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39 1997

TAXES CONSOLIDATION ACT, 1997

CHAPTER 3

Government and other public securities: exemptions from tax

Exemption of interest on savings certificates.

[ITA67 s463]

42. —The accumulated interest payable in respect of any savings certificate issued by the Minister for Finance, under which the purchaser, by virtue of an immediate payment of a specified sum, becomes entitled after a specified period to receive a larger sum consisting of the specified sum originally paid and accumulated interest on that specified sum, shall not be liable to tax so long as the amount of such certificates held by the person who is for the time being the holder of the certificate does not exceed the amount which that person is for the time being authorised to hold under regulations made by the Minister for Finance.

Certain securities issued by Minister for Finance.

[ITA67 s464; FA92 s42(1)(a); FA97 s45]

43. —(1) Any security which the Minister for Finance has power to issue for the purpose of raising any money or loan may be issued with a condition that neither the capital of nor the interest on such security shall be liable to tax so long as it is shown in the manner to be prescribed by the Minister for Finance that such security is in the beneficial ownership of a person who is not, or persons who are not, ordinarily resident in the State, and accordingly every security issued with such condition shall be exempt from tax.

(2) (a) Notwithstanding subsection (1), where a security has been issued with the condition referred to in that subsection and the security is held by or for a branch or agency through which a company carries on a trade or business in the State, which is such a trade or business, as the case may be, that, if the security had been issued without that condition, interest on, or other profits or gains from, the security accruing to the company would be chargeable to corporation tax under Case I or, as respects interest and other profits or gains accruing on or after the 21st day of April, 1997, from the security, Case IV of Schedule D, or in accordance with section 726 , then, such interest and profits or gains shall be charged to tax as if the security had been issued without such condition.

(b) Paragraph (a) shall apply as respects securities acquired by a company after the 29th day of January, 1992, whether they were issued before or after that date.

Exemption from corporation tax of certain securities issued by Minister for Finance.

[FA85 s69]

44. —(1) In this section—

control” shall be construed in accordance with subsections (2) to (6) of section 432 , with the substitution in subsection (6) of that section for “5 or fewer participators” of “persons resident in a relevant territory”;

foreign company” means a company which is—

(a) not resident in the State, and

(b) under the control of a person or persons resident in a relevant territory;

qualifying company” means a company—

(a) (i) which is resident in the State and not resident elsewhere,

(ii) whose business consists wholly or mainly of—

(I) the carrying on of a relevant trade or relevant trades, or

(II) the holding of stocks, shares or securities of a company which exists wholly or mainly for the purpose of the carrying on of a relevant trade or relevant trades,

and

(iii) of which not less than 90 per cent of its issued share capital is held by a foreign company or foreign companies, or by a person or persons directly or indirectly controlled by a foreign company or foreign companies,

or

(b) which is a foreign company carrying on a relevant trade through a branch or agency in the State;

relevant territory” means the United States of America or a territory with the government of which arrangements having the force of law by virtue of section 826 have been made;

relevant trade” means a trade carried on wholly or mainly in the State, but does not include a trade consisting wholly or partly of—

(a) banking within the meaning of the Central Bank Act, 1971 ,

(b) assurance business within the meaning of section 3 of the Insurance Act, 1936 ,

(c) selling goods by retail, or

(d) dealing in securities,

but goods shall be deemed for the purposes of this definition not to be sold by retail if they are sold to—

(i) a person who carries on a trade of selling goods of the class to which the goods so sold to such person belong,

(ii) a person who uses goods of that class for the purposes of a trade carried on by such person, or

(iii) a person, other than an individual, who uses goods of that class for the purposes of an undertaking carried on by such person.

(2) Any security which the Minister for Finance has power to issue for the purpose of raising any money or loan may be issued with a condition that any interest arising on such security shall not be liable to corporation tax so long as the security is held continuously from the date of issue in the beneficial ownership of a qualifying company to which the security was issued.

