Revenue Note for Guidance

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Revenue Note for Guidance

396C Relief from Corporation Tax for losses of participating institutions


This section was inserted by section 240 and Schedule 3 of the National Asset Management Agency Act 2009. It places a limit on the amount of the trading income of a participating institution, and all other participating institutions within the same group, against which losses forward may be set off in any accounting period.

The section does this by—

  • firstly setting a “relevant amount” for each accounting period. This relevant amount is determined by aggregating the trading income and trading losses of each group company in the period and then taking a fixed percentage of 50 per cent of that aggregate figure, and
  • secondly by allocating that “relevant amount” between the companies in the group on the basis of each company’s share in the trading income of the group. This share in the group “relevant amount” is defined as the “relevant limit”.

The effect is that a participating institution can claim relief under section 396(1) for any losses incurred in previous accounting periods but only up to this relevant limit. Where a participating institution has unused losses forward, it may transfer an amount of those excess losses to another group company participating in the NAMA scheme provided that:

  • the transferee company has sufficient income, having availed of its own losses forward, to fully use the amount transferred, and
  • the total of the amount transferred together with the transferee’s own losses forward does not exceed the transferee’s relevant limit.

The net effect of the measure is that, taking the group of participating institutions as a whole, the total amount of losses forward that can be offset against the income of the group will not exceed 50 per cent of the groups income.



(1)(a) “available losses” in relation to an accounting period of a participating institution, means the amount of losses carried forward by a participating institution from previous accounting periods for which relief is available in accordance with section 396(1) in that accounting period or in succeeding accounting periods;

“group company” is defined in relation to a participating institution and means a company which is itself a participating institution and has an accounting period that coincides with the accounting period of the participating institution, where throughout the accounting period of the participating institution:

  1. the company is a subsidiary of the participating institution,
  2. the participating institution is a subsidiary of the company, or
  3. both the company and the participating institution are subsidiaries of a third company.

“participating institution” and “subsidiary” have the same meanings as in section 4 of the National Asset Management Agency Act 2009.

“relevant amount” is the amount of income which can be sheltered by losses forward in any one year. It is calculated by taking 50% of the sum of the trading income and trading losses of a participating institution and all of its group companies in an accounting period.

“relevant limit” is the proportion of the relevant amount applicable to each group company. It is calculated by applying to the relevant amount, the same proportion as the company’s income is to the group total income before losses.

This proportion is calculated by the formula-

A × B




is the relevant amount for the group (i.e. 50% of the net trading income of the participating institution and all of its group companies), amount.


is the gross trading income of the participating institution, and


is the gross trading income of the group.

(1)(b)(i) An accounting period of a company coincides with that of another company where the company’s accounting period begins and ends on the same day as the other company’s accounting period.

(1)(b)(ii) Only trading income and trading losses of Irish resident companies and Irish branches of non-resident companies come within the scope of the legislation.

Limit on relief

(2) Where for any accounting period, a participating institution makes a claim under section 396(1) for relief in respect of available losses incurred or deemed, under subsection (3), to have been incurred in a trade carried on by that institution, the amount of the losses which may be set off against trading income of the trade in that accounting period cannot exceed the relevant limit of the participating institution for that period.

(3)(a) This subsection provides for situations where a participating institution is unable to use all or some of its losses due to an insufficiency of income. In such cases, the participating institution can surrender the loss or part of the loss to a group company (the transferee company). The amount surrendered cannot exceed the relevant limit of the transferee company (after taking account of its own loss relief). The transferee company must make a claim for the amount surrendered and where it does so, that amount is deemed to be a loss incurred in its own trade for the purpose of making a claim for relief under section 396(1). In such cases, the transferee’s income is treated as reduced by the amount transferred and the surrendering company’s available losses are reduced by a similar amount.

(3)(b) Two or more companies can use losses surrendered to them by another participating institution but in such cases, relief is not to be given more than once in respect of the same amount.

(3)(c) The conditions for claiming the relief are:

  1. the claim must be made on the Corporation Tax return of the claimant company,
  2. the consent of the surrendering company is required, and
  3. the claim must be made within 2 years of the end of the surrendering company’s accounting period.

(4)(a) Where an inspector discovers that any group relief given is excessive, he or she may make an assessment to Corporation Tax under Case I of Schedule D in the amount which should in his/her opinion be charged.

(4)(b) Paragraph (a) is without prejudice to Chapter 5 of Part 41 which deals with the making of amended assessments or to the making of all such adjustment or discharges as achieve a correct result when group relief has been allowed in an excess amount.

(5) Subsection (5) provides that the restriction will come into effect in respect of claims for loss relief made in respect of accounting periods commencing on or after, the passing of the National Asset Management Agency Act 2009 and does not have effect for any accounting period commencing on or after 1 January 2014.

Relevant Date: Finance Act 2021