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Amendment of Chapter 2 of Part 29 of Principal Act (scientific and certain other research)
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35. (1) Chapter 2 of Part 29 of the Principal Act is amended—
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(a) in section 766, by the insertion of the following subsection after subsection (1A):
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“(1B) For the purposes of this section and section 766C—
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(a) Where expenditure is incurred by a company on emoluments paid to an employee of the company who performs not less than 95 per cent of the duties of his or her employment in the carrying on by the company of research and development activities, 100 per cent of that expenditure shall be treated for the purposes of the definition, in subsection (1)(a), of ‘expenditure on research and development’, as expenditure incurred by the company wholly and exclusively in the carrying on by it of research and development activities, save where the expenditure is incurred by a company which is resident in the State and where that expenditure—
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(i) may be taken into account as an expense in computing income of that company,
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(ii) is expenditure in respect of which an allowance for capital expenditure may be made to that company, or
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(iii) may otherwise be allowed or relieved in relation to that company,
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for the purposes of tax in a territory other than the State.
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(b) In this subsection, ‘emoluments’ and ‘employee’ have the meaning given to them, respectively, by section 983.”,
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(b) in section 766A—
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(i) in subsection (1)(a), in the definition of “relevant expenditure”, by the insertion of “or being expenditure of the type referred to in subsection (1A)” after “Part 9”, and
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(ii) by the insertion of the following subsection after subsection (1):
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“(1A) For the purposes of the definition, in subsection (1)(a), of ‘relevant expenditure’, expenditure incurred by a company on the construction of a qualifying building shall include expenditure incurred by the company on the construction of a laboratory for use in the carrying on of research and development activities but does not include expenditure—
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(a) to which section 765(1)(a)(ii) applies, or
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(b) which is incurred on the construction of any part of the laboratory for use as an office or for any purpose ancillary to the purpose of an office.”,
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(c) in section 766C—
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(i) in subsection (1), by the substitution of “35 per cent” for “30 per cent”,
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(ii) in subsection (2)(a)(ii), by the substitution of “subsection (7)(a)(i)” for “subsection (7)(a)”,
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(iii) in subsection (6)(a)(i), by the substitution of “€87,500” for “€75,000”,
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(iv) by the substitution of the following subsection for subsection (7):
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“(7) (a) The company shall specify in respect of each instalment referred to in subsection (6) whether such amounts, or any portion of such amounts, are to be—
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(i) treated as an overpayment of tax, for the purposes of section 960H, or
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(ii) paid to the company by the Revenue Commissioners.
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(b) Subject to paragraph (c), the company shall make the specification referred to in paragraph (a)—
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(i) in respect of the first instalment, in the return referred to in subsection (9),
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(ii) in respect of the second instalment, if any, in the return that the company is required to file under Part 41A in respect of the accounting period (in this paragraph referred to as ‘the first mentioned accounting period’) immediately succeeding the accounting period in respect of which the claim was made, and
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(iii) in respect of the third instalment, if any, in the return that the company is required to file under Part 41A in respect of the accounting period immediately succeeding the first-mentioned accounting period.
