372AAC Capital allowances in relation to conversion or refurbishment of certain commercial premises

Summary

This section is concerned with the commercial element of the incentive scheme.

Details

Definitions

“conversion” in relation to a building or structure, means any work of conversion, reconstruction or renewal, into a building suitable for the purposes of retailing goods, or the provision of services only within the State and includes the provision or improvement of water, sewerage or heating facilities carried out, or maintenance in the nature of repair. (1)

“qualifying expenditure” is defined as capital expenditure incurred on the conversion or refurbishment of a qualifying premises, in the qualifying period, but excluding any State or public or local authority grants or payments received or receivable.

For expenditure incurred before 2026, there is a €200,000 limit on the amount of the tax relief that could be claimed under this measure in respect of any given project, and the qualifying expenditure was restricted in accordance with this limit and the limit applied by the de minimis Regulation. Finance Act 2025 removed this per project limit.

From 1 January 2026 the relief available under this section is limited to the permissible ceiling of aid under the de minimis regulations. This currently limits the tax relief available to any single undertaking to the de minimis limit of €300,000 in any 3-year period. Aid from all de minimis sources is taken into account in this limit and must be declared when making a claim.

Finance Act 2025 amended the treatment of grants. The definition of qualifying expenditure now excludes any grant or similar payment received or receivable in respect of the property, or its conversion or refurbishment. Previously an amount equal to 3 times the grant received, or receivable was deductible in line with subsection (8A), subsection (8A) was deleted in Finance Act 2025.

“qualifying premises” is defined as a building or structure the site of which is wholly within a special regeneration area and which –

• apart from this section is not an industrial building within the meaning of section 268 or deemed to be such a building or structure (this provision therefore rules out any building or structure which already qualifies for capital allowances by virtue of section 268), and is
  • in use for the purposes of the retailing of goods or the provision of services within the State, or
  • let under a lease at arms-length for either of those purposes.

Application of industrial buildings’ provisions

(2)(a) The provisions of Chapter 1 of Part 9 (relief for capital expenditure on industrial buildings or structures) are applied to capital expenditure incurred on the conversion or refurbishment of premises, which qualify under this section. The application of Chapter 1 (subject to paragraph (b) and to subsections (4) to (8) of this section) is:

• as if the premises were a mill or factory under section 268(1)(a), and
• as if any non-trading activity carried on in the premises were a trade. This provision is a mechanism to ensure that the technical rules for entitlement to industrial buildings allowances apply and does not affect the nature of any income arising from the premises e.g. if a premises is let the income arising will be chargeable under Case V but capital allowances will be available even if the activity of the lessee is not a trade.

Allowances available

(2)(b) Allowances are available only in respect of capital expenditure incurred on the refurbishment or conversion of a qualifying premises during the qualifying period.

Rate of allowances and tax life

(4) This provision sets out how the application, by subsection (2), of the provisions of Chapter 1 of Part 9 in relation to capital expenditure incurred on the conversion or refurbishment of a qualifying premises is to apply in the case of section 272. The treatment is determined by the date on which the qualifying expenditure is incurred.

(4)(a) In relation to qualifying expenditure incurred before 1 January 2026

• (4)(a)(i) Section 272(3)(a)(ii) applies as if a reference in that subsection to 4% were a reference to 15% ─ this provides that qualifying expenditure incurred in the qualifying period in relation to a qualifying premises is to be written off at the rate of 15% per annum.
• (4)(a)(ii) Section 272(4)(a)(ii) applies as if a revised subsection (4)(a)(ii) were inserted – this provides that the tax life (the period during which the relief attaching to the premises can be transferred to a new owner) of a qualifying premises in relation to

qualifying expenditure incurred on its conversion or refurbishment is 7 years from its first use subsequent to the incurring of that expenditure.

(4)(b) In relation to qualifying expenditure incurred on or after 1 January 2026

• (4)(b)(i) Section 272(3)(a)(ii) applies as if a reference in that subsection to 4% were a reference to 50% ─ this provides that qualifying expenditure incurred in the qualifying period in relation to a qualifying premises is to be written off at the rate of 50% per annum.
• (4)(b)(ii) Section 272(4)(a)(ii) applies as if a revised subsection (4)(a)(ii) were inserted – this provides that the tax life (the period during which the relief attaching to the premises can be transferred to a new owner) of a qualifying premises in relation to qualifying expenditure incurred on its conversion or refurbishment is 10 years from its first use subsequent to the incurring of that expenditure.

Balancing events

(5) This provision sets out how the application, by subsection (2), of the provisions of Chapter 1 of Part 9 in relation to capital expenditure incurred on the conversion or refurbishment of a qualifying premises is to apply in the case of section 274.

The treatment is determined by the date on which the qualifying expenditure is incurred.

• In relation to qualifying expenditure incurred before 1 January 2026, a balancing allowance or charge is not to be made if that event occurs more than 7 years after the qualifying premises was first used subsequent to the incurring of the qualifying expenditure.
• In relation to qualifying expenditure incurred after 1 January 2026, a balancing allowance or charge is not to be made if that event occurs more than 10 years after the qualifying premises was first used subsequent to the incurring of the qualifying expenditure.

Minimum spend

(6) Conversion or refurbishment expenditure incurred in the qualifying period must exceed €5,000 for relief under this section to apply.

Information to accompany claim

(6A) The following information must be provided to the Revenue Commissioners before any claim for accelerated capital allowances under this section can be made:

• the name, address and tax reference number of the person making the claim,
• the address of the premises in respect of which the expenditure was incurred,
• details of the aggregate of all expenditure incurred on the conversion or refurbishment of the qualifying premises, and
• a brief description of the nature of the retail or other commercial activity which is to be conducted from the premises

(6B) The information required under subsection (6A) will be provided to the Revenue Commissioners by electronic means and through whatever electronic systems the Revenue Commissioners may make available.

Expenditure attributable to work actually carried out

(7) Conversion or refurbishment expenditure is to be treated as incurred in the qualifying period only to the extent that it is attributable to work actually carried out in the qualifying period.

Provision against double relief

(9) Relief shall not be given in respect of capital expenditure incurred on the conversion or refurbishment of a qualifying premises, under any other provision of the Tax Acts where relief is given by virtue of this section.

Application of De Minimis Regulation

This provision limits the relief that may be claimed under this section to the permissible ceiling of aid in accordance with the de minimis Regulation. These aid limits are set out in Commission Regulation (EU) 2023/2831 of 13 December 2023 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid. The permissible ceiling of aid means the maximum amount of de minimis aid of

(11) €300,000 that may be granted to a single undertaking over any 3 year period from all sources where the aid is granted in accordance with Commission Regulation (EU) 2023/2831.

Relevant Date: Finance Act 2025