Taxes Consolidation Act, 1997 (Number 39 of 1997)
[1]>
766A Tax credit on expenditure on buildings or structures used for research and development.
(1) (a) [26]>In this section—<[26][26]>In this section and in section 766D—<[26]
“qualified company”, “relevant member State” and “research and development activities” have the same meanings as in section 766;
[2]>
“qualifying building” means a building or structure, which is to be used for the purpose of the carrying on by the company of research and development activities in a relevant Member State, where, for the specified relevant period in relation to that building or structure, the proportion of use of the building or structure attributable to the research and development activities carried on by the company, as calculated in accordance with subsection (6), is not less than 35 per cent;
<[2]
“refurbishment”, in relation to a building or structure, means any work of construction, reconstruction, repair or renewal including the provision of water, sewerage or heating facilities carried out in the course of the repair or restoration, or maintenance in the nature of repair or restoration, of the building or structure;
“relevant expenditure” on a building or structure, in relation to a company, means expenditure incurred by the company on the construction of a [3]>building or structure which is to be used wholly and exclusively for the purposes of the carrying on by the company of research and development activities in a relevant Member State<[3][3]>qualifying building<[3], being expenditure which qualifies for an allowance under Part 9[22]> or this Part<[22]: but expenditure incurred by a company which is resident in the State shall not be relevant expenditure if it—
(i) may be taken into account as an expense in computing income of the company,
(ii) is expenditure in respect of which an allowance for capital expenditure may be made to the company, or
(iii) may otherwise be allowed or relieved in relation to the company,
for the purposes of tax in a territory other than the State.
[4]>
“specified relevant expenditure” means the same proportion of relevant expenditure as the research and development activities carried on in the qualifying building by the company for the specified relevant period bears to the total of all activities carried on by the company in that building for that period;
“specified relevant period” means—
(i) in the case of the construction of a qualifying building, the period of 4 years, commencing with the date on which the building or structure is first brought into use for the purposes of a trade,
(ii) in the case of the refurbishment of a qualifying building, the period of 4 years, commencing with the date on which the refurbishment is completed or, such earlier period of 4 years, as the company may elect, beginning not earlier than the date on which the refurbishment commences;
<[4]
[14]>
“specified time” in relation to a building or structure means the period of 10 years commencing at the beginning of the accounting period in which the predecessor incurs relevant expenditure on that building or structure;
<[14]
(b) [27]>For the purposes of this section—<[27][27]>For the purposes of this section and section 766D—<[27]
(i) expenditure shall not be regarded as having been incurred by a company if it has been or is to be met directly or indirectly [15]>by the State;<[15][15]>by or through—<[15]
[15]>
(I) the State or another relevant Member State [23]>or the European Union<[23], or
(II) any board established by statute, any public or local authority or any other agency of the State or of another relevant [24]>Member State;<[24][24]>Member State or an institution, body, office, agency or other body of the European Union, or<[24]
<[15]
[25]>
(III) a state, other than the State or a Member State referred to in clause (I), and any board, authority, institution, office, agency or other body in such state;
<[25]
(ii) a reference to expenditure incurred on the construction of a building or structure includes expenditure on the refurbishment of the building or structure, but does not include—
(I) any expenditure incurred on the acquisition of, or of rights in or over, any land,
(II) any expenditure on the provision of machinery or plant or on any asset treated for any chargeable period as machinery or plant, or
(III) any expenditure on research and development within the meaning of section 766;
(iii) where a building or structure which is to be used for the purposes of the carrying on of research and development activities forms part of a building or is one of a number of buildings in a single development, or forms a part of a building which is itself one of a number of buildings in a single development, there shall be made such apportionment as is necessary of the expenditure incurred on the construction of the whole building or number of buildings, as the case may be, for the purpose of determining the expenditure incurred on the construction of the building or structure which is to be used for the purposes of carrying on of research and development activities,
(iv) paragraphs (i) to (iii) of section 766(1)(b) shall apply.
[5]>
(2) Where in an accounting period a qualified company incurs relevant expenditure on a building or structure, the corporation tax of the company for each accounting period falling wholly or partly into the period of 4 years commencing at the beginning of that accounting period shall be reduced by an amount determined by the formula—
M |
|
E × |
|
1460 |
where—
E is an amount equal to 20 per cent of the amount of the relevant expenditure on the building or structure, and
M is the number of days in the accounting period which fall into that period of 4 years.
