to which such expenditure is incurred on the specified intangible asset and, where such an asset is acquired from a connected person (within the meaning of section 10), the amount which would have been payable for the asset in a transaction between independent persons acting at arm’s length, and

(ii) notwithstanding any obligation as to secrecy or other restriction on the disclosure of information imposed by, or under, the Tax Acts or any other statute or otherwise, but subject to paragraph (b), disclose to the expert any detail in relation to the allowance claimed under this section which they consider necessary for such consultation.

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(b) (i) Before disclosing information to any expert under paragraph (a), the Revenue Commissioners or authorised officer shall make known to the company—

(I) the identity of the expert who they intend to consult, and

(II) the information they intend to disclose to the expert.

(ii) Where the company shows to the satisfaction of the Revenue Commissioners or authorised officer (or on appeal to the Appeal Commissioners) that disclosure of such information to that expert could prejudice the company’s trade, then the Revenue Commissioners or authorised officer shall not make such disclosure.

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(b) Before disclosing information to any expert under paragraph (a), an authorised officer shall give the company a notice in writing of—

(i) the officer's intention to disclose information to an expert,

(ii) the information that the officer intends to disclose, and

(iii) the identity of the expert whom the officer intends to consult,

and shall allow the company a period of 30 days after the date of the notice to show to his or her satisfaction that disclosure of such information to that expert could prejudice the company's trade.

(c) Where, on the expiry of the period referred to in paragraph (b), it is not shown to the satisfaction of the authorised officer that disclosure could prejudice the company's trade, the officer may disclose the information on the expiry of a further period of 30 days after giving notice in writing of his or her decision to disclose the information.

(d) A company aggrieved by an authorised officer's decision made under paragraph (c) in respect of it may appeal the decision to the Appeal Commissioners, in accordance with section 949I, within the period of 30 days after the date of that decision.

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(9) (a) This section shall not apply to the acquisition by a company (in this subsection referred to as “the transferee”) of a specified intangible asset where the acquisition is from another company (in this subsection referred to as “the transferor”) and, by virtue of section 615(2) or 617(1), the transferee is treated as having acquired the asset for a consideration of such amount as would secure that neither a gain nor a loss would accrue on the transferor’s disposal of the asset to the transferee.

(b) Notwithstanding paragraph (a), where the transferor and transferee make a joint election under section 615(4) or 617(4), the transferee shall be entitled to claim an allowance under section 284 as applied by this section in respect of capital expenditure incurred by it on acquiring the specified intangible asset from the transferor.

(10) Any claim made by reference to this section shall be made within 12 months from the end of the accounting period in which the capital expenditure, giving rise to the claim, is incurred.