Exemption of non-interest-bearing securities.

[ITA67 s465; FA74 s86 and Sch2 PtI; FA84 s28and FA90 s138]

45. —(1) The excess of the amount received on the redemption of a unit of non-interest-bearing securities issued by the Minister for Finance under section 4 of the Central Fund Act, 1965 , over the amount paid for the unit on its issue shall, except where the excess is to be taken into account in computing for the purposes of taxation the profits of a trade, be exempt from tax.

(2) Subsection (1) shall not apply to issues of securities to which subsection (3) applies made after the 25th day of January, 1984, unless a tender for any such securities was submitted on or before that date.

(3) The securities to which this subsection applies are—

(a) non-interest-bearing securities issued by the Minister for Finance at a discount, including Exchequer Bills and Exchequer Notes, and

(b) Agricultural Commodities Intervention Bills issued by the Minister for Agriculture and Food.

(4) (a) In this subsection, “owner”, in relation to securities, means at any time the person who would be entitled, if the securities were redeemed at that time by the issuer, to the proceeds of the redemption.

(b) Notwithstanding subsection (2), where the owner of a security to which subsection (3) applies—

(i) sells or otherwise disposes of the security, or

(ii) receives on redemption of the security an amount greater than the amount paid by such owner for that security either on its issue or otherwise,

then, any profit, gain or excess arising to the owner from such sale, disposal or receipt shall be exempt from tax where the owner is not ordinarily resident in the State; but this subsection shall not apply in respect of corporation tax chargeable on the income of an Irish branch or agency of a company not resident in the State.

Exemption of premiums on Investment Bonds.

[F(No.2)A68 s8; FA 74 s86 and Sch2 PtI]

46. —The excess of the amount received on the redemption of a unit of securities created and issued by the Minister for Finance under the Central Fund (Permanent Provisions) Act, 1965 , and known as Investment Bonds, over the amount which was paid for the unit on its issue shall, except where the excess is to be taken into account in computing for the purposes of taxation the profits of a trade, be exempt from tax.

Certain securities of ACC Bank plc.

[ITA67 s468(3)]

47. —Debentures, debenture stock and certificates of charge issued by ACC Bank plc, shall not be liable to tax so long as it is shown in the manner to be prescribed by the Minister for Finance that they are in the beneficial ownership of persons neither domiciled nor ordinarily resident in the State.

Exemption of premiums on certain securities.

[FA69 s63; FA70 s59(1) and (6); FA73 s92(1) and (2)(b); FA74 s86 and Sch2 PtI; FA84 s28; FA89 s98(1); FA90 s138; FA94 s161(1) and (2)(b); FA97 s34]

48. —(1) The securities to which this subsection applies are—

(a) securities created and issued by the Minister for Finance under the Central Fund (Permanent Provisions) Act, 1965 , or under any other statutory powers conferred on that Minister, and any stock, debenture, debenture stock, certificate of charge or other security issued with the approval of the Minister for Finance given under any Act of the Oireachtas and in respect of which the payment of interest and repayment of capital is guaranteed by the Minister for Finance under that Act, but excluding securities to which section 4 of the Central Fund Act, 1965 , or section 45 (1) or 46 applies,

(b) securities (other than securities specified in the Table to section 37 ) issued by a body corporate and in respect of which the payment of interest and the repayment of principal is guaranteed by a Minister of the Government under statutory authority,

(c) any stock or other form of security issued in the State by the European Community, the European Coal and Steel Community, the European Atomic Energy Community or the European Investment Bank, and

(d) any stock or other form of security issued by the International Bank for Reconstruction and Development.

(2) The excess of the amount received on the redemption of a unit of securities to which subsection (1) applies over the amount paid for the unit on its issue shall, except where the excess is to be taken into account in computing for the purposes of taxation the profits of a trade, be exempt from tax.

