Group Relief allows members of a group of companies to transfer certain Corporation Tax (CT) losses to other members of the group. For example, Company A can surrender a loss to Company B of the same group. The transferred loss reduces the amount of CT that Company B must pay.
Two companies are considered to be group members if either:
- Company A is a 75% subsidiary of Company B
- Company A and B are both 75% subsidiaries of a third company.
In both scenarios the parent company must:
- own at least 75% of the subsidiary’s ordinary share capital, with certain disregards of ownership
- be beneficially entitled to at least 75% of any profits available for distribution to equity holders
- be beneficially entitled to at least 75% of any of the subsidiary’s assets available for distribution to equity holders in a winding up.
Group Relief is generally available between Irish resident companies and branches of foreign companies within the charge to Irish tax. In certain limited circumstances, an Irish resident parent company may claim Group Relief on losses incurred by a subsidiary resident in another country. The other country must be a European Union (EU) or European Economic Area (EEA) state which has a double taxation agreement with Ireland.
Under Group Relief, members of a group can transfer and receive relief on:
- current year trading losses
- excess charges on income
- excess management expenses, in the case of investment companies
- Case V excess capital allowances.
Group Relief may be claimed:
- as an offset against relevant trading income
- on a value basis against relevant corporation tax
- as a deduction against total profits of an excepted trade for that accounting period.
A company must claim Group Relief within two years from the end of the surrendering company’s accounting period to which the claim relates. The surrendering company must consent in writing that they allow the claim.
Group Relief will be restricted if the tax returns of the surrendering company or the company claiming the Group Relief are filed late.
If the accounting periods of the companies do not match, then the relief will be restricted on a time apportioned basis.