On 24 February 2017, the Irish Revenue Commissioners (“Revenue”) issued new guidance on the notification requirements that apply to Irish companies that qualify under section 110 of the Taxes Consolidation Act 1997 (“Section 110 Companies”).
Under the new guidance:
Section 110 Companies that have been established recently are required to take action by 19 April 2017;
the form of notification that must be filed by Section 110 Companies has been changed; and
Section 110 Companies are required to notify Revenue if they wish to cease to be treated as such and a new form has been issued for this purpose.
Recently established Section 110 Companies
Section 110 Companies have always been required to notify Revenue of their intention to be treated as such. For this purpose, Revenue have provided a Form S110. Under Irish tax law, companies that fail to notify Revenue are not eligible be treated as Section 110 Companies. Historically, Forms S110 were required to be filed no later than the date on which the company’s first corporation tax return became due (in general terms, nine months after the end of the first accounting period). In Finance Act 2016, this notification requirement was brought forward and, with effect from 1 January 2017, any company wishing to be treated as a Section 110 Company must notify Revenue within eight weeks of entering into its first transaction.
Section 110 Companies that have not filed notifications
If a Section 110 Company has not already filed a notification, the guidance indicates that a notification must be filed by 19 April 2017.
Under the changes made in the Finance Act 2016, any company that intended to be treated as a Section 110 Company and had entered into its first transaction before 1 January 2017 but had not filed a notification by 1 January 2017 was strictly required to file a Form S110 by 25 February 2017. However, the Revenue guidance indicates that those taxpayers will be given until 19 April 2017 to make the necessary notification.
Section 110 Companies that filed notifications since 1 January 2017
Any company that notified Revenue of its intention to be a Section 110 Company on or after 1 January 2017 will likely have filed the old Form S110. Some (but not all) will have included the additional information required under Finance Act 2016 in a cover letter. Under the guidance, Revenue indicates that those companies should make an additional filing and re-submit the information in the new Form S110. These additional notifications must also be made by 19 April 2017.
The Revenue guidance suggests that failure to make the additional notification will result in the company ceasing to be a Section 110 Company with effect from 23 February 2017.
Changes to Form S110
In line with the changes made in the Finance Act 2016, companies notifying Revenue of their intention to be treated as Section 110 Companies must now provide additional information to Revenue in the Form S110, including information on the type of transaction into which the company is entering (eg CDO, CLO, etc), the assets acquired and details of how the company is funded. The new Form S110 is available here and should be used for all future notifications.
Ceasing to be treated as a Section 110 Company
Revenue has now formalised the process for companies that wish to cease to be treated as Section 110 Companies and for companies that cease to meet the criteria and may no longer be treated as Section 110 Companies. Those companies must file a Form S110W indicating the date from which the company should cease to be treated as a Section 110 Company. Such notifications must be filed within eight weeks of the company ceasing to be a Section 110 Company.
By Turlough Galvin and Christian Donagh of Matheson.