Oireachtas Joint and Select Committees
Wednesday, 17 November 2021
Select Committee on Finance, Public Expenditure and Reform, and Taoiseach
Finance Bill 2021: Committee Stage (Resumed)
Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source
This section is an anti-avoidance provision that denies a tax deduction for interest payable on intra-group borrowings which are used to purchase assets from the connected company. I will deal in a moment with the Deputy’s question regarding how we define “connected”. It was designed to prevent companies from selling assets, such as plant or machinery, between group companies and funding the sales with intra-group debt to create tax deductible interest expenses. Revenue has been aware of cases where the provisions of section 840A were being circumvented by the use of promissory notes and replacement borrowings. Section 840A is therefore being amended to bring promissory notes and other agreements or arrangements having similar effect within the scope of the anti-avoidance provision. The amendment will also ensure any form of refinancing of a loan, as defined in this section, is within the scope of the jurisdiction. There is, therefore, no change here in how we define whether one is connected or not. The change here is to bring promissory notes and replacement borrowings into scope. I am informed there is a definition as to what the connected company is. My officials will send that on to the Deputy on Committee Stage.
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