835AY. Interpretation (Part 35D)

(1) In this Part—

“allowable amount” shall be construed in accordance with subsection (2);

“alternative body of accounting standards” means standards that accounts of entities are to comply with which are laid down by such body or bodies having authority to lay down standards of that kind in Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, the Republic of Korea, the United States of America, the Republic of India and the People’s Republic of China;

“associated enterprise”, other than in Chapter 3, means an enterprise that is associated with another enterprise in accordance with subsections (2) and (4) of section 835AA, other than enterprises which would be considered associated enterprises pursuant only to paragraphs (e), (f) or (g) of section 835AA(2);

“CGT rate” means—

(a) other than in the cases referred to in paragraphs (b) and (c), the rate specified in section 28(3),

(b) in the case of a relevant disposal (within the meaning of Chapter 2 of Part 22), the rate specified in section 649A(1)(b), and

(c) in the case of a disposal of an asset to which section 747A applies, the rate specified in section 747A(4);

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“consolidating entity” means an entity which is included in the ultimate consolidated financial statements, other than a non-consolidating entity;

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“consolidating entity” means an entity, other than a non-consolidating entity, which is included in the ultimate consolidated financial statements or would be included in the ultimate consolidated financial statements but for being excluded by the ultimate parent on materiality grounds under generally accepted accounting practice or an alternative body of accounting standards;

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“de minimis amount”—

(a) in respect of an accounting period of 12 months, means €3,000,000, and

(b) in respect of an accounting period of less than 12 months, the amount referred to in paragraph (a) reduced pro rata;

“deductible interest equivalent” means the amount in respect of interest equivalent that is deducted in calculating the relevant profit or loss of a relevant entity;

“deemed borrowing cost” has the meaning assigned to it by section 835AAD(1);

‘Directive (EU) 2016/1164’ has the same meaning as it has in Part 35C;

“disallowable amount” means the amount by which the exceeding borrowing costs is greater than the allowable amount;

‘EBITDA’ shall be construed in accordance with section 835AAB(5);

“EBITDA limit” means 30 per cent;

“enterprise” has the same meaning as it has in Part 35C;

“entity” has the same meaning as it has in Part 35C;

“exceeding borrowing costs” has the meaning assigned to it by section 835AAB(4);

‘finance cost element of non-finance lease payments’ in respect of a company and an accounting period, means the portion of the deductible lease payment in that accounting period calculated as follows—

P x (A – B) /A

where—

P is the deductible lease payment,

A is the total expected cost of the lease, over the course of the life of the lease on the date the lease was entered into, and

B is the value of the right of use asset recognised in the accounts under international accounting standards, or would be so recognised if accounts were prepared in accordance with international accounting standards, on the date the lease was entered into,

but where the terms of the lease are amended during the life of the lease such that either of A or B are amended, then, for the accounting period in which that amendment was made and all successive accounting periods, A and B shall be calculated as if a new lease was entered into at the date of that amendment;

‘finance element of finance lease payments’ in respect of a company and an accounting period, means the portion of the deductible, or taxable, finance lease payment, as the case may be, in that accounting period calculated as follows—

P x (A/B)

where—

P is the deductible, or taxable, finance lease payment, as the case may be,

A is the expected total finance cost, or finance income, as the case may be, which will be recognised in the accounts under generally accepted accounting practice over the course of the life of the lease on the date the lease was entered into, and

B is the total expected cost of the lease, or income of the lease, as the case may be, over the course of the life of the lease on the date the lease was entered into,

but where the terms of the lease are amended during the life of the lease such that either of A or B are amended, then, for the accounting period in which that amendment was made and all successive accounting periods, A and B shall be calculated as if a new lease was entered into at the date of amendment;

‘finance income element of non-finance lease payments’ in respect of a company and an accounting period, means the portion of the taxable lease payment in that accounting period calculated as follows—