<[5]
[5]>
(2) Where in an accounting period a qualified company incurs relevant expenditure, the corporation tax of the company for that accounting period shall be reduced by an amount equal to 25 per cent of the specified relevant expenditure.
<[5]
[6]>
(3) Where—
(i) in an accounting period a company incurs relevant expenditure on a building or structure,
(ii) in relation to that expenditure the corporation tax of the company is reduced under subsection (2), and
(iii) at any time in the period of 10 years commencing at the beginning of that accounting period the building or structure is sold or commences to be used for purposes other than the carrying on by the company of research and development activities,
then the company—
(I) shall not be entitled to reduce corporation tax under subsection (2) for any accounting period ending after the time specified in paragraph (iii), and
(II) shall be charged to tax under Case IV of Schedule D for the accounting period in which the building or structure is sold, or as the case may be commences to be used for purposes other than the carrying on by the company of research and development activities, in an amount equal to 4 times the aggregate amount by which corporation tax of the company or another company was reduced under subsection (2) or (4) in relation to that expenditure.
<[6]
[6]>
(3) Where—
(a) in an accounting period a company incurs relevant expenditure on a building or structure,
(b) in relation to that expenditure the corporation tax of the company or another company is reduced under subsection (2) or (4A), or a payment has been made to the company or another company by the Revenue Commissioners by virtue of subsection (4B), and
(c) at any time in the period of 10 years commencing at the beginning of that accounting period the building or structure is sold or ceases to be used by the company for the purpose of research and development activities or for the purpose of the same trade that was carried on by the company at the beginning of the specified relevant period, in connection with which the research and development activities were carried on,
[16]>then the company<[16][16]>then, subject to subsection (3A), the company<[16]—
(i) and in relation to that expenditure, another company, shall not be entitled to reduce corporation tax under subsection (2) for any accounting period ending after the time specified in paragraph (c), and
(ii) shall be charged to tax under Case IV of Schedule D for the accounting period in which the building or structure is sold or ceases to be used for the purpose of research and development activities or for the purpose of the trade, in an amount equal to 4 times the aggregate amount by which, in respect of the company or in relation to that expenditure, another company, the corporation tax payable is reduced under subsections (2), (4) and (4A), and payments are made under subsection (4B).
<[6]
[17]>
(3A) Where an event referred to in section 766(4C) occurs and—
(a) in connection with the event the predecessor transfers to the successor a building or structure in respect of which—
(i) the predecessor had made a claim under [19]>section 766A<[19][19]>this section<[19],
(ii) the transfer is a transfer to which section 617 applies, and
(iii) at the time of the transfer either or both the specified relevant period and the specified time had not expired,
(b) on, or at any time within 2 years after, the event, the trade and research and development activities are not carried on otherwise than by the successor, and
(c) the building or structure in respect of which relevant expenditure was incurred by the predecessor—
(i) in a case where the specified relevant period had not expired, would continue to be a qualifying building if a reference, in the definition of ‘qualifying building’ to activities carried on by the company were construed as a reference to activities carried on by the company and the successor, and
(ii) continues to be used by the successor throughout the remainder of the ‘specified time’ for the purposes of research and development activities,
then—
(I) subparagraphs (i) and (ii) of subsection (3) shall not apply in relation to the transfer by the predecessor,
(II) the successor may, to the extent that the predecessor has not used an amount to reduce the corporation tax of an accounting period in accordance with subsection (2) or made a claim under subsection (4A) or (4B) carry forward any excess that the predecessor would have been entitled to carry forward, in accordance with subsection (4), and
(III) subsection (3) shall have effect as if a reference to the company in subsection (3)(c) and thereafter in subsection (3) were a reference to the successor.
<[17]
(4) (a) Subject to paragraphs (b) and (c) [7]>and subsections (4A) and (4B),<[7] where as respects any accounting period of a company the amount by which the company is entitled under this section to reduce corporation tax of the accounting period exceeds the relevant corporation tax of the company for the accounting period, the excess shall be carried forward and treated as an amount by which corporation tax for the next succeeding accounting period may be reduced, and so on for succeeding accounting periods.
(b) Where the company referred to in paragraph (a) is a member of a group of companies, the company may specify that the excess specified in paragraph (a), or any part of that excess, is to be treated as an amount by which corporation tax payable by another company which is a member of that group for that other company’s corresponding accounting period is to be reduced.
(c) So much of the excess specified under paragraph (a) as is treated under paragraph (b) as an amount by which tax payable by another company is to be reduced shall not be carried forward under paragraph (a).
