Finance (No. 2) Act 2008

Scheme to facilitate removal and relocation of certain industrial facilities.

21.— (1) The Principal Act is amended by inserting the following after Part 11C (inserted by the Finance Act 2008 ):

“PART 11D

Income Tax and Corporation Tax: Reliefs for the Removal and Relocation of Certain Industrial Facilities

Interpretation (Part 11D).

380Q.— (1) In this Part—

‘ dangerous substance ’ has the meaning assigned to it by section 3 of the European Communities (Control of Major Accident Hazards Involving Dangerous Substances) Regulations 2000 ( S.I. No. 476 of 2000 );

‘enhancement expenditure’, in relation to establishment land, means the amount of any capital expenditure wholly and exclusively incurred on the land for the purpose of enhancing the value of the land, being expenditure reflected in the state or nature of the land at the time of the disposal but does not include expenditure for which relief may be claimed under this Part;

‘ establishment ’, in relation to a person who carries on a relevant trade, means the whole area under that person’s control where dangerous substances are present in one or more installations, including common or related infrastructure or activities;

‘ establishment land ’, in relation to a relevant trade, means the area of land of the establishment of which the old installation is a unit;

‘ local authority ’ means—

(a) in the case of a city, the city council, and

(b) in the case of a county, the county council,

being a city council or a county council, as the case may be, for the purposes of the Local Government Act 2001 ;

‘ installation ’ means a unit within an establishment in which dangerous substances are produced, used, handled or stored, and includes—

(a) equipment, structures, pipework, machinery and tools,

(b) docks and unloading quays serving the installation, and

(c) jetties, warehouses or similar structures, whether floating or not,

which are necessary for the operation of the installation;

‘ land ’ includes any interest in land and references to establishment land include references to any interest in that land;

‘market value’, in relation to the whole or part of establishment land, means the price that whole or part might reasonably be expected to fetch on a sale in the open market if the old installation was removed;

‘ new installation ’ means an installation which replaces an old installation;

‘ old installation ’ means an installation located in an urban dockland area which, by agreement with the relevant local authority, an operator relocates to facilitate the regeneration of that area;

‘ operator ’ means any person who in the course of a trade operates an establishment or installation;

‘ relocation expenditure ’ means relevant expenses incurred by a person who carries on a relevant trade in an establishment situated within an urban dockland area in relocating that trade to an establishment in a new location;

‘ relevant expenses ’ means capital expenditure, incurred in connection with the removal of an old installation and the set up of a replacement installation including the cost of acquiring such land as is necessary for the operation of the new installation but not including expenditure relating to—

(a) any building or structure on that land other than a building or structure which is demolished in the course of the set-up,

(b) the construction of any building or structure, or

(c) machinery or plant;

‘ relevant trade ’ means a trade of operating an establishment or installation;

‘ urban dockland area ’ means a dockland area which is the subject of either a local area plan adopted by the relevant local authority under the Planning and Development Acts 2000 to 2006 or a planning scheme approved by the Minister for the Environment, Heritage and Local Government under section 25 of the Dublin Docklands Development Authority Act 1997 and comprises an area designated by that Minister, with the approval of the Minister for Finance, to be regenerated for the purposes set out in the local area plan or planning scheme.

(2) This Part shall not apply to any expenditure incurred on or after 1 January 2014.

Relocation allowance.

380R.— (1) A person carrying on a relevant trade, who incurs relocation expenditure in relation to that trade, may claim an allowance (in this section referred to as a ‘relocation allowance’) under this section in respect of that expenditure.

(2) A relocation allowance made to a person carrying on a relevant trade shall be made in taxing the trade.

(3) Where a person carrying on a relevant trade owns or owned establishment land and the whole of that land has not been disposed of at the end of the chargeable period, then the following provisions shall apply:

(a) no amount incurred in the chargeable period in respect of the cost of acquiring land may be included as relevant expenses unless the aggregate of the expenditure incurred in acquiring land necessary for the operation of the new installation in that and previous chargeable periods exceeds the market value of the establishment land at the date relevant expenses were first incurred, and

(b) for the first chargeable period in which the aggregate of the expenditure incurred in acquiring land necessary for the operation of the new installation exceeds the market value mentioned in paragraph (a), the amount to be included is the excess.

(4) Where a person carrying on a relevant trade owned establishment land in relation to that trade and is entitled to a relocation allowance for a chargeable period, which is or is subsequent to the first chargeable period at or before the end of which the whole of that land is disposed of, then the following provisions shall apply:

(a) no expenditure incurred in the chargeable period in respect of the cost of acquiring land may be included as relevant expenses unless the aggregate of the expenditure incurred on acquiring land necessary for the operation of the new installation in that and previous chargeable periods exceeds the total consideration received on the disposal of the establishment land reduced by any enhancement expenditure in relation to that establishment land incurred by that person at a time after all the old installations have been removed from that land, and

(b) the amount of expenditure which is included in relevant expenditure in respect of the cost of acquisition of land shall not exceed that excess.

