617 Transfers of assets, other than trading stock, within group

Summary

This section provides that the disposal of a chargeable asset (other than trading stock) within a group of companies is to be treated as having been for a consideration of such an amount that neither a gain nor a loss accrues to the company making the disposal. Certain financial transactions are excluded. Where the consideration for a disposal consists of compensation for damage to an asset, the disposal is to be treated as being to the person who ultimately bears the burden. In the case of the transfer of a specified intangible asset within the meaning of section 291A, the section allows companies to opt out of the capital gains tax group relief provision so that the acquiring company may claim capital allowances under section 284, as applied by section 291A.

Details

Relief for transfer of assets in a group

(1) Where a member of a group of companies disposes of a chargeable asset to another member of the group the disposal is to be treated as if the consideration received by the company making the disposal is such that it gives rise to neither a gain nor a loss provided certain conditions are met.

These are that —

• the transaction is between members of a group of companies,
• the company transferring the asset is resident in the State at the time of transfer or the asset is a chargeable asset in relation to that company immediately before the time of transfer, and

• the company acquiring the asset is resident in the State at the time of transfer or the asset is a chargeable asset in relation to that company immediately after the time of transfer and is not an authorised investment company (within the meaning of Part 24 of the Companies Act 2014) that is an investment undertaking (within the meaning of section 739B) or a Real Estate Investment Trust or group Real Estate Investment Trust (both within the meaning of section 705A) or an authorised ICAV (within the meaning of section 2 of the Irish Collective Asset-management Vehicles Act 2015).

As set out in section 616 membership of a group is open to companies resident in Member States of the European Union and to companies resident in Member States of the EEA with whom Ireland has a tax treaty.

Exceptions

(2) Excluded from the relief are —

• a disposal that consists of paying off a debt (that is, one member of a group pays off the debt of another),
• a disposal that consists of redeeming shares (that is, where shares in one member of a group are owned by another member and are redeemed), and
• a disposal in consideration for a capital distribution (see section 583).

Compensation for destruction or damage of an asset

(3) Where the consideration received on a disposal of an asset from one group member to another takes the form of compensation for damage or injury to the asset, the consideration is deemed to be received from the person who ultimately bears the burden of the consideration (be that the insurer or otherwise).

Election to disapply this section in the case of the disposal of a specified intangible asset

(4) This section will not apply to the disposal of a specified intangible asset by one group member to another group member where both the company disposing of the asset and the company acquiring the asset so elect by giving notice in writing to the Collector-General, not later than 12 months from the end of the accounting period in which the other member of the group acquired the asset.

Meaning of “group of companies”

(5) For the purposes of the section, a “group of companies” includes companies which, under the law of a relevant Member State or other territory with which this country has a double tax treaty, are resident for tax purposes in such Member State or territory. In this context, “tax” means any tax in the Member State or territory which corresponds to corporation tax in the State.

Relevant Date: Finance Act 2021