Select view:

Taxes Consolidation Act, 1997 (Number 39 of 1997)

[1]>

486C Relief from tax for certain start-up companies.

(1) (a) In this section—

[8]>

associated company” shall be construed in accordance with section 432;

<[8]

[2]>

“Commission Regulation (EC) No. 1998/2006” means Commission Regulation (EC) No. 1998/2006 of 15 December 20065 on the application of Articles 86 and 87 of the Treaty to de minimis aid;

<[2]

EEA Agreement” means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993;

EEA state” means a State, other than the State, which is a Contracting Party to the EEA Agreement;

[9]>

Employer Job (PRSI) Incentive Scheme” means the scheme provided for in the Social Welfare (Employers’ Pay-Related Social Insurance Exemption Scheme) Regulations 2010 (S.I. No. 294 of 2010);

Employers” Pay-Related Social Insurance’ means the contribution specified in section 13(2)(d) of the Social Welfare Consolidation Act 2005;

<[9]

excepted trade” has the same meaning as in section 21A;

net chargeable gains” means chargeable gains less allowable losses;

new company” means a company incorporated in the State or in an EEA State [35]>other than the State<[35][35]>(other than the State) or in the United Kingdom<[35] on or after 14 October 2008;

qualifying assets”, in relation to a qualifying trade, means relevant assets of the qualifying trade which are disposed of in the relevant period in relation to that trade;

qualifying trade” has the meaning assigned to it in subsection (2);

relevant asset”, in relation to a qualifying trade means, an asset (including goodwill but not including shares or securities or other assets held as investments) which is, or is an interest in, an asset used for the purposes of that trade other than an asset on the disposal of which no gain accruing would be a chargeable gain or an asset the consideration for the acquisition of which is determined by section 617 or section 631;

relevant corporation tax”, in relation to an accounting period, means the corporation tax which, apart from this section, sections 239, 241, 440, 441, 644B and 827 and paragraph 18 of Schedule 32, would be chargeable for the accounting period exclusive of—

(i) the corporation tax chargeable on the profits of the company attributable to chargeable gains for that period, and

(ii) the corporation tax chargeable on the part of the companies profits which are charged to tax at the rate specified in section 21A;

[10]>

relevant limit” means, subject to subsection (6), €5,000;

<[10]

relevant period”, in relation to a qualifying trade, means the period beginning on the day the company commences to carry on the qualifying trade and ending 3 years after that date;

[11]>

specified contribution”, in relation to an employee or director of a company, means, subject to paragraph (c), the lesser of—

(i) the amount of Employers’ Pay-Related Social Insurance paid by the company in an accounting period in respect of that employee or director, or which would have been so paid if relief under the Employer Job (PRSI) Incentive Scheme did not apply, and

(ii) the relevant limit;

total contribution” means the lesser of —

(i) the aggregate amount of specified contributions of a company for an accounting period, and

(ii) the lower relevant maximum amount specified in subsection (5);

<[11]

total corporation tax”, in relation to an accounting period, means the corporation tax which, apart from this section, sections 239 and 241 would be chargeable for the accounting period;

trade” means a trade the profits or gains of which are charged to tax under Case I of Schedule D.

(b) For the purposes of this section, the profits of a company attributable to chargeable gains for an accounting period shall be taken to be the amount of its profits for that period on which corporation tax falls finally to be borne exclusive of the part of the profits attributable to income. That part shall be taken to be the amount brought into the company’s profits for that period for the purposes of corporation tax in respect of income after any deduction for charges on income, expenses of management or other amounts which can be deducted from or set against or treated as reducing profits of more than one description.

[12]>

(c) In computing a specified contribution for an accounting period of a company which sets up and commences a qualifying trade in 2011, an amount of Employers’ Pay-Related Social Insurance paid by the company, or which would have been so paid if relief under the Employer Job (PRSI) Incentive Scheme did not apply, within one month after the end of the accounting period may be treated as Employers’ Pay-Related Social Insurance paid by the company in that accounting period and, where such an amount is so treated, it shall not be taken into account in computing a specified contribution for any subsequent accounting period.

