Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I move amendment No. 32:

In page 71, to delete lines 35 to 38 and substitute the following:

“ “(3A) (a) In this subsection ‘relevant treatment of a gain’ means the treatment, provided by this section or section 626C, of a gain as not being a chargeable gain.

(b) Notwithstanding any provision of section 590, the relevant treatment of a gain shall not apply for the purposes of section 590, but this is subject to paragraph (c).

(c) The relevant treatment of a gain shall apply for the purposes of section 590 where the participator (within the meaning of that section) is a company.”.”.

This amendment relates to section 43 of the Bill as passed by the select sub-committee. Section 43 was introduced on Committee Stage to ensure that the exemption from capital gains tax provided for by section 626B, and a related provision in section 626C, cannot be used by Irish resident individuals and trusts to avoid a charge to tax imposed under section 590.

Section 590 is one of the oldest anti-avoidance provisions in Irish tax legislation, and acts to attribute 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 that the Revenue Commissioners are aware of at present, with the potential to run to millions of euro.

This is a technical amendment to ensure that the proposed wording cannot create any uncertainty in the application of relief under sections 626B and 626C. I commend the amendment to the House.

See this speech in context