Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I move amendment No. 64:

In page 60, between lines 26 and 27, to insert the following:"Amendment of section 626B of Principal Act (exemption from tax in the case of gains on certain disposals of shares)
39.(1) Section 626B of the Principal Act is amended by inserting the following after subsection (3):

“(3A) For the avoidance of doubt, the treatment of a gain, as not being a chargeable gain, provided by this section and section 626C shall, notwithstanding any provision of section 590, not apply for the purposes of section 590.”.

(2) This section applies as respects disposals on or after 18 November 2014.".

This is effectively an anti-avoidance measure. The amendment makes a technical change to section 626B of the Taxes Consolidation Act 1997. The purpose of the amendment is to ensure that the provisions of section 626B cannot be used by Irish resident individuals and trusts to avoid a charge to tax imposed under section 590 of the Taxes Consolidation Act 1997.
Section 590 is an anti-avoidance provision which attributes certain chargeable gains, made by a non-resident company, to Irish-resident participators in that company. The purpose of section 590 is to prevent persons from avoiding capital gains tax by transferring property to a non-resident controlled company.
It has come to Revenue's notice that some individuals are seeking to invoke section 626B, which exempts certain disposals of shares by companies from capital gains tax, in order to avoid a charge to tax under section 590. There is considerable tax at risk in respect of the cases of which Revenue is aware at present, with the potential to run to millions of euro.
Revenue's position is that the exemption provided by section 626B and a related exemption in section 626C, which provides a similar exemption in respect of gains on the disposal of asset relating to shares, do not apply in circumstances where a gain accrues to a company but is attributed to an Irish resident individual by section 590. To prevent the misuse of these relieving provisions by individuals and trusts, the purpose of this amendment is to clarify that sections 626B and 626C do not apply where a charge to tax arises under section 590.
I would like to inform Members that the Minister may be bringing a further technical amendment to this provision on Report Stage.