P x (A – B) /A

where—

P is the taxable lease payment,

A is the total expected income of the lease, over the course of the life of the lease on the date the lease was entered into, and

B is the value of the leased asset recognised in the accounts under generally accepted accounting practice on the date the lease was entered into less the expected depreciated value of the leased asset at the end of the lease, determined in accordance with the accounting policy in the financial statements for the year in which the lease is entered into,

but where the terms of the lease are amended during the life of the lease such that either of A or B are amended, then, for the accounting period in which that amendment was made and all successive accounting periods, A and B shall be calculated as if a new lease was entered into at the date of amendment;

“finance lease” means a lease which, under generally accepted accounting practice, falls to be treated as a finance lease;

“interest equivalent” means—

(a) interest,

(b) amounts economically equivalent to interest including—

(i) a discount, where securities are issued at a discount,

(ii) the finance element of finance lease payments,

(iii) the finance income element and finance cost element of nonfinance lease payments of a company that carries on a trade of leasing that is treated for the purposes of the Tax Acts as a separate trade distinct from all other activities carried on by such company under section 403(2),

(iv) amounts under derivative instruments or hedging arrangements directly connected with the raising of finance, and

(v) such portion of the profit or loss on—

(I) a financial asset (within the meaning of section 76B), or

(II) a financial liability (within the meaning of section 76B),

the coupon or return on which principally comprises interest or one or more of the amounts referred to in this paragraph, to the extent that it would be reasonable to consider that such amount is economically equivalent to interest,

(c) any amounts referred to in paragraph (a) or (b) claimed by a claimant company under section 420(6),

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(ca) any amounts referred to in paragraph (a) or (b) claimed by a claimant company under section 420A(3) or 420B(2) that are treated under section 247(4G) for the purposes of Chapter 5 of Part 12 as relevant trading charges on income (within the meaning of section 243A),

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(d) amounts arising directly in connection with raising finance, including—

(i) guarantee fees,

(ii) arrangement fees, and

(iii) commitment fees,

(e) foreign exchange gains and losses on interest or ^[4]>amounts economically equivalent to interest, and^<[4][4]>amounts economically equivalent to interest,^<[4]

(f) any amount arising from an arrangement, or part of an arrangement, which could reasonably be considered, when the arrangement is considered in the whole, ^[5]>to be economically equivalent to interest;^<[5][5]>to be economically equivalent to interest, and^<[5]

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(g) any amounts referred to in paragraphs (a) to (f) treated for the purposes of section 83, in accordance with subsection (3) of that section, as if those amounts had been disbursed as expenses of management;

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“interest group” shall be construed in accordance with section 835AAK(1);

“interest spare capacity” has the meaning given to it by section 835AAB(4);

“large scale asset” means—

(a) a development, within the meaning of the Planning and Development Act 2000, specified in the Seventh Schedule of that Act, approved by—

(i) An Bord Pleanála under section 37G of that Act, on foot of an application made pursuant to section 37A(2)(a) or (b) of that Act, or

(ii) a local authority under section 170 of that Act,

(b) a development, referred to in section 182A of the Planning and Development Act 2000, approved by An Bord Pleanála under section 182B of that Act,

(c) a development, referred to in section 182C of the Planning and Development Act 2000, approved by An Bord Pleanála under section 182D of that Act,

(d) railway works, within the meaning of the Transport (Railway Infrastructure) Act 2001, in respect of which an order has been made under section 43 of that Act,

(e) a scheme, within the meaning of the Roads Act 1993, which has been approved under section 49 of that Act,

(f) a strategic housing development, within the meaning of Chapter 1 of Part 2 of the Planning and Development (Housing) and Residential Tenancies Act 2016 approved by—

(i) An Bord Pleanála, under section 9 of that Act, or

(ii) a local authority, under section 170 of the Planning and Development Act 2000,

(g) an asset (within the meaning of the State Authorities (Public Private Partnership Arrangements) Act 2002) constructed pursuant to a public private partnership arrangement (within the meaning of that Act),

