Chapter 6

Capital Gains Tax

41 .— The Principal Act is hereby amended by inserting the following section after section 541B:

“541C.— (1) In this section—

‘ carried interest ’, in relation to a relevant investment, means the share of profits (where the share ratio was agreed at the outset of the relevant investment) referred to in paragraph (b) of the definition of ‘total profits of an investment’ that is received by a company or partnership in respect of the management of the relevant investment;

‘ carried interest to which this section applies ’, in relation to a relevant investment, means an amount of carried interest which is not greater than 20 per cent of the total profits from the relevant investment;

‘ innovation activities ’ means development of new technological, telecommunication, scientific or business processes;

‘ investor ’, in relation to a relevant investment, means a person other than a person entitled to carried interest or a person connected with that person;

‘ relevant investment ’ means an investment, which remains in place for at least 6 years, in unquoted shares or securities of a private trading company and that company is—

(a) carrying on a business set up and commenced on or after 1 January 2009, other than a business—

(i) which was previously carried on by another person and to which the company has succeeded,

(ii) the activities of which were previously carried on as part of another person’s business, or

(iii) which is an excepted trade within the meaning of section 21A,

and

(b) carrying on a business of research, development or innovation activities;

‘ research and development activities ’ has the same meaning as in section 766(1);

‘ total profits of an investment ’, in relation to a relevant investment, means the sum of—

(a) the profits which are attributable to investors in the relevant investment by reference to an agreed initial rate of return, and

(b) the balance of the profits of the relevant investment over and above those calculated by reference to the agreed initial rate of return.

(2) (a) Notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts, carried interest to which this section applies and which is received by a partnership shall be deemed to be an amount of chargeable gains to which section 28(1) applies.

(b) Notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts, carried interest to which this section applies and which is received by a company shall be deemed to be an amount of chargeable gains to which section 28(1) applies.

(3) (a) Notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts, the rate of capital gains tax in respect of chargeable gains to which subsection (2)(a) apply shall be 15 per cent.

(b) Notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts, the rate of corporation tax in respect of chargeable gains to which subsection (2)(b) apply shall be 12.5 per cent.”.

42 .— (1) Section 29 of the Principal Act is amended in subsection (4) by deleting “and the United Kingdom” in both places where it occurs.

(2) This section applies to disposals made on or after 20 November 2008.

43 .— (1) Section 549 of the Principal Act is amended—

(a) by substituting the following for subsection (6):

“(6) Where the asset mentioned in subsection (1) is subject to any right or restriction enforceable by the person making the disposal or by a person connected with that person, then that market value shall, where the amount of the consideration for the acquisition is in accordance with subsection (2) deemed to be equal to the market value of the asset, be what its market value would be if not subject to the right or restriction, reduced—

(a) by the lesser of—

(i) the market value of the right or restriction, and

(ii) the amount by which its extinction would enhance the value of the asset to its owner, or

(b) by the market value of the right or restriction, where the market value referred to in paragraph (a)(i) and the amount referred to in paragraph (a)(ii) are equal.”,

and

(b) by inserting the following after subsection (7):

“(7A) (a) This subsection applies where the asset mentioned in subsection (1) is subject to any right or restriction enforceable by the person making the disposal or by the person connected with that person, and the market value of the asset at the date of its acquisition (without reference to any right or restriction) is greater than the consideration, in money or money’s worth, given in payment for that asset.

(b) Where, on a subsequent disposal of an asset to which paragraph (a) applies by the person who acquired that asset, subsection (7) has the effect (without taking account of this subsection) of—

(i) increasing a loss, or

(ii) substituting a loss for a gain,

then that subsection shall not apply.”.

(2) This section applies to disposals made on or after 20 November 2008.

44 .— (1) The Principal Act is amended—

(a) in section 28(3) by substituting “22 per cent” for “20 per cent”, and

(b) in section 649A—

(i) by substituting the following for paragraph (b) of subsection (1):

“(b) in the case of a relevant disposal made on or after 15 October 2008, 22 per cent.”,

and

(ii) in subsection (2) by deleting paragraph (b)(i).

(2) This section applies to disposals made on or after 15 October 2008.

45 .— (1) The Principal Act is amended by inserting the following section after section 611:

“611A.— (1) In this section—

‘ new Society ’ means Cumann Cógaisceoirí na hÉireann or, in the English language, The Pharmaceutical Society of Ireland established by section 5(2) of the Pharmacy Act 2007 ;

‘ old Society ’ means the Pharmaceutical Society of Ireland constituted and incorporated by section 4 of the Pharmacy (Ireland) Act 1875.

(2) An asset disposed of by the new Society which it acquired from the old Society by virtue of section 5 of the Pharmacy Act 2007 shall be deemed to have been acquired by the new Society at the same time and for the same consideration that it was acquired by the old Society, and the provisions of section 5 56 shall apply accordingly.”.

(2) This section applies to disposals made on or after 20 November 2008.