(3) Subsection (2) shall not apply to issues of securities to which subsection (4) applies made after the 25th day of January, 1984, unless a tender for any such securities was submitted on or before that date.

(4) The securities to which this subsection applies are—

(a) non-interest-bearing securities issued by the Minister for Finance at a discount, including Exchequer Bills and Exchequer Notes,

(b) Agricultural Commodities Intervention Bills issued by the Minister for Agriculture and Food, and

(c) strips within the meaning of section 54 (10) of the Finance Act, 1970 (inserted by section 161 of the Finance Act, 1997).

(5) (a) In this subsection, “owner”, in relation to securities, means at any time the person who would be entitled, if the securities were redeemed at that time by the issuer, to the proceeds of the redemption.

(b) Notwithstanding subsection (3), where the owner of a security to which subsection (4) applies—

(i) sells or otherwise disposes of the security, or

(ii) receives on redemption of the security an amount greater than the amount paid by the owner for that security either on its issue or otherwise,

any profit, gain or excess arising to the owner from such sale, disposal or receipt shall be exempt from tax where the owner is not ordinarily resident in the State; but this subsection shall not apply in respect of corporation tax chargeable on the income of an Irish branch or agency of a company not resident in the State.

Exemption of certain securities.

[ITA67 s474; FA92 s42(1)(c); FA97 s47, s146(1) and Sch9 PtI par1 (32)]

49. —(1) This section shall apply to any stock or other security on which interest is payable without deduction of tax by virtue of a direction given by the Minister for Finance in pursuance of section 37 , 38 , 39 , 40 or 41 .

(2) Any stock or other security to which this section applies may be issued with either or both of the following conditions—

(a) that neither the capital of nor the interest on the stock or other security shall be liable to tax so long as it is shown in the manner directed by the Minister for Finance that the stock or other security is in the beneficial ownership of persons who are neither domiciled nor ordinarily resident in the State, and

(b) that the interest on the stock or other security shall not be liable to tax so long as it is shown in the manner directed by the Minister for Finance that the stock or other security is in the beneficial ownership of persons who, though domiciled in the State, are not ordinarily resident in the State,

and accordingly, as respects every such stock or other security so issued, exemption from tax shall be granted.

(3) (a) Notwithstanding subsection (2), where a security to which this section applies has been issued with either or both of the conditions referred to in that subsection and the security is held by or for a branch or agency through which a company carries on a trade or business in the State, which is such a trade or business, as the case may be, that, if the security had been issued without either of those conditions, interest on, or other profits or gains from, the security accruing to the company would be chargeable to corporation tax under Case I or, as respects interest and other profits or gains accruing on or after the 21st day of April, 1997, from the security, Case IV of Schedule D, or in accordance with section 726 , then, such interest and profits or gains shall be charged to tax as if the security had been issued without either of those conditions.

(b) Paragraph (a) shall apply as respects securities acquired by a company after the 15th day of May, 1992, whether they were issued before or after that date.

Securities of Irish local authorities issued abroad.

[ITA67 s470; FA92 s42(1)(b); FA97 s46]

50. —(1) In this section, “local authority” includes any public body recognised as a local authority for the purpose of this section by the Minister for the Environment and Local Government.

(2) Securities issued outside the State by a local authority in the State for the purpose of raising any money which the local authority is authorised to borrow, if issued under the authority of the Minister for Finance, shall not be liable to tax, except—

(a) where they are held by persons domiciled in the State or ordinarily resident in the State, or

(b) as respects securities acquired by a company after the 15th day of May, 1992, whether they were issued before or after that date, where they are held by or for a branch or agency through which a company carries on a trade or business in the State which is such a trade or business, as the case may be, that, if this section had not been enacted, interest on, or other profits or gains from, the securities accruing to the company would be chargeable to corporation tax under Case I or, as respects interest and other profits or gains accruing on or after the 21st day of April, 1997, from the securities. Case IV of Schedule D, or in accordance with section 726 .