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Taxes Consolidation Act, 1997 (Number 39 of 1997)

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497 Relevant trading operations.

[FA84 s16A; FA95 s17(1)(g); FA96 s24; FA97 s9(d)]

(1) For the purposes of this Part, “relevant trading operations” means qualifying trading operations (other than those operations referred to in section 496(2)(a)(ix)) in respect of which a certifying agency or a certifying Minister, as the case may be (in this section referred to as “the authority”), has given a certificate under subsection (2).

(2) Subject to this section, the authority may, in respect of qualifying trading operations carried on or to be carried on by a company, give a certificate to the company certifying that the authority is satisfied, on the basis of such information as is supplied to the authority by the company or which the authority may reasonably require the company to furnish, that the carrying on of such qualifying trading operations by the company is or will be a bona fide new venture which, having regard to—

(a) the potential for the creation of additional sustainable employment, and

(b) the desirability of minimising the displacement of existing employment,

may be eligible—

(i) in the case of qualifying trading operations referred to in section 496(2)(a)(v), based on guidelines agreed, with the consent of the Minister for Finance, between the certifying agency and the Minister for Arts, Heritage, Gaeltacht and the Islands or the Minister for Enterprise, Trade and Employment (as may be appropriate in the circumstances), for the payment of the grants or the financial assistance referred to in section 496(2)(a)(ii) within a reasonable period after the completion of the feasibility study carried out in relation to the trading operations concerned in accordance with section 496(2)(a)(v), and

(ii) in any other case but subject to subsection (4), based on guidelines agreed—

(I) with the consent of the Minister for Finance, between the certifying agency and the Minister for Arts, Heritage, Gaeltacht and the Islands or the Minister for Enterprise, Trade and Employment or the Minister for the Marine and Natural Resources or the Minister for Tourism, Sport and Recreation (as may be appropriate in the circumstances), or

(II) between the certifying Minister and the Minister for Finance,

to be grant aided under a scheme of assistance administered by the authority.

(3) The carrying on of qualifying trading operations referred to in subsection (2) by a company shall not be regarded as not being a bona fide new venture by reason only that they were carried on as or as part of a trade by another person at any time before the issue of the eligible shares in respect of which relief is claimed.

(4) A certificate to which subsection (2) relates may be given by—

(a) the Industrial Development Agency (Ireland) in respect of qualifying trading operations referred to in [1]>section 496(2)(a)(iv)<[1][1]>sections 496(2)(a)(iv) and 496(2)(a)(xv)<[1],

(b) the Minister for Agriculture and Food in respect of qualifying trading operations referred to in section 496(2)(a)(viii), [4]>or<[4]

(c) the Minister for Arts, Heritage, Gaeltacht and the Islands in respect of qualifying trading operations referred to in section 496(2)(a)(xii), [3]>or<[3]

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(d) an industrial development agency or a County Enterprise Board (being a board referred to in the Schedule to the Industrial Development Act 1995) in respect of qualifying trading operations referred to in section 496(2)(a)(xvi),

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without regard to whether such operations are eligible to be grant-aided but, in considering whether to give such a certificate, the agency or the Minister, as the case may be, shall have regard to such guidelines in relation to the giving of such a certificate as may be agreed—

(i) with the consent of the Minister for Finance, between the agency and the Minister for Enterprise, Trade and Employment, or

(ii) between the Minister for Agriculture and Food or the Minister for Arts, Heritage, Gaeltacht and the Islands (as may be appropriate) and the Minister for Finance.

(5) [2]>Bord Fáilte Éireann<[2][2]>the National Tourism Development Authority<[2] shall not give a certificate under subsection (2) in a case where the value of a company’s interests in land and buildings (excluding fixtures and fittings) is or is intended to be greater than 50 per cent of the value of its assets as a whole.

(6) An authority shall not give a certificate under subsection (2) unless the company concerned undertakes in writing to furnish the authority when requested to do so with such details in relation to the carrying on of the qualifying trading operations as the authority may specify.

(7) (a) For the purposes of this Chapter, as respects a relevant investment made on or after the 10th day of May, 1997, a certificate under subsection (2) may, instead of being given by the authority, be given by a County Enterprise Board (being a board referred to in the Schedule to the Industrial Development Act, 1995) to a company carrying on or intending to carry on one or more qualifying trading operations mentioned in [6]>subparagraphs (i), (ii) and (v) of section 496(2)(a),<[6][6]>subparagraphs (i), (ii), (v) and (xvi) of section 496(2)(a)<[6] and subsections (2) and (6) shall, subject to the modification specified in paragraph (b) and any other necessary modification, apply accordingly.

