600N Qualifying partnership

Summary

Section 600N applies the relief to investments made by an individual through a qualifying partnership.

Details

(1)In order for the relief to apply, that individual must be a partner in a partnership and have contributed a minimum of €20,000 to the partnership. The partnership must also have a written partnership agreement and have as its principal business the investing of funds in line with a defined investment policy for the benefit of investors. The partnership agreement must also fulfil additional conditions as set out below.

A qualifying partnership is a partnership that—

1. (1)(a)the individual must be a partner in and has contributed a minimum of €20,000 to the partnership prior to the date of investment by the partnership in a qualifying company, and
2. (1)(b)complies with subsection (2).

(2)A partnership shall be a qualifying partnership for the purposes of this Chapter where it satisfies a number of conditions pursuant to paragraphs (a) and (b) of subsection (2).

(2)(a)A partnership shall be established under a partnership agreement and have as its principal business, to be expressed in the partnership agreement establishing the partnership, the investing of its funds in accordance with a defined investment policy for the benefit of its investors, and

(2)(b)The partnership agreement must also provide that—

1. (b)(i)the funds to be invested in eligible shares must be invested in a timely manner,
2. (b)(ii)pending investment in eligible shares, any moneys subscribed for the purchase of eligible shares are to be placed on deposit in a separate account with a licensed bank to transact in the State,
3. (b)(iii)any amounts received by means of dividends or interest cannot be subject to a commission above an amount set out in the partnership agreement, and to be paid without undue delay to the partners,
4. (b)(iv)any charges relating to the establishment, operation, winding down or termination of the partnership cannot exceed the amounts set out in the partnership agreement, and
5. (b)(v)audited partnership accounts must be prepared annually and submitted to the Revenue Commissioners when requested.

(3)Relief is available where the investment made by the partnership satisfies certain conditions as prescribed in paragraphs (a) and (b).

(3)(a)Where a qualifying partnership makes an investment in eligible shares in a qualifying company of at least €20,000, that would, if the investment was made directly in the qualifying company by the individual be a qualifying investment, then relief under section 600M shall be available to the investor in the partnership subject to certain modifications. The partnership cannot be connected to the qualifying company. The relief available to the investor in the partnership shall be apportioned to a partner.

(3)(b)Modifications to the legislation are required for a qualifying partnership and are that section 600J shall apply to an investment by a qualifying partnership as if—

1. (b)(i)section 600J(2)(b)(ii) were deleted. This means an investment must be made by the qualifying partnership for a minimum of €20,000 in eligible shares. There is no requirement that the investment satisfies a minimum percentage shareholding of 5%, and
2. (b)(ii)references to “the individual” in section 600J(2)(c) were references to “qualifying partnership”. This means the shares are required to be held by the qualifying partnership for 3 years and the shares held by the partnership do not amount to more than 49% of the ordinary share capital of the company or any company that is a member of the relief group of which the qualifying company is a member. Further, the partnership must retain a copy of the certificates of qualification.

(4)Relief available is at a reduced rate of 18% for individuals who invest via qualifying partnerships, as opposed to 16% when invested directly by individuals, as required by GBER in relation to indirect investments.

Relevant Date: Finance Act 2024