<[12]

(2) (a) In this section “qualifying trade” means a trade which is set up and commenced by a new company [23]>in<[23] [21]>2009[13]>[3]> or 2010<[3]<[13][13]>, 2010 or 2011<[13]<[21][21]>[23]>at any time<[23][23]>at any time<[23] in the period beginning on 1 January 2009 and ending on [32]>31 December 2014<[32][33]>[32]>31 December 2015<[32]<[33]<[21][34]>[33]>31 December 2018<[33]<[34][34]>31 December 2021<[34] other than a trade—

(i) which was previously carried on by another person and to which the company has succeeded,

(ii) the activities of which were previously carried on as part of another person’s trade or profession,

(iii) which is an excepted trade, [4]>or<[4]

(iv) the activities of which if carried on by a close company with no other source of income, would result in that company being a service company for the purposes of [5]>section 441.<[5][5]>section 441,[14]> or<[14]<[5]

[6]>

(v) the activities of which form part of an undertaking to which subparagraphs (a) to (h) of Article 1 of Commission Regulation (EC) No. 1998/2006 [15]>apply.<[15][15]>apply, or<[15]

<[6]

[16]>

(vi) the activities of which, if carried on by an associated company of the new company, would form part of a trade carried on by that associated company.

<[16]

(b) Where a trade consists partly of excepted operations and partly of other operations or activities, then section 21A(2) shall apply for the purposes of this section as it applies for the purposes of section 21A.

[24]>

(3) Where a company carries on a qualifying trade in an accounting period falling partly within the relevant period in relation to that qualifying trade, then the income from the qualifying trade for that accounting period shall, for the purpose of this section, be the amount of the income of the qualifying trade for that part of the accounting period and the amount of the income of the qualifying trade for that part shall be determined as if that part were a separate accounting period.

<[24]

[24]>

(3) Where a company carries on a qualifying trade in an accounting period falling partly within the relevant period in relation to that qualifying trade, then, for the purposes of this section, the income from the qualifying trade for that accounting period shall be the amount of the income of the qualifying trade for that part of the accounting period and that part of the accounting period shall be treated as a separate accounting period.

<[24]

(4) (a) Where an accounting period of a company falls [25]>wholly or partly<[25] within a relevant period in relation to a qualifying trade and the total corporation tax payable by the company for that accounting period does not exceed the lower relevant maximum amount, then[17]> the aggregate of<[17]

(i) corporation tax payable by the company for that accounting period, so far as it is referable to income from the qualifying trade for that accounting period, and

(ii) corporation tax payable by the company so far as it is referable to chargeable gains on the disposal of qualifying assets in relation to the trade,

[18]>

shall be reduced to nil.

<[18]

[18]>

shall be reduced by the lesser of—

(I) that aggregate, and

(II) the total contribution for the accounting period

<[18]

(b) Where an accounting period of a company falls [26]>wholly or partly<[26] within a relevant period in relation to a qualifying trade and the total corporation tax payable by the company for that accounting period exceeds the lower relevant maximum amount but does not exceed the upper relevant maximum amount, then the aggregate of corporation tax payable by the company for that accounting period so far as it is referable to income from the qualifying trade for that accounting period and corporation tax payable by the company for that accounting period so far as it is referable to chargeable gains on the disposal of qualifying assets in relation to the trade, [19]>shall be reduced to an amount determined by the following formula:<[19][19]>shall be reduced to the greater of—<[19]

[19]>

(i) that aggregate as reduced by the total contribution for the accounting period, and

(ii) an amount determined by the following formula:

<[19]

3

×

(T − M)

×

A + B

T

where—

T is the total corporation tax payable by the company for that accounting period,

M is the lower relevant maximum amount,

A is the corporation tax payable by the company for the accounting period so far as is referable to income from the qualifying trade for that accounting period, and

B is the corporation tax payable by the company for that accounting period so far as is referable to chargeable gains on the disposal of qualifying assets of the qualifying trade.