(h) an installation generating energy from renewable sources (within the meaning of the European Union (Renewable Energy) Regulations (S.I. No. 365 of 2020)), which is regulated, either solely or jointly with another party, by the Commission for the ^[7]>Regulation of Utilities, or^<[7][7]>Regulation of Utilities,^<[7]

(i) an asset specified by the Minister for Finance in regulations made under ^[8]>section 835AAA(1),^<[8][8]>section 835AAA(1), or^<[8]

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(j) a large-scale residential development within the meaning of the Planning and Development Act 2000, approved by a planning authority under section 34 or section 170 of that Act,

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that has a minimum expected life span of 10 years;

‘limitation spare capacity’ is the amount by which the exceeding borrowing costs are less than the allowable amount;

“long-term infrastructure project” means a project to provide, upgrade, operate or maintain a large scale asset;

“non-consolidating entity” means an entity which is valued in ultimate consolidated financial statements—

(a) using fair value accounting (within the meaning of international accounting standards),

(b) on the basis that it is an asset held for sale or held for distribution (within the meaning of international accounting standards), or

(c) where the ultimate consolidated financial statements are prepared under an alternative body of accounting standards, on an equivalent basis under those standards;

‘non-finance element of finance lease payments’ in respect of a company and an accounting period, means the deductible, or taxable, finance lease payments, as the case may be, in that accounting period less the finance element of the finance lease payments;

‘P rate’ is the rate specified in section 21A(3)(a);

“payment for relief” means a payment made by one member of an interest group to another member of an interest group pursuant to an agreement between them as respects an allocation of a disallowable amount or total spare capacity, being a payment not exceeding the reduction in tax payable in the current accounting period or successive accounting periods as a result of the allocation in respect of the member of the interest group making the payment;

“qualifying long-term infrastructure project” means a long-term infrastructure project—

(a) in respect of which the operator is established in, and tax resident in, a Member State,

(b) in respect of which the large scale asset concerned is in a Member State, and

(c) the income arising from which and the deductible interest equivalent relating to which arise in a Member State;

“relevant entity” means a company or an interest group;

“relevant loss” shall be construed in accordance with section 835AZ(7);

“relevant profit” has the meaning assigned to it by section 835AZ(1);

“reporting company” shall be construed in accordance with section 835AAM(1);

“single company worldwide group” means a company that is not—

(a) a member of a worldwide group,

(b) a member of an interest group, or

(c) a standalone entity;

“specified return date for the accounting period” has the same meaning as it has in Part 41A;

“standalone entity” means a company resident in the State that—

(a) is not a member of a worldwide group,

(b) has no associated enterprises, and

(c) does not have a permanent establishment in a territory other than the State;

‘T rate’ is the rate specified in section 21(1)(f);

“taxable interest equivalent” means the amount in respect of interest equivalent that is income, profits or gains included in the calculation of the relevant profit or loss of a relevant entity, including a reversal of deductible interest equivalent;

“total spare capacity” is the aggregate of interest spare capacity and limitation spare capacity;

“ultimate consolidated financial statements” means the consolidated financial statements prepared by an ultimate parent under generally accepted accounting practice or an alternative body of accounting standards;

“ultimate parent” means an entity that prepares consolidated financial statements under generally accepted accounting practice, or an alternative body of accounting standards, and whose results are not fully included in any other consolidated financial statements prepared under such a practice or standard;

“worldwide group” means the ultimate parent and all consolidating entities in the ultimate consolidated financial statements and ‘member of a worldwide group’ shall be construed accordingly.

(2) The ‘allowable amount’ in respect of a relevant entity for an accounting period shall be calculated as follows:

allowable amount = EBITDA x EBITDA limit.

(3) A word or expression which is used in this Part and is also used in Directive (EU) 2016/1164 has, unless the context otherwise requires, the same meaning in this Part as it has in Directive (EU) 2016/1164.