(5) Notwithstanding section 380Q(2), where, in a chargeable period, a person carrying on a relevant trade in respect of which a relocation allowance has been granted under subsection (2) for previous chargeable periods, disposes of the whole or part of the establishment land in relation to that trade and as a consequence the whole of the establishment land in relation to that trade is disposed of at the end of that period, then the following provisions shall apply:

(a) if the aggregate of all consideration received on disposals of all establishment land reduced by any enhancement expenditure in relation to that establishment land incurred by that person at a time after all the old installations have been removed from that land—

(i) is less than the market value mentioned in subsection (3)(a), then a relocation allowance under subsection (2) shall be made in respect of the difference, in addition to a relocation allowance (if any) which may be due in respect of expenditure incurred in the chargeable period,

(ii) is greater than the market value mentioned in subsection (3)(a), then the difference shall, subject to paragraph (b), be treated as a trading receipt of that trade,

and

(b) the amount treated as a trading receipt of the trade under paragraph (a)(ii) shall not exceed the aggregate of relocation allowances in respect of establishment land allowed in previous chargeable periods.

(6) Where a person carrying on a relevant trade does not dispose of the whole of the establishment land in relation to the relevant trade within a period of 2 years beginning on the date on which that person ceases to use the old installation for the purposes of a relevant trade, then the person shall be deemed to have disposed of the establishment land in relation to that trade on the last day of the chargeable period in which that period ends for consideration equal to the aggregate of all consideration (if any) received in respect of parts of establishment land which have been disposed of and the market value of the whole or part of such land which the person owns at that date reduced by any enhancement expenditure in relation to that establishment land incurred by that person at a time after all the old installations have been removed from that land.

(7) Where land is appropriated as trading stock, section 596(1) shall apply for the purposes of this section as it applies for the purposes of the Capital Gains Tax Acts.

(8) Where the relevant trade ceases before all establishment land in relation to that trade is disposed of, then the remaining land shall be deemed, for the purposes of this section, to have been disposed of on the date of cessation of the trade for its market value at that date.

(9) Where the whole or part of the establishment land is owned by a person (in this subsection referred to as the ‘first mentioned person’) connected with the person claiming relief under this Part, then that whole or part, as the case may be, shall be treated for the purposes of this Part as owned by the person claiming relief and this Part shall apply as if all actions of the first mentioned person in relation to the whole or part were actions of the person claiming relief.

Additional allowance for relocation expenditure.

380S.— (1) Where a person carrying on a relevant trade incurs relocation expenditure in relation to which section 380R applies, there shall, in addition to any relocation allowance made in respect of such expenditure, be made to the person in taxing the trade for the chargeable period for which such relocation allowance is made, an additional relocation allowance (which shall be known as an ‘additional relocation allowance’) equal to 50 per cent of the expenditure and section 380R(2) shall apply to such additional relocation allowance as if it were an allowance under that subsection.

(2) Where, in a chargeable period, an amount is treated as a trading receipt of a trade under section 380R(5)(b), an additional amount equal to 50 per cent of that amount shall also be treated as a trading receipt of the trade for that chargeable period.

Allowance for machinery or plant.

380T.— (1) Where, for any chargeable period, expenditure incurred by a person on a new installation includes expenditure (in this section referred to as ‘qualifying expenditure’) on the provision of new machinery or new plant (other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles) provided for use in the relevant trade, then the following provisions shall apply:

(a) that person may claim that the wear and tear allowance to be made under section 284 to the person in respect of that expenditure is to be determined as if the reference to 12.5 per cent in section 284(2)(ad) were a reference to 100 per cent, and

(b) there shall be made to the person for the chargeable period related to the expenditure an allowance equal to 50 per cent of the qualifying expenditure in relation to that plant or machinery, and such allowance shall be made in taxing the relevant trade.

(2) For the purposes of ascertaining the amount of any allowance to be made to any person under section 284 in respect of expenditure incurred during a chargeable period on any qualifying machinery or plant, no account shall be taken of an allowance under subsection (1)(b) in respect of that expenditure, and in section 284(4) ‘the allowances on that account’ and ‘the allowances’ where it occurs before ‘exceed’ shall each be construed as not including a reference to any allowance made under subsection (1)(b) to the person by whom the relevant trade is carried on.