(c) [27]>For the purposes of this subsection<[27][27]>For the purposes of this subsection and subsection (4A)<[27], the corporation tax referable to income from a qualifying trade in an accounting period is such an amount as bears to the relevant corporation tax the same proportion as the income from the qualifying trade bears to the total income brought into charge to corporation tax for that accounting period.

(d) [28]>For the purposes of this subsection,<[28][28]>For the purposes of this subsection and subsection (4A)<[28] the corporation tax referable to chargeable gains on the disposal of qualifying assets is such amount as bears to the corporation tax payable on the profits of the company attributable to the chargeable gains for the accounting period the same proportion as the net chargeable gains on qualifying assets disposed of in the accounting period bears to net chargeable gains on all chargeable assets disposed of in the accounting period.

[29]>

(4A) (a) In this subsection—

accounting period following the relevant period”, in relation to a company carrying on a qualifying trade, means an accounting period commencing on a date which occurs after the expiry of the relevant period in relation to the qualifying trade;

corporation tax referable to the qualifying trade”, in relation to an accounting period of a company, means the corporation tax payable by the company for the accounting period, so far as it is referable to—

(i) income from the qualifying trade for that accounting period, and

(ii) chargeable gains on the disposal of relevant assets in relation to the trade in that accounting period.

(b) (i) Where for an accounting period of a company falling within the relevant period in relation to a qualifying trade carried on by the company—

(I) the total corporation tax payable by the company for the accounting period does not exceed the lower relevant maximum amount, and

(II) the total contribution for the accounting period exceeds the corporation tax referable to the qualifying trade for that accounting period,

the amount (in paragraph (c) referred to as a “first relevant amount”) of the excess referred to in clause (II) shall be available to reduce, in accordance with this subsection, the corporation tax referable to the qualifying trade for an accounting period following the relevant period.

(ii) Where for an accounting period of a company falling within the relevant period in relation to a qualifying trade carried on by a company—

(I) the total corporation tax payable by the company for the accounting period exceeds the lower relevant maximum amount but does not exceed the upper relevant maximum amount, and

(II) the total contribution for the accounting period exceeds the corporation tax referable to the qualifying trade for that accounting period,

an amount (in paragraph (c) referred to as a “second relevant amount”) determined by the following formula:

[C — (3 x (T — M) x C/T)] — R

where—

C is the total contribution for the accounting period,

T is the total corporation tax payable by the company for the accounting period,

M is the lower relevant maximum amount, and

R is the amount of relief to which the company is entitled under subsection (4)(b) for the accounting period,

shall be available to reduce, in accordance with this subsection, the corporation tax referable to the qualifying trade for an accounting period following the relevant period.

(c) For the purposes of this subsection, the aggregate of all amounts which are—

(i) the first relevant amount, or

(ii) the second relevant amount,

if any, for each accounting period falling within the relevant period, shall be referred to as a “specified aggregate”.

(d) (i) Subject to paragraphs (e) and (f), where a company carries on a qualifying trade in an accounting period following the relevant period, the corporation tax referable to the qualifying trade for that accounting period shall be reduced by the specified aggregate.

(ii) Subject to paragraphs (e) and (f), where there is a reduction in the corporation tax for an accounting period following the relevant period by virtue of subparagraph (i) and the specified aggregate exceeds the amount of that reduction, the corporation tax referable to the qualifying trade for the next accounting period shall be reduced by the amount of that excess and so much of that excess as is not applied to reduce that corporation tax shall, in turn, be applied by the company to reduce the corporation tax referable to the qualifying trade for the succeeding accounting period and so on for each succeeding accounting period.

(e) As respects a qualifying trade carried on by a company, the amount by which the corporation tax referable to the qualifying trade for an accounting period following the relevant period may be reduced under this subsection shall not exceed the lesser of—

(i) such corporation tax, and

(ii) the total contribution,

for that accounting period.