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(c) Where, in relation to an accounting period, a company makes a claim in respect of the credit in accordance with subsection (9) (in this paragraph referred to as ‘the first-mentioned claim’), and a second or third instalment is payable in accordance with subsection (11) in respect of a claim for the credit made in an earlier accounting period, the company may make the specification referred to in paragraph (a) in respect of the second or third instalment, or both, as the case may be, on the making of the first mentioned claim.”,
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(v) in subsection (7A), by the substitution of “subsection (7)(a)(i) or paid to the company in accordance with subsection (7)(a)(ii)” for “subsection (7)(a) or paid to the company in accordance with subsection (7)(b)”,
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(vi) in subsection (10)(a), by the substitution of “subsection (7)(a)(i) or paid to the company under subsection (7)(a)(ii)” for “subsection (7)(a) or paid to the company under subsection (7)(b)”,
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(vii) in subsection (11)(c), by the substitution of the following subparagraph for subparagraph (i):
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“(i) where the first-mentioned accounting period is for a period of 12 months and the accounting period (in this subparagraph referred to as ‘the second-mentioned accounting period’) immediately succeeding the first-mentioned accounting period is for a period of 12 months, on the filing of the return that the company is required to file under Part 41A for the second-mentioned accounting period, or”,
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(viii) in subsection (13), by the substitution of “subsection (7)(a)(i)” for “subsection (7)(a)”, and
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(ix) in subsection (15), by the substitution of “subsection (7)(a)(i) or to be paid under subsection (7)(a)(ii)” for “subsection (7)(a) or to be paid under subsection (7)(b)”,
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and
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(d) in section 766D—
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(i) in subsection (1), by the substitution of “35 per cent” for “30 per cent”,
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(ii) in subsection (2)(a)(ii), by the substitution of “subsection (6)(a)(i)” for “subsection (6)(a)”,
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(iii) in subsection (3A)(c)(II), by the substitution of “subsection (6)(a)(i) or paid to the company in accordance with subsection (6)(a)(ii)” for “subsection (6)(a) or paid to the company in accordance with subsection (6)(b)”,
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(iv) by the substitution of the following subsection for subsection (6):
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“(6) (a) The company shall specify in respect of each instalment referred to in subsection (5) whether such amounts, or any portion of such amounts, are to be—
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(i) treated as an overpayment of tax, for the purposes of section 960H, or
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(ii) paid to the company by the Revenue Commissioners.
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(b) Subject to paragraph (c), the company shall make the specification referred to in paragraph (a)—
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(i) in respect of the first instalment, in the return referred to in subsection (8),
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(ii) in respect of the second instalment, if any, in the return that the company is required to file under Part 41A in respect of the accounting period (in this paragraph referred to as ‘the first mentioned accounting period’) immediately succeeding the accounting period in respect of which the claim was made, and
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(iii) in respect of the third instalment, if any, in the return that the company is required to file under Part 41A in respect of the accounting period immediately succeeding the first-mentioned accounting period.
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(c) Where, in relation to an accounting period, a company makes a claim in respect of the credit in accordance with subsection (8) (in this paragraph referred to as ‘the first-mentioned claim’), and a second or third instalment is payable in accordance with subsection (10) in respect of a claim for the credit made in an earlier accounting period, the company may make the specification referred to in paragraph (a) in respect of the second or third instalment, or both, as the case may be, on the making of the first mentioned claim.”,
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(v) in subsection (9)(a), by the substitution of “subsection (6)(a)(i) or paid to the company under subsection (6)(a)(ii)” for “subsection (6)(a) or paid to the company under subsection (6)(b)”,
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(vi) in subsection (10)(c), by the substitution of the following subparagraph for subparagraph (i):
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“(i) where the first-mentioned accounting period is for a period of 12 months and the accounting period (in this subparagraph referred to as ‘the second-mentioned accounting period’) immediately succeeding the first-mentioned accounting period is for a period of 12 months, on the filing of the return that the company is required to file under Part 41A for the second mentioned accounting period, or”,
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(vii) in subsection (12), by the substitution of “subsection (6)(a)(i)” for “subsection (6)(a)”, and
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(viii) in subsection (14), by the substitution of “subsection (6)(a)(i) or to be paid under subsection (6)(a)(ii)” for “subsection (6)(a) or to be paid under subsection (6)(b)”.
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(2) (a) Paragraph (a), subparagraphs (i) and (iii) of paragraph (c) and subparagraph (i) of paragraph (d) of subsection (1) shall apply in respect of any accounting period the specified return date (within the meaning of Part 41A) of which is on or after 23 September 2027.
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(b) Paragraph (b) of subsection (1) shall apply on and from the date of the passing of this Act.
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(c) Subparagraphs (ii), (iv), (v), (vi), (viii) and (ix) of paragraph (c) and subparagraphs (ii), (iii), (iv), (v), (vii) and (viii) of paragraph (d) of subsection (1) shall apply in respect of accounting periods ending on or after 31 December 2025.
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(d) Paragraph (c)(vii) of subsection (1) shall apply in respect of instalments payable in accordance with section 766C on and from the date of the passing of this Act.
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(e) Paragraph (d)(vi) of subsection (1) shall apply in respect of instalments payable in accordance with section 766D on and from the date of the passing of this Act.
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