Finance Act 2022
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Interest limitation | ||
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39. (1) Section 400 of the Principal Act is amended, in subsection (7A), by the substitution of “section 835AAD(8)” for “section 835AAD(8) or (10) ”. | ||
(2) Part 35D of the Principal Act is amended— | ||
(a) in section 835AY, in subsection (1)— | ||
(i) by the substitution of the following definition for the definition of ‘consolidating entity’: | ||
“‘consolidating entity’ means an entity, other than a non-consolidating entity, which is included in the ultimate consolidated financial statements or would be included in the ultimate consolidated financial statements but for being excluded by the ultimate parent on materiality grounds under generally accepted accounting practice or an alternative body of accounting standards;”, | ||
(ii) in the definition of “interest equivalent”— | ||
(I) by the insertion of the following paragraph after paragraph (c): | ||
“(ca) any amounts referred to in paragraph (a) or (b) claimed by a claimant company under section 420A(3) or 420B(2) that are treated under section 247(4G) for the purposes of Chapter 5 of Part 12 as relevant trading charges on income (within the meaning of section 243A),”, | ||
(II) in paragraph (e), by the substitution of “amounts economically equivalent to interest,” for “amounts economically equivalent to interest, and”, | ||
(III) in paragraph (f), by the substitution of “to be economically equivalent to interest, and” for “to be economically equivalent to interest;”, and | ||
(IV) by the insertion of the following paragraph after paragraph (f): | ||
“(g) any amounts referred to in paragraphs (a) to (f) treated for the purposes of section 83, in accordance with subsection (3) of that section, as if those amounts had been disbursed as expenses of management;”, | ||
and | ||
(iii) in the definition of “large scale asset”— | ||
(I) in paragraph (h), by the substitution of “Regulation of Utilities,” for “Regulation of Utilities, or”, | ||
(II) in paragraph (i), by the substitution of “section 835AAA(1), or” for “section 835AAA(1),” and | ||
(III) by the insertion of the following paragraph after paragraph (i): | ||
“(j) a large-scale residential development within the meaning of the Planning and Development Act 2000 , approved by a planning authority under section 34 or section 170 of that Act,”, | ||
(b) in section 835AZ— | ||
(i) in subsection (1)— | ||
(I) in paragraph (i), by the substitution of “but for this Part,” for “but for this Part, and”, | ||
(II) in paragraph (ii), by the substitution of “but for this Part, and” for “but for this Part.”, and | ||
(III) by the insertion of the following paragraph after paragraph (ii): | ||
“(iii) the amount of the excess referred to in subsection (2) of section 420B as it relates to interest on a loan to which section 247(4G) applies, to the extent relief may be claimed under that subsection, but for this Part.”, | ||
(ii) in subsection (4), by the substitution of the following paragraph for paragraph (c): | ||
“(c) amounts set off under section 420 or 420A other than: | ||
(i) interest treated as a charge on income that may be set off under section 420(6), but for this Part, | ||
(ii) expenses of management that may be set off under section 420(3), but for this Part, and | ||
(iii) interest treated as a charge on income that may be set off under section 420A(3), but for this Part.”, | ||
(c) in section 835AAB, by the insertion of the following subsection after subsection (2): | ||
“(2A) Where a debt, consisting in part of legacy debt and in part of debt which is not legacy debt, is repaid in part, the part so repaid shall be treated for the purposes of this Part as being a repayment of that part of the debt which is legacy debt in priority to that part of the debt which is not legacy debt.”, | ||
(d) in section 835AAD, by the substitution of the following subsection for subsection (15): | ||
“(15) The aggregate in an accounting period of— | ||
(a) the deemed borrowing cost utilised under sections (3), (8) and (12), and | ||
(b) a deduction in respect of an amount which, pursuant to subsection (19), was treated as an amount of interest for which relief could not be given by virtue of section 291A(6)(a) for the purposes of section 291A(6)(b)(ii), | ||
shall be limited to the amount of the total spare capacity in the accounting period.”, | ||
(e) in section 835AAE— | ||
(i) in subsection (6) by the substitution of “under subsection (3), (8) or (12)” for “under subsection (3), (8) or (10) ”, and | ||
(ii) by the insertion of the following subsection after subsection (6): | ||
“(7) Where an amount that is not deductible in respect of a deemed borrowing cost under section 835AAD(19) is deducted in a subsequent accounting period, having been treated as an amount of interest for which relief cannot be given by virtue of section 291A(6)(a) for the purposes of section 291A(6)(b)(ii), the amount of total spare capacity available for any subsequent claims or deductions shall be reduced by the amount so deducted.”, | ||
(f) in section 835AAG, in subsection (1)— | ||
(i) by the substitution of the following definition for the definition of “group EBITDA”: | ||
“‘group EBITDA’ means the amount included in respect of profit or loss, before taking into account any amount of income tax, finance income, finance costs, depreciation, amortisation or impairments, excluding any amounts in respect of a qualifying long-term infrastructure project, in the ultimate consolidated financial statements of the worldwide group or single company worldwide group, as the case may be, of which the relevant entity is a member for the period in which the relevant entity’s accounting period ends;”, | ||
and | ||
(ii) by the substitution of the following definition for the definition of “group exceeding borrowing costs”: | ||
“‘group exceeding borrowing costs’ means the amount included in respect of net finance expense, excluding any amount of finance income or finance expense in respect of a qualifying long-term infrastructure project, in the ultimate consolidated financial statements of the worldwide group or single company worldwide group, as the case may be, of which the relevant entity is a member for the period in which the relevant entity’s accounting period ends;”, | ||
and | ||
(g) in section 835AAI, by the insertion of the following subsection after subsection (1): | ||
“(1A) The ratio of equity over total assets for a relevant entity for an accounting period shall be calculated on the basis of financial statements that are prepared in accordance with— | ||
(a) the same body of accounting standards, and | ||