(f) So much of a specified aggregate as is applied by a company to reduce corporation tax under this subsection shall be so applied only once.

<[29]

(5) Subject to subsection (6), the lower relevant maximum amount and the upper relevant maximum amount mentioned in [30]>subsection (4)<[30][30]>subsections (4) and (4A)<[30] are €40,000 and €60,000 respectively.

[20]>

(6) For an accounting period of less than 12 months the relevant maximum amounts determined in accordance with subsection (5) shall be proportionately reduced.

<[20]

[20]>

(6) For an accounting period of less than 12 months—

(a) the relevant limit, and

(b) the relevant maximum amounts specified in subsection (5),

shall be proportionately reduced.

<[20]

(7) The aggregate of all reductions in corporation tax to which a company is entitled under [31]>subsection (4)<[31][31]>subsections (4) and (4A)<[31] in respect of a qualifying trade, the activities of which consist wholly or mainly of the conveyance by road of persons or goods or the haulage by road of other vehicles, shall not exceed €100,000.

(8) (a) Where, on a person ceasing to carry on a trade or part of a trade, a company (in this subsection referred to as the “successor”) begins—

(i) to carry on the activities of the trade as part of its trade, or

(ii) to carry on the activities of that part as part of its trade,

then that part of the trade carried on by the successor shall for the purposes of this section be treated as a separate trade.

(b) Where under paragraph (a) any activities of a company’s trade are to be treated as a separate trade, then any necessary apportionment shall be made of receipts or expenses.

(9) Notwithstanding section 4(4)(b), the income of a company, referred to in the expression “total income brought into charge to corporation tax”, for the accounting period for the purposes of subsection (2) is the sum determined by section 4(4)(b) for that period reduced by an amount equal to so much of the profits of the company for the accounting period as are charged to tax in accordance with section 21A.

(10) Where in an accounting period a company transfers to a connected person part of a qualifying trade, then the company shall not be entitled to relief under this section in respect of that trade for that or any subsequent accounting periods.

(11) Where a company is entitled to relief under this section in respect of any accounting period, then it shall specify the amount of relief due in its return required under [22]>section 951<[22][22]>Chapter 3 of Part 41A<[22] for that accounting period.

[7]>

(12) Notwithstanding any obligation to maintain secrecy or any other restriction on the disclosure of information imposed by or under statute or otherwise, the Revenue Commissioners or any officer authorised by them for the purposes of this subsection may—

(a) disclose to any board established by statute, any public or local authority or any other agency of the State (in this paragraph referred to as a “relevant body”) information relating to the amount of relief granted to a company under this section, being information which is required by the relevant body concerned for the purpose of ensuring that the ceilings on aid set out in Commission Regulation (EC) No. 1998/2006 are not exceeded, and

(b) provide to the European Commission such information as may be requested by the European Commission in accordance with Article 3 of Commission Regulation (EC) No. 1998/2006.

<[7]

Footnotes

5 OJ No. L 379 of 28.12.2006, p.5

<[1]

[1]

[+]

Inserted by F(No.2)A08 s31(1). This section comes into operation on such day as the Minister for Finance may appoint by order.

[2]

[+]

Inserted by FA10 s45(1)(a). This section has effect in relation to accounting periods beginning on and from 1 January 2009.

[3]

[+]

Inserted by FA10 s45(1)(b)(i). This section has effect in relation to accounting periods beginning on and from 1 January 2009.

[4]

[-]

Deleted by FA10 s45(1)(b)(ii). This section has effect in relation to accounting periods beginning on and from 1 January 2009.

[5]

[-] [+]

Substituted by FA10 s45(1)(b)(iii). This section has effect in relation to accounting periods beginning on and from 1 January 2009.

[6]

[+]

Inserted by FA10 s45(1)(c). This section has effect in relation to accounting periods beginning on and from 1 January 2009.

[7]

[+]

Inserted by FA10 s45(1)(d). This section has effect in relation to accounting periods beginning on and from 1 January 2009.

