835AAL Application of Part to interest group

Summary

This section details how the provisions of earlier sections are to apply to an interest group.

Details

(1) This section applies where a company is a member of an interest group.

(2) This subsection provides that where the interest limitation in section 835AAC applies to an interest group, references to a disallowable amount of a relevant entity are read as references to a disallowable amount of a member an interest group, calculated or allocated under subsection (6), (7) or (8).

(3) Any amount to be calculated in respect of an interest group for the purposes of Part 35D (3) will comprise the results of all members of the interest group.

(4) The accounting period of an interest group will be the period that is common to most members of the interest group, and if no such period exists, it will be the accounting period of the reporting company.

(5) Where the accounting period of a member of an interest group does not coincide with the accounting period of the interest group, then the income and expenses of the group member will be those that arose during the accounting period of the interest group, apportioned on a just and reasonable basis. In addition, all balance sheet amounts of the group member will be taken to be the amounts which would be reflected in the balance sheet of the member of the interest group on the final day of the accounting period of the interest group.

(6) Subject to subsections (7) and (8), the disallowable amount of a member of an interest group for an accounting period will be calculated as a fraction of the disallowable amount of the interest group, by reference to the deductible interest equivalent of the member and of the interest group.

(7) Under this subsection, a reporting company and each member of the interest group concerned may jointly notify the Revenue Commissioners of an allocation of disallowable amount other than the allocation as described in subsection (6).

(8) A disallowable amount allocated under subsection (7) to a member of the interest group cannot exceed the deductible interest equivalent of that group member for the accounting period.

(9) Subject to subsection (10), the total spare capacity of a member of an interest group for an accounting period will be calculated as a fraction of the total spare capacity of the interest group by reference to the taxable interest equivalent of the member and of the interest group.

(10) Under this subsection, a reporting company and each member of the interest group concerned may jointly notify the Revenue Commissioners of an allocation of total spare capacity other than the allocation as described in subsection (9).

(11) In applying section 835AAD (carry forward of disallowable amount) and section 835AAE (carry forward of total spare capacity) to an interest group, the references to relevant entity are read as references to a member of an interest group.

(12) An amount of total spare capacity that is being carried forward by a member of an interest group may be reallocated to other members of an interest group for an accounting period where the reporting company and the members of the interest group concerned notify the Revenue Commissioners in the form made available.

(13) Subject to subsection (14), when calculating the equity ratio for an interest group, the amounts used in the calculation for equity and total assets are based on a consolidation of the results of all members of the interest group (as if each member of the interest group had a common ultimate parent resident in the State) prepared under the same body of accounting standards as applies to the ultimate consolidated financial statements of the worldwide group.

(14) Where members of an interest group hold investments in subsidiaries which are not members of an interest group, and those investments would but for this subsection be fully consolidated in the results of the members of an interest group prepared pursuant to subsection (13), then those investments are accounted for at cost (measured at the lower of their carrying amount and fair value less costs to sell), as if the interest group was a single company preparing non-consolidated financial statements.

(15) Where a payment is made for the allocation of deemed borrowing cost or total spare capacity from one member of an interest group to another, that payment will not be taken into account in calculating the profits or losses of either company and will not be regarded as a distribution or a charge on income for the purposes of the Corporation Tax Acts where the value of the payment does not exceed the tax value of the amount allocated.

Relevant Date: Finance Act 2021