Allowances in respect of certain buildings.

380U.— Where a person carrying on a relevant trade incurs expenditure (in this section referred to as ‘qualifying expenditure’) on a new installation which includes capital expenditure on the construction of a new building or structure which is to be an industrial building or structure to be occupied for the purposes of that trade, then the following provisions shall apply:

(a) section 271 shall apply as if—

(i) in subsection (1) of that section the definition of ‘industrial development agency’ were deleted,

(ii) in subsection (2)(a)(i) of that section ‘to which subsection (3) applies’ were deleted,

(iii) subsection (3) of that section were deleted,

(iv) the following subsection were substituted for subsection (4) of that section:

‘(4) An industrial building allowance shall be of an amount equal to 100 per cent of the capital expenditure mentioned in subsection (2).’,

and

(v) in subsection (5) of that section ‘to which subsection (3)(c) applies’ were deleted,

and

(b) there shall be made to that person for the chargeable period related to the expenditure an allowance equal to 50 per cent of the qualifying expenditure in relation to that building or structure, and such allowance shall be made in taxing the relevant trade.

Improvement.

380V.— (1) A new installation is an improved installation where its capacity is greater or it has improved efficiency or productivity beyond normal modernisation or upgrading than the old installation which it replaced.

(2) Where expenditure incurred on the provision of an improved installation includes expenditure on new machinery or new plant or on the construction of a new building or structure which is to be an industrial building or structure to be occupied for the purposes of that trade, then the amount of that expenditure qualifying for relief under section 380T(1)(b) or 380U(1)(b) shall be the expenditure on the new machinery or the new plant or on the construction of a new building or structure, as the case may be, reduced by an amount representing improvement and the amount of expenditure representing improvement shall be such proportion of the expenditure in relation to the new machinery or new plant or in relation to the construction of a new building or structure, as the case may be, as appears to the inspector (or on appeal, the Appeal Commissioners) to be just and reasonable as representing costs relating to providing increased capacity or improved efficiency or productivity.

Supplementary provisions.

380W.— (1) Where an allowance under section 380T(1)(b) or 380U(1)(b) has been made to any person in respect of expenditure incurred on the provision of machinery or plant or on the construction of a building or structure and the machinery or plant or building or structure is sold by that person without the machinery or plant or building or structure having been used by that person for the purposes of a relevant trade or before the expiration of the period of 2 years from the day on which the machinery or plant or, as the case may be, the building or structure, began to be so used, then the allowance under those sections shall be withdrawn and all such additional assessments and adjustments of assessments shall be made as may be necessary for or in consequence of the withdrawal of the allowance.

(2) For the purposes of this Part, capital expenditure does not include any expenditure which is allowed to be deducted in computing for the purposes of tax the profits or gains of a trade carried on by the person incurring the expenditure.

(3) Where relief is given by any provision of this Part in relation to relocation expenditure, then relief shall not be given in respect of that expenditure under any other provision of the Taxes Acts.

(4) Chapter 4 of Part 9 shall apply as if this Part were contained in that Part.

Restrictions on relief — non-application of relief in certain cases.

380X.— Notwithstanding any other provision of this Part, no allowances under sections 380R, 380S, 380T and 380U shall be made in relation to expenditure—

(a) where any part of such expenditure has been or is to be met, directly or indirectly, by grant assistance or any other assistance which is granted by or through the State, any board established by statute, any public or local authority or any other agency of the State,

(b) unless the potential allowances in relation to that expenditure comply with—

(i) the requirements of the Guidelines on National Regional Aid for 2007-2013 prepared by the Commission of the European Communities and issued on 4 March 2006 1 ,

(ii) the National Regional Aid Map for Ireland for the period 1 January 2007 to 31 December 2013 which was approved by the Commission of the European Communities on 24 October 2006 2 , and

(iii) the requirements of the Community Guidelines on State Aid for Environmental Protection prepared by the Commission of the European Communities and issued on 1 April 2008 3 ,

(c) where the person who is entitled to the allowances in relation to that expenditure is subject to an outstanding recovery order following a previous decision of the Commission of the European Communities declaring aid in favour of that person to be illegal and incompatible with the common market,

or

(d) where the person who is entitled to the allowances is a person in difficulty under the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty 4 .”.

(2) Subsection (1) comes into operation on the making of an order to that effect by the Minister for Finance.

1OJ No. C54, 4 March 2006, p.13.

2OJ No. C292, 1 December 2006, p. 11.

3OJ No. C82, 1 April 2008, p. 1.

4OJ No. C288, 9 October 1999, p. 2, and OJ No. C244 of 1 October 2004, p. 2.