Finance (No.2) Act 2023
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Amendment of Part 16 of Principal Act (relief for investment in corporate trades) | ||
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31. (1) Part 16 of the Principal Act is amended— | ||
(a) in section 488(1), in the definition of “General Block Exemption Regulation”, by the insertion of “, as amended by Commission Regulation (EU) No. 2023/1315 of 23 June 20231 ” after “17 June 2014”, | ||
(b) in section 493, in the definition of “expansion risk finance investment”, by the substitution of “to fund a new economic activity” for “to fund entering a new product on the market or entering a new geographic market”, | ||
(c) in section 494, by the substitution of the following subsection for subsection (3): | ||
“(3) The shares, other than where relief under section 507 is claimed, may be redeemable.”, | ||
(d) in section 495, by the insertion of the following subsection after subsection (6): | ||
“(7) This section applies to shares in a company that carry preferential rights to a dividend or to repayment of capital on a winding up, except in circumstances where the shares are issued to the managers of a qualifying investment fund.”, | ||
(e) in section 496— | ||
(i) by the substitution of the following subsection for subsection (5): | ||
“(5) (a) An initial risk finance investment shall only be a qualifying investment where each company in the RICT group, at the time the eligible shares are issued— | ||
(i) has not been operating in any market, or | ||
(ii) has been operating in any market for— | ||
(I) less than 10 years following its date of incorporation, or | ||
(II) less than 7 years after its first commercial sale. | ||
(b) Where a business (in this paragraph referred to as ‘the acquiring business’) in the RICT group has acquired another business (in this paragraph referred to as ‘the acquired business’), or was formed through a merger (in this paragraph referred to as ‘the merged businesses’), the periods referred to in subparagraph (ii) of paragraph (a) shall, in the case of the application of clause (I) or (II), as the case may be, of the said subparagraph (ii), encompass the operations of the acquired business or the merged businesses, respectively, except for such acquired business or merged businesses whose turnover accounts for less than 10 per cent of the turnover of the acquiring business in the financial year preceding the acquisition or, in the case of merged businesses, less than 10 per cent of the combined turnover that each of the businesses comprising the merged businesses had in the financial year preceding the merger. | ||
(c) For the purposes of paragraph (b), references to financial year shall be construed in accordance with Chapter 3 of Part 6 of the Companies Act 2014 .”, | ||
(ii) by the substitution of the following subsection for subsection (6): | ||
“(6) An expansion risk finance investment shall only be a qualifying investment where, based on a business plan prepared in view of a new economic activity, the amount to be raised through the issue of those shares is— | ||
(a) greater than 50 per cent of the RICT group’s average annual turnover in the preceding 5 years, or | ||
(b) greater than 30 per cent of the RICT group’s average annual turnover in the preceding 5 years where the investment— | ||
(i) significantly improves the environmental performance of the activity in accordance with Article 36(2) of the General Block Exemption Regulation, | ||
(ii) constitutes an environmentally sustainable investment as defined in Article 2(1) of Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 20202 , or | ||
(iii) is aimed at increasing capacity for the extraction, separation, refining, processing or recycling of a critical raw material listed in Annex IV of the General Block Exemption Regulation.”, | ||
and | ||
(iii) in subsection (7)(b), by the substitution of “provided for” for “foreseen”, | ||
(f) in section 497— | ||
(i) in subsection (2)— | ||
(I) in paragraph (a), by the substitution of “€5,500,000” for “€5,000,000”, and | ||
(II) in paragraph (b), by the substitution of “€16,500,000” for “€15,000,000”, | ||
(ii) in subsection (3), by the substitution of “€5,500,000” for “€5,000,000”, | ||
(iii) in subsection (4), by the substitution of “€16,500,000” for “€15,000,000”, and | ||
(iv) by the insertion of the following subsections after subsection (5): | ||
“(6) (a) Where a qualifying company has issued shares in respect of which— | ||
(i) relief under this Part applies, and | ||
(ii) an entitlement to claim relief under section 600M may apply on the disposal of those shares— | ||
then, this section shall apply subject to the following modifications: | ||
