Taxes Consolidation Act, 1997 (Number 39 of 1997)
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502 Prevention of misuse.
[FA84 s21]
An individual shall not be entitled to relief in respect of any shares unless the shares are subscribed and issued for bona fide commercial purposes and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
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502 Assessments for withdrawing relief.
(1) Where any relief has been given which is subsequently found not to have been due, that relief shall be withdrawn by the making of an assessment to income tax under Case IV of Schedule D for the year of assessment for which the relief was given.
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(2) Where any relief given in respect of shares for which either a married person or his or her spouse has subscribed, and which were issued while the married person was assessed in accordance with section 1017, is to be withdrawn by virtue of a subsequent disposal of those shares by the person who subscribed for them and at the time of the disposal the married person is not so assessable, any assessment for withdrawing that relief shall be made on the person making the disposal and shall be made by reference to the reduction of tax flowing from the amount of the relief regardless of any allocation of that reduction under subsections (2) and (3) of section 1024 or of any allocation of a repayment of income tax under section 1020.
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(2) (a) Where any relief given in respect of shares for which either a married person or his or her spouse has subscribed, and which were issued while the married person was assessed in accordance with section 1017, is to be withdrawn by virtue of a subsequent disposal of those shares by the person who subscribed for them and at the time of the disposal the married person is not so assessable, any assessment for withdrawing that relief shall be made on the person making the disposal and shall be made by reference to the reduction of tax flowing from the amount of the relief regardless of any allocation of that reduction under subsections (2) and (3) of section 1024 or of any allocation of a repayment of income tax under section 1020.
(b) Where any relief given in respect of shares for which either a nominated civil partner or the other civil partner has subscribed, and which were issued while the nominated civil partner was assessed in accordance with section 1031C, is to be withdrawn by virtue of a subsequent disposal of those shares by the person who subscribed for them and at the time of the disposal the nominated civil partner is not so assessable, any assessment for withdrawing that relief shall be made on the person making the disposal and shall be made by reference to the reduction of tax flowing from the amount of the relief regardless of any allocation of that reduction under subsections (2) and (3) of section 1031I or of any allocation of a repayment of income tax under section 1031E.
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(3) Subject to this section, any assessment for withdrawing relief which is made by reason of an event occurring after the date of the claim may be made within 4 years after the end of the year of assessment in which that event occurs.
(4) No assessment for withdrawing relief in respect of shares issued to any person shall be made by reason of any event occurring after his or her death.
(5) Where a person has, by a disposal or disposals to which section 496(1)(b) applies, disposed of all the ordinary shares issued to the person by a company, no assessment for withdrawing relief in respect of any of those shares shall be made by reason of any subsequent event unless it occurs at a time when the person is connected with the company within the meaning of section 492.
(6) Subsection (3) is without prejudice to [3]>section 924(2)(c)<[3][3]>section 959AD<[3].
(7) In its application to an assessment made by virtue of this section, section 1080 applies as if the date on which the income tax charged by the assessment becomes due and payable were—
(a) in the case of relief withdrawn by virtue of section 492, 494, 495, 498(2) or 499(1) in consequence of any event after the grant of the relief, the date of that event;
(b) in the case of relief withdrawn by virtue of section 496(1) in consequence of a disposal after the grant of the relief, the date of the disposal;
(c) in the case of relief withdrawn by virtue of section 497 in consequence of a receipt of value after the grant of the relief, the date of the receipt;
(d) in the case of relief withdrawn by virtue of section 500—
(i) in so far as effect has been given to the relief in accordance with regulations under section 986, the [4]>5th day of April<[4][4]>31st day of December<[4] in the year of assessment in which effect was so given, and
(ii) in so far as effect has not been so given, the date on which the relief was granted;
(e) in the case of relief withdrawn by virtue of—
(i) a specified individual failing or ceasing to hold a relevant employment, or
(ii) an individual ceasing to be a specified individual,
the date of the failure or the cessation, as the case may be.
(8) For the purposes of subsection (7), the date on which the relief shall be granted is the date on which a repayment of tax for giving effect to the relief was made or, if there was no such repayment, the date on which the inspector issued a notice to the claimant showing the amount of tax payable after giving effect to the relief.
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502. The relief (Chapter 4)
(1) In this section—
““basic pay rate””, in relation to a qualifying employee of a qualifying company, or a qualifying subsidiary as the case may be, means the employee’’s emoluments (other than non-pecuniary emoluments) per hour from the company in respect of an employment held with the company;
““employment relevant number”” means the total number of qualifying employees in receipt of emoluments from the qualifying company, or a qualifying subsidiary as the case may be, in the year of assessment in which, in relation to a subscription for eligible shares, a subsequent period ends;
““employment threshold number”” means the total number of qualifying employees in receipt of emoluments from the qualifying company, or a qualifying subsidiary as the case may be, in the year of assessment preceding the year of assessment in which the subscription for eligible shares was made;
““qualifying employee””, in relation to a qualifying company, or a qualifying subsidiary as the case may be, means an employee (within the meaning of section 983), other than a director, of that company—
(a) who throughout his or her period of employment with that company is employed by that company for at least 30 hours duration per week, and
(b) his or her employment is capable of lasting at least 12 months;
““relevant amount”” means total emoluments (other than non-pecuniary emoluments) paid by a qualifying company, or a qualifying subsidiary as the case may be, to qualifying employees as referred to in the definition of ‘‘employment relevant number’’, in the year of assessment in which, in relation to a subscription for eligible shares, a subsequent period ends;
““threshold amount”” means the total of the emoluments (other than non-pecuniary emoluments) paid by a qualifying company, or a qualifying subsidiary as the case may be, to the qualifying employees referred to in the definition of ‘employment threshold number", in the year of assessment preceding the year of assessment in which the subscription for eligible shares was made but where there was a general reduction in the basic pay rate of qualifying employees then the threshold amount shall be reduced accordingly;
““subsequent period”” means the period beginning on the date on which the shares were issued and ending 3 years after that date.