(b) The modification referred to in paragraph (a) is that for the purposes of this subsection, the guidelines of the kind mentioned in paragraphs (i) and (ii) of subsection (2) shall be agreed between the Minister for Finance and the Minister for Arts, Heritage, Gaeltacht and the Islands or the Minister for Enterprise, Trade and Employment, as may be appropriate in the circumstances.

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497 Value received from company.

(1) In this section “ordinary trade debt” means any debt for goods or services supplied in the ordinary course of a trade or business where the credit period given does not exceed 6 months and is not longer than that normally given to the customers of the person carrying on the trade or business.

(2) In this section—

(a) any reference to a payment or transfer to an individual includes a reference to a payment or transfer made to the individual indirectly or to his or her order or for his or her benefit, and

(b) any reference to an individual includes a reference to an associate of the individual and any reference to the company includes a reference to any person connected with the company.

(3) For the purposes of this section, an individual receives value from a company where the company—

(a) repays, redeems or repurchases any of its share capital or securities which belong to the individual or makes any payment to the individual for giving up his or her right to any of the company’s share capital or any security on its cancellation or extinguishment,

(b) repays any debt owed to the individual other than—

(i) an ordinary trade debt incurred by the company, or

(ii) any other debt incurred by the company—

(I) on or after the earliest date on which the individual subscribed for the shares in respect of which the relief is claimed, and

(II) otherwise than in consideration of the extinguishment of a debt incurred before that date,

(c) makes to the individual any payment for giving up his or her right to any debt on its extinguishment other than—

(i) a debt in respect of a payment of the kind mentioned in paragraph (d) or (e) of section 492(3), or

(ii) a debt of the kind mentioned in subparagraph (i) or (ii) of paragraph (b),

(d) releases or waives any liability of the individual to the company or discharges, or undertakes to 10 discharge, any liability of the individual to a third person,

(e) makes a loan or advance to the individual,

(f) provides a benefit or facility for 15 the individual,

(g) transfers an asset to the individual for no consideration or for consideration less than its market value or acquires an asset from the individual for consideration exceeding its market value, or

(h) makes to the individual any other payment except a payment of the kind mentioned in paragraph (a), (b), (c), (d) or (e) of section 492(3) or a payment in discharge of an ordinary trade debt.

(4) (a) A specified individual shall not 30 have received value from a company by virtue of subsection (3)(b) where—

(i) the specified individual has made an investment in the 35 company by way of a loan,

(ii) the loan is converted into eligible shares within one year of the making of the loan, and

(iii) the specified individual provides a statement by the auditor of the company certifying that, in his or her opinion, the money raised by the company by way of the loan was used, and only used, by it in accordance with the provisions of section 493(1)(d).

(b) Where paragraph (a) applies, conversion of the loan into eligible shares shall, notwithstanding any other provision of this Part, be treated as the making of a relevant investment by the specified individual on the date of the making of the loan.

(c) For the purposes of this subsection “auditor”, in relation to a company, means the person or persons appointed as auditor of the company for all the purposes of the Companies Acts.

(5) For the purposes of this section, an individual shall also receive value from the company where the individual receives in respect of ordinary shares held by the individual any payment or asset in a winding up or in connection with a dissolution of the company, being a winding up or dissolution within section 494(10).

(6) For the purposes of this section, an individual shall also receive value from the company where any person who for the purposes of section 492 would be treated as connected with the company—

(a) purchases any of its share capital or securities which belong to the individual, or

(b) makes any payment to the individual for giving up any right in relation to any of the company’s share capital or securities.

(7) The value received by an individual shall be—

(a) in a case within paragraph (a), (b) or (c) of subsection (3), the amount receivable by the individual or, if greater, the market value of the shares, securities or debt in question,

(b) in a case within subsection (3)(d), the amount of the liability,

(c) in a case within subsection (3)(e), the amount of the loan or advance,

(d) in a case within subsection (3)(f), the cost to the company of providing the benefit or facility less any consideration given for it by the individual,

(e) in a case within subsection (3)(g), the difference between the market value of the asset and the consideration (if any) given for it,

(f) in a case within subsection (3)(h), the amount of the payment,

(g) in a case within subsection (4), the amount of the payment or, as the case may be, the market value of the asset, and

(h) in a case within subsection (5), the amount receivable by the individual or, if greater, the market value of the shares or securities in question.

(8) For the purposes of subsection (3)(d), a company shall be treated as having released or waived a liability where the liability is not discharged by payment within 12 months of the time when it ought to have been discharged by payment.

