Saturday, Dec 21, 2024

17:08

Definition of the term GROUP for Corporation Tax Loss purposes?

Posted on: Friday, January 23, 2015

Under section 411 TCA 1997, two companies will form a CT Loss group if one company is a 75% subsidiary of the other or both companies are 75% subsidiaries of a third company.


Indirect shareholdings may be used to establish a 75% relationship, provided the shares are owned directly or indirectly by a company which is:

• Resident in Ireland
• Resident in another EU country
• Resident in an EEA country with which Ireland has signed a Double Taxation Agreement
• Resident in a country with which Ireland has signed a double taxation agreement.  Please be aware that Finance Act 2012 amended Section 411(i)(c)(iii). It stated that in determining what companies form part of a CT Loss Group, group ownership can be traced through the treaty countries in addition to E.U. resident countries.  What that actually means is prior to 1st January 2012 if two Irish companies were separated by an Australian resident company, for example, they would NOT have formed a CT Group for loss relief purposes.
• Quoted on a recognised stock exchange or
• A 75% subsidiary of a company quoted on a recognised stock exchange.

Please keep in mind that Shares held in a share dealing capacity whether directly or indirectly (in other words where the profit on the sale of the shares would be a trading receipt) are ignored when trying to establish a 75% group relationship.

In addition to the 75% share capital test, there is also a (1)75% profit entitlement test and (2) a 75% entitlement to assets on a winding up requirement.