Wealth Tax Act, 1975

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Taxable wealth of private non-trading company.

6.—(1) (a) The taxable wealth of a private non-trading company on a valuation date shall include all the property situate in the State to which the company is beneficially entitled in possession on the valuation date.

(b) The taxable wealth of a private non-trading company on a valuation date shall also include any property situate outside the State to which the company is beneficially entitled in possession on the valuation date in any case where—

(i) the company is incorporated in the State,

(ii) the effective centre of management of the company is in the State, or

(iii) control of the company is in an individual domiciled and ordinarily resident in the State or in the trustee of a discretionary trust all the property of which, wheresoever situate, is chargeable to tax under section 5 or in a company which is incorporated in, or has its effective centre of management in, the State or is controlled as aforesaid.

(2) For the purposes of this section, section 3 (3) and paragraphs (b) and (c) of section 3 (5) shall apply with any necessary modifications in relation to property to which a private non-trading company is beneficially entitled in possession and which includes an interest which is a limited interest as they apply in relation to property to which an individual is beneficially entitled in possession and which includes an interest which is a limited interest.

(3) In this section—

“company” means a body corporate (wherever incorporated)—

(a) in which the number of shareholders (excluding employees who are not directors of the company and any shareholder who is such as nominee of a beneficial owner of shares) is not more than fifty,

(b) which has not issued any of its shares as a result of a public invitation to subscribe for shares, and

(c) which is under the control of not more than five persons,

but does not include—

(A) a body corporate (other than a company within the meaning of section 2 of the Companies Act, 1963 ) established by or under an Act of the Oireachtas, or

(B) a company within the meaning of section 2 of the Companies Act, 1963 , which is under the control of a Minister of State,

and for the purposes of this section—

(i) a company shall be deemed to be under the control of not more than five persons if any five or fewer persons together exercise, or are able to exercise, or are entitled to acquire, control, whether direct or indirect, of the company; and for this purpose persons who are relatives of one another, persons who are nominees of any other person together with that other person, persons in partnership and persons interested in any shares or obligations of the company which are subject to any trust or are part of the estate of a deceased person shall respectively be treated as a single person, and

(ii) a person shall be deemed to have control of a company at any time if—

(I) he then had control of powers of voting on all questions, or on any particular question, affecting the company as a whole which, if exercised, would have yielded a majority of the votes capable of being exercised thereon, or could then have obtained such control by an exercise at that time of a power exercisable by him or at his direction or with his consent,

(II) he then had the capacity, or could then by an exercise of a power exercisable by him or at his direction or with his consent obtain the capacity, to exercise or to control the exercise of any of the following powers, that is to say, the powers of a board of directors or of a governing director of the company, power to nominate a majority of the directors or a governing director thereof, power to veto the appointment of a director thereof, or powers of a like nature,

(III) he then had a right to receive or the receipt of more than one half of the total amount of the dividends of the company, whether declared or not, and for the purposes of this subparagraph “dividend” shall be deemed to include interest on any debentures of the company, or

(IV) he then had an interest in the shares in or the debentures of the company, or in both, of an aggregate nominal value representing one-half or more of the aggregate nominal value of the shares and debentures of the company;

“private non-trading company” means a company whose income in the twelve months preceding the valuation date consisted wholly or mainly of investment income, that is to say, income, which, if the company were an individual, would not be earned income within the meaning of section 2 of the Income Tax Act, 1967 , and whose property on that date consisted wholly or mainly of property from which that investment income is derived, and, for the purposes of this definition, income from real property in the State shall, in the case of a company which is not a company to which subsection (1) (b) refers, be deemed to be investment income.

(4) (a) In this section—

“nominee” includes a person who may be required to exercise his voting power on the directions of, or holds shares directly or indirectly on behalf of, another person;

“relative” means—

(i) a husband or wife, or

(ii) lineal ancestor, lineal descendant, uncle, aunt, brother, sister, descendant of a brother or sister, or the wife or husband of any of those persons;

“share”, in relation to a company, includes any interest whatsoever in the company which is analogous to a share in the company.

(b) For the purposes of this section a company which is controlled by any one or more of the individual and relatives of the individual shall be regarded as being itself a relative of the individual.

(5) This section shall not apply to a private non-trading company of which a body corporate which is not a private non-trading company has control and, for the purposes of this subsection, where a body corporate (in this subsection referred to as the first body corporate) has control of a second body corporate and the second body corporate has control of a private non-trading company, the first body corporate shall be deemed to have control of the private non-trading company, and if a third body corporate has control of the first body corporate, the third body corporate shall be deemed to have control of the private non-trading company, and so on.