(2) [6]>A qualifying investor who makes a qualifying investment in a qualifying company shall be entitled, subject to this section, to relief for——<[6][6]>In respect of shares issued on or before 8 October 2019, a qualifying investor who makes a qualifying investment in a qualifying company shall be entitled, subject to this section, to relief for—<[6]
(a) thirty fortieths of the amount subscribed, which shall be given, subject to section 508J(4), as a deduction from his or her total income for the year of assessment in which the shares are issued, and
(b) subject to subsection (4), ten fortieths of the amount subscribed, which shall be given as a deduction from his or her total income for the year of assessment following the year of assessment in which the subsequent period ends.
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(2A) In respect of shares issued after 8 October 2019, a qualifying investor who makes a qualifying investment in a qualifying company shall be entitled, subject to this section, to relief for the full amount subscribed, which shall be given, subject to section 508J(4), as a deduction from his or her total income for the year of assessment in which the shares are issued.
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(3) In a year of assessment the maximum qualifying investment in respect of which an investor may claim relief under this Part is €€150,000.
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(3) (a) The maximum qualifying investment in respect of which an investor may claim relief under this Part is—
(i) €150,000 in respect of the year of assessment 2019,
(ii) in respect of the year of assessment 2020 and each subsequent year of assessment—
(I) €500,000 in respect of an investment to which paragraph (b) applies, or
(II) €250,000 in respect of all other investments.
(b) This paragraph applies to an investment in eligible shares where the investor undertakes not to dispose of those shares for a period of 7 years, and for the purposes of applying sections 508M and 508P to this investment, the definition of relevant period in section 488(1), shall be read as if the reference to ‘4 years’ were a reference to ‘7 years’.
(c) A qualifying investor shall, for a qualifying investment, provide to the Revenue Commissioners, through such electronic means as the Revenue Commissioners make available, such information as the Revenue Commissioners may require for the purposes of paragraph (a).
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(4) [9]>An amount shall not be given as a deduction under subsection (2)(b) unless in relation to a qualifying company and its qualifying subsidiaries——<[9][9]>In respect of shares issued on or before 8 October 2019, an amount shall not be given as a deduction under subsection (2)(b) unless in relation to a qualifying company and its qualifying subsidiaries—<[9]
(a) (i) the employment relevant number exceeds the employment threshold number by at least one qualifying employee, and
(ii) the relevant amount exceeds the threshold amount by at least the total emoluments of one qualifying employee in the year of assessment in which the subsequent period ends,
or
(b) the amount of expenditure on R&D+I incurred in the year of assessment in which the subsequent period ends exceeds the amount of expenditure on R&D+I incurred in the year of assessment prior to the year of assessment in which the subscription for eligible shares was made.
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(5) In respect of shares issued on or after 1 January 2022, an amount equal to ten fortieths of the relief granted under subsection (2A) shall be withdrawn, unless in relation to a qualifying company and its qualifying subsidiaries—
(a) (i) the employment relevant number exceeds the employment threshold number by at least one qualifying employee, and
(ii) the relevant amount exceeds the threshold amount by at least the total emoluments of one qualifying employee in the year of assessment in which the subsequent period ends,
or
(b) the amount of expenditure on R&D+I incurred in the year of assessment in which the subsequent period ends exceeds the amount of expenditure on R&D+I incurred in the year of assessment prior to the year of assessment in which the subscription for eligible shares was made.
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Substituted by FA11 s33(1)(a). Has effect in respect of shares issued on or after 25 November 2011. Note: FA 12 s26 (2) amends FA 11 s33 and provides: (b) This section does not have effect in respect of shares issued before 25 November 2011 and, for all the purposes of Part 16 in connection with those shares, the Principal Act has effect as if this section had not been enacted. (c) This section does not have effect in respect of shares issued on or after 25 November 2011 and on or before 31 December 2011 where— (i) the company issuing the shares, or (ii) where the shares are acquired by an investment fund, the fund acquiring the shares, elects by notice in writing to the Revenue Commissioners on or before 31 December 2011 that, for all the purposes of Part 16 in connection with those shares, the Principal Act has effect as if this section had not been enacted.
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Substituted by FA18 s25(1). Has effect as respects shares issued on or after 1 January 2019.