(9) For the purposes of subsection (3)(e), there shall be treated as if it were a loan made by the company to the individual—

(a) the amount of any debt (other than an ordinary trade debt) incurred by the individual to the company, and

(b) the amount of any debt due from the individual to a third person which has been assigned to the company.

(10) Where an individual who subscribes for eligible shares in a company—

(a) has, before the issue of the shares but within the specified period, received any value from the company, or

(b) on or after their issue but before the end of the specified period, receives any such value,

then, the amount of the relief to which the individual is entitled in respect of the shares shall be reduced by the value so received.

(11) Where by virtue of this section any relief is withheld or withdrawn in the case of an individual to whom ordinary shares in a company have been issued at different times, the relief shall be withheld or withdrawn in respect of shares issued earlier rather than in respect of shares issued later.

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497. Limits on amounts a qualifying company can raise

(1) For the purpose of this section——

(a) account shall not be taken of any amount subscribed for eligible shares by a person other than an individual who qualifies for relief,

(b) eligible shares includes any shares issued on or after 6 April 1984 in respect of which relief was available under this Part (including this Part as it stood enacted at any time before the commencement of section 23 of the Finance Act 2018 or, as the case may be, the commencement of section 33(1)(a) of the Finance Act 2011), and

(c) account shall be taken of any amount subscribed for eligible shares in a company which was, at any time, part of a RICT group with the qualifying company, but no account shall be taken of amounts so raised once that company was no longer part of that RICT group.

(2) The maximum amount which a RICT group may raise through the issue of eligible shares is——

(a) €€5,000,000 in any 12 month period, and

(b) €€15,000,000 in total in respect of the issue of eligible shares.

(3) Where a member of the RICT group raises any amount through the issue of eligible shares (in this section referred to as the ‘‘relevant issue’’) in excess of the amount specified in subsection (2)(a), the excess over that amount determined by the formula——

A –– B

where——

A is €€5,000,000,

and

B is the lesser of——

(a) the amount represented by A in the formula, and

(b) the aggregate of——

(i) the amount to be raised through the relevant issue, and

(ii) the amount or amounts, if any, raised through the issue of eligible shares other than the relevant issue, within the period of 12 months ending with the date of that relevant issue, by the members of the RICT group,

shall not be a qualifying investment.

(4) Where a member of the RICT group raises any amount through the issue of eligible shares (in this section referred to as the ‘‘relevant issue’’) in excess of the amount specified in subsection (2)(b), the excess over that amount determined by the formula—

A –– B

where—

A is —€15,000,000,

and

B is the lesser of——

(a) the amount represented by A in the formula, and

(b) an amount equal to the aggregate of all amounts raised by the members of the RICT group through the issue of eligible shares at any time before the relevant issue,

shall not be a qualifying investment.

(5) Where, as a consequence of subsection (3) or (4), the giving of relief would be precluded on claims in respect of shares issued to 2 or more individuals, the available relief shall be divided between them respectively in proportion to the amounts which have been subscribed by them for the shares to which their claims relate and which apart from this section would be eligible for relief.

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Substituted by FA03 s15(d).

[2]

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Substituted by FA06 sched2(1)(q). This section is deemed to have come into force and have taken effect as on and from 28 May 2003.

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Inserted by FA08 s24(1)(c)(i)(I). Applies as on and from 1 January 2008.

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Deleted by FA08 s24(1)(c)(i)(I). Applies as on and from 1 January 2008.

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Inserted by FA08 s24(1)(c)(i)(II). Applies as on and from 1 January 2008.

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Substituted by FA08 s24(1)(c)(ii). Applies as on and from 1 January 2008.

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Substituted by FA11 s33(1)(a). Has effect in respect of shares issued on or after 25 November 2011. Note: FA 12 s26 (2) amends FA 11 s33 and provides: (b) This section does not have effect in respect of shares issued before 25 November 2011 and, for all the purposes of Part 16 in connection with those shares, the Principal Act has effect as if this section had not been enacted. (c) This section does not have effect in respect of shares issued on or after 25 November 2011 and on or before 31 December 2011 where— (i) the company issuing the shares, or (ii) where the shares are acquired by an investment fund, the fund acquiring the shares, elects by notice in writing to the Revenue Commissioners on or before 31 December 2011 that, for all the purposes of Part 16 in connection with those shares, the Principal Act has effect as if this section had not been enacted.

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Substituted by FA18 s25(1). Has effect as respects shares issued on or after 1 January 2019.