[8]

[+]

Inserted by FA11 s34(1)(a). Has effect in relation to accounting periods beginning on or after 1 January 2011.

[9]

[+]

Inserted by FA11 s34(1)(b). Has effect in relation to accounting periods beginning on or after 1 January 2011.

[10]

[+]

Inserted by FA11 s34(1)(c). Has effect in relation to accounting periods beginning on or after 1 January 2011.

[11]

[+]

Inserted by FA11 s34(1)(d). Has effect in relation to accounting periods beginning on or after 1 January 2011.

[12]

[+]

Inserted by FA11 s34(1)(e). Has effect in relation to accounting periods beginning on or after 1 January 2011.

[13]

[-] [+]

Substituted by FA11 s34(1)(f)(i). Has effect in relation to accounting periods beginning on or after 1 January 2011.

[14]

[-]

Deleted by FA11 s34(1)(f)(ii). Has effect in relation to accounting periods beginning on or after 1 January 2011.

[15]

[-] [+]

Substituted by FA11 s34(1)(f)(iii). Has effect in relation to accounting periods beginning on or after 1 January 2011.

[16]

[+]

Inserted by FA11 s34(1)(g). Has effect in relation to accounting periods beginning on or after 1 January 2011.

[17]

[+]

Inserted by FA11 s34(1)(h)(i). Has effect in relation to accounting periods beginning on or after 1 January 2011.

[18]

[-] [+]

Substituted by FA11 s34(1)(h)(ii). Has effect in relation to accounting periods beginning on or after 1 January 2011.

[19]

[-] [+] [+]

Substituted by FA11 s34(1)(i). Has effect in relation to accounting periods beginning on or after 1 January 2011.

[20]

[-] [+]

Substituted by FA11 s34(1)(j). Has effect in relation to accounting periods beginning on or after 1 January 2011.

[21]

[-] [+]

Substituted by FA12 s45. Deemed to have come into force and takes effect on and from 1 January 2012.

[22]

[-] [+]

Substituted by FA12 sched4(part2)(g).

[23]

[-] [-] [+]

Substituted by FA13 s34(1)(a). Deemed to have come into force and takes effect on and from 1 January 2013.

[24]

[-] [+]

Substituted by FA13 s34(1)(b). Deemed to have come into force and takes effect on and from 1 January 2013.

[25]

[-]

Deleted by FA13 s34(1)(c). Deemed to have come into force and takes effect on and from 1 January 2013.

[26]

[-]

Deleted by FA13 s34(1)(d). Deemed to have come into force and takes effect on and from 1 January 2013.

[27]

[-] [+]

Substituted by FA13 s34(1)(e). Has effect as respects any first relevant amount or second relevant amount (both within the meaning of section 486C) for accounting periods ending on or after 1 January 2013.

[28]

[-] [+]

Substituted by FA13 s34(1)(f). Has effect as respects any first relevant amount or second relevant amount (both within the meaning of section 486C) for accounting periods ending on or after 1 January 2013.

[29]

[+]

Inserted by FA13 s34(1)(g). Has effect as respects any first relevant amount or second relevant amount (both within the meaning of section 486C) for accounting periods ending on or after 1 January 2013.

[30]

[-] [+]

Substituted by FA13 s34(1)(h). Has effect as respects any first relevant amount or second relevant amount (both within the meaning of section 486C) for accounting periods ending on or after 1 January 2013.

[31]

[-] [+]

Substituted by FA13 s34(1)(i). Has effect as respects any first relevant amount or second relevant amount (both within the meaning of section 486C) for accounting periods ending on or after 1 January 2013.

[32]

[-] [+]

Substituted by FA14 s39. Comes into operation on 1 January 2015.

[33]

[-] [+]

Substituted by FA15 s30. Comes into operation on 1 January 2016.

[34]

[-] [+]

Substituted by FA18 s22. Comes into operation on 1 January 2019.

[35]

[-] [+]

Substituted by the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2020 s55. Comes into operation on 31 December 2020 as per S.I. No. 723 of 2020.