[8]>
(4A) (a) Where as respects any accounting period of a company the amount by which the company is entitled to reduce corporation tax of the accounting period exceeds the corporation tax of the company for the accounting period, the company may make a claim requiring the corporation tax of the preceding accounting periods ending within the time specified in paragraph (b) to be reduced by the amount of the excess.
(b) The time referred to in paragraph (a) shall be a time immediately preceding the accounting period first mentioned in that paragraph, equal in length to that accounting period, but the amount of the reduction which may be made under that paragraph in the corporation tax of an accounting period falling partly before that time shall not exceed the corporation tax referable to the part of those profits proportionate to the part of the period falling within that time.
(4B) (a) Where a claim under subsection (4A)(a) has been made, and the amount of the excess referred to in subsection (4A)(a) exceeds the corporation tax of the preceding accounting periods ending within the time specified in subsection (4A)(b) or where no corporation tax arises for those preceding accounting periods, the company may make a claim to have any excess remaining paid to the company by the Revenue Commissioners.
(b) Subject to section 766B, on receipt of a claim the Revenue Commissioners shall pay any excess remaining to the company, in 3 instalments—
(i) the first instalment shall be paid by the Revenue Commissioners not earlier than the date provided for in [18]>paragraph (b) of the definition of “specified return date for the chargeable period” as defined in section 950(1)<[18][18]>paragraph (b)(i) of the definition of “specified return date for the chargeable period” as defined in section 959A<[18], for the accounting period in which the expenditure on research and development was incurred and shall equal 33 per cent of the excess remaining,
(ii) in respect of the second instalment—
(I) the excess remaining, as reduced by the first instalment under subparagraph (i), shall be first treated as an amount by which the corporation tax of the accounting period next succeeding the accounting period in which the expenditure giving rise to the claim under this subsection was incurred, is reduced in accordance with subsection (4), and
(II) the second instalment shall be paid by the Revenue Commissioners not earlier than 12 months immediately following the date referred to in [13]>subsubparagraph (i)<[13][13]>subparagraph (i)<[13] and shall equal 50 per cent of the amount [11]>by which the excess remaining is reduced<[11][11]>of the excess remaining as reduced<[11] by the aggregate of the first instalment under subparagraph (i) and the amount treated as reducing the corporation tax of an accounting period under clause (I),
and
(iii) in respect of the last instalment—
(I) the excess remaining, as reduced by the first and second instalments and by the amount treated as reducing the corporation tax of an accounting period under clause (I) of subparagraph (ii), shall be first treated as an amount by which the corporation tax of the accounting period next succeeding the accounting period referred to in clause (I) of subparagraph (ii) is reduced in accordance with subsection (4), and
(II) the last instalment shall be paid by the Revenue Commissioners not earlier than 24 months immediately following the date referred to in subparagraph (i) and shall equal the amount by which the excess remaining is reduced by the first and second instalments and by the total of the amounts by which the corporation tax of an accounting period is reduced under clause (I) of subparagraph (ii) and under clause (I) of this subparagraph.
<[8]
[28]>
(4C) Where, in respect of a claim made in respect of an accounting period that commenced before 1 January 2022, an amount is due to be paid as—
(a) a second instalment under subsection (4B)(b)(ii), or
(b) a last instalment under subsection (4B)(b)(iii),
in an accounting period that commences on or after 1 January 2022 (in this subsection referred to as the ‘second-mentioned accounting period’), the company may, notwithstanding subsection (5), within 12 months of the end of the second-mentioned accounting period, make a claim in the return filed under Part 41A to have such excess paid to the company by the Revenue Commissioners, notwithstanding the restrictions set out in subparagraphs (ii)(II) and (iii)(II) of subsection (4B) in relation to the period before the expiry of which the Revenue Commissioners may not make a payment of the second or last instalment, as the case may be.
<[28]
[9]>
(5) Where a company claims relief under this section in respect of any accounting period, it shall specify the amount of relief claimed in its return under section 951 for that accounting period.
<[9]
[9]>
(5) Any claim under this section shall be made within 12 months from the end of the accounting period in which the relevant expenditure, giving rise to the claim, is incurred.
<[9]
[10]>
(6) (a) Where expenditure is incurred by a company on a building or structure and the building or structure will not be used by the company wholly and exclusively for the purposes of research and development, the proportion of the use of the building or the amount of the expenditure, attributable to research and development shall be such portion of the use of the building or the expenditure [20]>as appears to the inspector (or on appeal the Appeal Commissioners) to be just and reasonable<[20][20]>as is just and reasonable<[20].