(I) subsection (1) shall apply with the modifications set out in subsection (7), | ||
(II) subsection (2) shall apply with the modification set out in subsection (8), | ||
(III) subsection (4) shall apply with the modifications set out in subsection (9), and | ||
(IV) subsection (5) shall apply with the modifications set out in subsection (10). | ||
(b) For the purposes of subsections (7), (8) and (9), ‘relief group’ shall have the meaning assigned to it by section 600B. | ||
(7) The modifications to subsection (1) referred to in subsection (6)(a)(I) are— | ||
(a) the reference to ‘an individual who qualifies for relief’ shall be read as a reference to an individual who qualifies for relief under this Part in respect of those shares and an individual who may be entitled to claim relief under section 600M on the disposal of those shares, | ||
(b) the reference to shares ‘in respect of which relief was available under this Part’ shall be read as a reference to shares in respect of which relief was available under this Part and shares in respect of which an entitlement to claim relief under section 600M may apply on the disposal of those shares, and | ||
(c) references to ‘RICT group’ shall be read as references to either or both RICT group and relief group, as the case may be. | ||
(8) The modification to subsection (2) referred to in subsection (6)(a)(II) is that the reference to a ‘RICT group’ as it pertains to subsection (2)(b) shall be read as a reference to the relief group and RICT group of which a qualifying company within the meaning of this Part and within the meaning of Chapter 6A of Part 19 is a member. | ||
(9) The modifications to subsection (4) referred to in subsection (6)(a)(III) are— | ||
(a) references to the ‘RICT group’ shall be read as references to the relief group and the RICT group of which a qualifying company within the meaning of this Part and within the meaning of Chapter 6A of Part 19 is a member, and | ||
(b) the reference to a ‘qualifying investment’ shall be read as a reference to qualifying investment within the meaning of this Part and within the meaning of Chapter 6A of Part 19. | ||
(10) The modifications to subsection (5) referred to in subsection (6)(a)(IV) are— | ||
(a) the reference to ‘the giving of relief’ shall be read as a reference to the giving of relief under this Part or the entitlement to claim relief under section 600M, | ||
(b) the reference to ‘the available relief’ shall be read as a reference to the available relief under this Part and the entitlement to claim relief under section 600M, | ||
(c) the reference to ‘to which their claims relate’ shall be read as a reference to claims under this Part and claims in respect of which an entitlement may arise under section 600M, and | ||
(d) the reference to ‘would be eligible for relief’ shall be read as a reference to being eligible for relief under this Part or being entitled to claim relief under section 600M.”, | ||
and | ||
(g) in section 502, by— | ||
(i) the substitution of the following subsection for subsection (2A): | ||
“(2A) (a) In respect of shares issued after 8 October 2019 and on or before 31 December 2023, 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. | ||
(b) In respect of shares issued on or after 1 January 2024, a qualifying investor who makes a qualifying investment in a qualifying company shall be entitled, subject to this section, to relief for— | ||
(i) 125 per cent of the amount subscribed where the qualifying investment is made pursuant to section 496(5)(a)(i), | ||
(ii) 87.5 per cent of the amount subscribed where the qualifying investment is made pursuant to section 496(5)(a)(ii), | ||
(iii) 50 per cent of the amount subscribed where the qualifying investment is made pursuant to section 496(6), | ||
(iv) 50 per cent of the amount subscribed where the qualifying investment is made pursuant to section 496(7), or | ||
(v) 75 per cent of the amount subscribed where the qualifying investment is made through a qualifying investment fund in accordance with section 508J, | ||
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 | ||
(ii) in subsection (3)(a)— | ||
(I) in subparagraph (ii)— | ||
(A) by the substitution of “the years of assessment 2020, 2021, 2022 and 2023” for “the year of assessment 2020 and each subsequent year of assessment”, and | ||
(B) in clause (II), by the substitution of “investments, and” for “investments.”, | ||
and | ||
(II) by the insertion of the following subparagraph after subparagraph (ii): | ||
“(iii) €500,000 in respect of the year of assessment 2024 and each subsequent year of assessment.”. | ||
(2) Subsection (1) shall have effect as respects shares issued on or after 1 January 2024. | ||