- A member of a group is permitted to make certain payments to another member of a group without deducting tax in certain circumstances.
- To be eligible to make such payments tax free there must be a 51% relationship between the companies i.e. where one company controls at least 51% of shares in the other company (directly/indirectly/via common parent).
- Interest and royalties may be paid gross i.e. without deduction of tax if a group relationship exists.
- Similar relief applies to consortia but there must be a 75% relationship.
Surrendering losses etc. & Group- Relief. What can be surrendered.
Members of a group may surrender current year trading losses, excess charges on income, excess management expenses (in the case of investment companies) and Case V excess capital allowances.
What are the conditions to claim relief
- Two companies are members of a group if one is a 75% subsidiary of the other or both are 75% subsidiaries of a third company. Note that a company is a 75% subsidiary of another company where not less than 75% of the ordinary share capital is owned directly/indirectly by that company.
- Parent company must be entitled to 75% of profits available for distribution to equity holders (includes loan creditors).
- Parent company must be entitled to 75% of assets available for distribution to equity holders on a winding up.
- Group relief is available to Irish companies, subject to certain conditions, in respect of trading losses incurred by their non-Irish subsidiary companies that are resident in EU Member States and EEA states with which Ireland has a double tax treaty.
Who can claim?
- For any accounting period two or more group members may make a claim in respect of loss/deficiency of a third member of the group.
- Note that no double allowances may be claimed.
How is relief claimed?
- As a deduction against claimant's total profits for the accounting period.
- Before reduction by any relief from subsequent accounting period and after reduction by any other relief from tax (including charges on income).
- Surrendering company must consent in writing and notify Revenue.
- Claim must be made within two years from the end of the surrendering company's accounting period to which the claim relates.
- Relief will be restricted if the tax return is delivered late.
- There is provision for apportionment on a time basis of the surrendering company's losses and the claimant company's profits where the accounting periods do not coincide.