(b) Where, at any time, any apportionment referred to in paragraph (a), or a further apportionment made under this paragraph, ceases to be just and reasonable, then—
(i) such further apportionment shall be made at that time [21]>as appears to the inspector (or on appeal the Appeal Commissioners) to be just and reasonable<[21][21]>as is just and reasonable<[21],
(ii) any such further apportionment shall supersede any earlier apportionment, and
(iii) any such adjustments, assessments or repayments of tax shall be made as are necessary to give effect to any apportionment under this subsection.
(7) Any amount payable by virtue of subsection (4B) shall not be income of the company or another company, for any tax purpose.
(8) Any amount payable by the Revenue Commissioners to the company or another company by virtue of subsection (4B) shall be deemed to be an overpayment of corporation tax, for the purposes only of [12]>section 1006A(2)<[12][12]>section 960H(2)<[12].
<[10]
[29]>
(9) (a) A claim shall not be made under subsection (2) in respect of expenditure on research and development incurred in an accounting period that commences on or after 1 January 2023.
(b) A company may, in respect of expenditure on research and development incurred in an accounting period make a claim under this section or section 766D.
<[29]
<[1]
[1]
Substituted by FA04 s33(1)(a). This section comes into operation on such day as the Minister for Finance may appoint by order and has effect as respects expenditure incurred on or after that day. With effect from 1 January 2004 per SI 425 of 2004.
[2]
Inserted by F(No.2)A08 s35(1)(a)(i). Comes into operation as respects expenditure incurred after 24 September 2009 and in any accounting period commencing on or after 1 January 2009 as per SI No. 392/2009.
[3]
Substituted by F(No.2)A08 s35(1)(a)(ii). Comes into operation as respects expenditure incurred after 24 September 2009 and in any accounting period commencing on or after 1 January 2009 as per SI No. 392/2009.
[4]
Inserted by F(No.2)A08 s35(1)(a)(iii). Comes into operation as respects expenditure incurred after 24 September 2009 and in any accounting period commencing on or after 1 January 2009 as per SI No. 392/2009.
[5]
Substituted by F(No.2)A08 s35(1)(b). Comes into operation as respects expenditure incurred after 24 September 2009 and in any accounting period commencing on or after 1 January 2009 as per SI No. 392/2009.
[6]
Substituted by F(No.2)A08 s35(1)(c). Comes into operation as respects expenditure incurred after 24 September 2009 and in any accounting period commencing on or after 1 January 2009 as per SI No. 392/2009.
[7]
Inserted by F(No.2)A08 s35(1)(d). Comes into operation as respects expenditure incurred after 24 September 2009 and in any accounting period commencing on or after 1 January 2009 as per SI No. 392/2009.
[8]
Inserted by F(No.2)A08 s35(1)(e). Comes into operation as respects expenditure incurred after 24 September 2009 and in any accounting period commencing on or after 1 January 2009 as per SI No. 392/2009.
[9]
Substituted by F(No.2)A08 s35(1)(f). Comes into operation as respects expenditure incurred after 24 September 2009 and in any accounting period commencing on or after 1 January 2009 as per SI No. 392/2009.
[10]
Inserted by F(No.2)A08 s35(1)(g). Comes into operation as respects expenditure incurred after 24 September 2009 and in any accounting period commencing on or after 1 January 2009 as per SI No. 392/2009.
[14]
Inserted by FA12 s27(1)(l). Applies to accounting periods commencing on or after 1 January 2012.
[15]
Substituted by FA12 s27(1)(m). Applies to accounting periods commencing on or after 1 January 2012.
[16]
Substituted by FA12 s27(1)(n). Applies to accounting periods commencing on or after 1 January 2012.
[17]
Inserted by FA12 s27(1)(o). Applies to accounting periods commencing on or after 1 January 2012.
[20]
Substituted by F(TA)A15 s38(6)(b). With effect from 21 March 2016 per S. I. No 110 of 2016.
[21]
Substituted by F(TA)A15 s38(6)(b). With effect from 21 March 2016 per S. I. No 110 of 2016.
[23]
Inserted by FA19 s25(3)(b)(i). Applies as respects accounting periods beginning on or after the date of the passing of this Act.
[24]
Substituted by FA19 s25(3)(b)(ii). Applies as respects accounting periods beginning on or after the date of the passing of this Act.
[25]
Inserted by FA19 s25(3)(b)(iii). Applies as respects accounting periods beginning on or after the date of the passing of this Act.