(b) the same accounting policies, | ||
that apply to the ultimate consolidated financial statements of the worldwide group of which the relevant entity is a member.”. | ||
(3) Subsections (1) and (2) shall apply for accounting periods commencing on or after 1 January 2023. | ||
(4) Section 959AR of the Principal Act is amended, in subsection (4), by the substitution of the following paragraph for paragraph (b): | ||
“(b) for accounting periods commencing on or after 1 January 2022 and ending on or before 31 December 2027— | ||
(i) the preliminary tax paid by the chargeable person for the accounting period in accordance with subsection (1) is less than 90 per cent of the tax payable by the chargeable person for the accounting period, | ||
(ii) the preliminary tax so paid by the chargeable person for the accounting period is not less than 90 per cent of the amount of tax which would be payable by the chargeable person for the accounting period if no amount were included in the company’s profits for the accounting period— | ||
(I) in respect of chargeable gains on the disposal of assets in the part of the accounting period which is after the date by which preliminary tax for the accounting period is payable in accordance with subsection (1), | ||
(II) in the case of a relevant company, in respect of profits or gains or losses accruing, and not realised, in the accounting period on financial assets or financial liabilities as are attributable to changes in value of those assets or liabilities in the part of the accounting period which is after the end of the month immediately preceding the month in which preliminary tax for the accounting period is payable in accordance with subsection (1), or | ||
(III) in respect of a disallowable amount (within the meaning of Part 35D), | ||
(iii) the chargeable person makes a further payment, if required, of preliminary tax for the accounting period within one month after the end of the accounting period and the aggregate of that payment and the preliminary tax paid by the chargeable person for the accounting period in accordance with subsection (1) is not less than 90 per cent of the tax payable by the chargeable person for the accounting period if no amount were included in the company’s profits for the accounting period in respect of a disallowable amount (within the meaning of Part 35D), | ||
(iv) the chargeable person makes a further payment of preliminary tax, if required, for the accounting period within a period of 6 months after the end of the accounting period, but where the last day of that period of 6 months is later than day 21 of the month in which it occurs, the further payment of preliminary tax for the accounting period is paid no later than— | ||
(I) day 21 of the month in which that last day occurs, or | ||
(II) where payment is made by such electronic means as are required by the Revenue Commissioners, day 23 of the month in which that last day occurs, | ||
and | ||
(v) following the making of any payment referred to in subparagraph (iii) or (iv), the aggregate of those payments and the preliminary tax paid by the chargeable person for the accounting period in accordance with subsection (1) is not less than 90 per cent of the tax payable by the chargeable person for the accounting period,”. | ||
(5) Section 959AS of the Principal Act is amended— | ||
(a) in subsection (1), by the substitution of “preliminary tax appropriate to a relevant accounting period” for “preliminary tax appropriate to an accounting period”, and | ||
(b) in subsection (7), by the substitution of the following paragraph for paragraph (b)— | ||
“(b) for accounting periods commencing on or after 1 January 2022 and ending on or before 31 December 2027— | ||
(i) the aggregate of the initial instalment and the final instalment of preliminary tax paid by the chargeable person for the accounting period in accordance with subsection (2) is less than 90 per cent of the tax payable by the chargeable person for the accounting period, | ||
(ii) the aggregate of the initial instalment and the final instalment of preliminary tax so paid by the chargeable person for the accounting period is not less than 90 per cent of the amount of tax which would be payable by the chargeable person for the accounting period if no amount were included in the company’s profits for the accounting period— | ||
(I) in respect of chargeable gains on the disposal of assets in the part of the accounting period which is after the date by which preliminary tax for the accounting period is payable in accordance with subsection (1), | ||
(II) in the case of a relevant company, in respect of profits or gains or losses accruing, and not realised, in the accounting period on financial assets or financial liabilities as are attributable to changes in value of those assets or liabilities in the part of the accounting period which is after the end of the month immediately preceding the month in which preliminary tax for the accounting period is payable in accordance with subsection (1), or | ||
(III) in respect of a disallowable amount (within the meaning of Part 35D), | ||
(iii) the chargeable person makes a further payment of preliminary tax, if required, for the accounting period within one month after the end of the accounting period and the aggregate of that payment and the initial instalment and final instalment of preliminary tax paid by the chargeable person for the accounting period in accordance with subsection (2) is not less than 90 per cent of the tax payable by the chargeable person for the accounting period if no amount were included in the company’s profits for the accounting period in respect of a disallowable amount (within the meaning of Part 35D), | ||
(iv) the chargeable person makes a further payment of preliminary tax, if required, for the accounting period within a period of 6 months after the end of the accounting period, but where the last day of that period of 6 months is later than day 21 of the month in which it occurs, the further payment of preliminary tax for the accounting period is paid no later than— | ||
(I) day 21 of the month in which that last day occurs, or | ||
(II) where payment is made by such electronic means as are required by the Revenue Commissioners, day 23 of the month in which that last day occurs, | ||
and | ||
(v) following the making of any payment referred to in subparagraph (iii) or (iv), the aggregate of those payments and the initial instalment and final instalment of preliminary tax paid by the chargeable person for the accounting period in accordance with subsection (2) is not less than 90 per cent of the tax payable by the chargeable person for the accounting period,”. |