Finance Act 2025

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Chapter 5

Corporation Tax

Enhanced deduction for eligible construction expenditure

42. The Principal Act is amended by the insertion of the following section after section 81D:

“81E. (1) In this section—

‘apartment’ means a separate and self-contained dwelling in a qualifying apartment block—

(a) that has sleeping facilities, bathroom facilities and cooking facilities within it for the exclusive use of the occupant of the dwelling concerned, and

(b) other than where the dwelling is situated on the ground floor of a multi-storey building, access to the dwelling is grouped or in common with other separate and self-contained dwellings;

‘certificate of compliance on completion’, ‘commencement notice’, ‘local authority’, ‘planning permission’ and ‘planning permission period’ have the same meaning, respectively, as they have in section 653A(1);

‘completed development’ means a qualifying apartment block, in respect of which—

(a) planning permission has been granted which includes permission for not fewer than 10 new apartments in the qualifying apartment block,

(b) a relevant commencement notice is lodged with the relevant local authority on or after 8 October 2025 but not later than 31 December 2030, and

(c) on or before the expiry of the planning permission period relating to it—

(i) all works required to ensure that all apartments in the qualifying apartment block are suitable for occupation as a dwelling have been completed, and

(ii) a relevant certificate of compliance on completion is lodged with the relevant local authority;

‘construction operations’ and ‘excepted trade’ have the same meaning, respectively, as they have in section 21A;

‘eligible expenditure’, in relation to a completed development, means, subject to subsection (8), expenditure incurred by a relevant person in connection with construction operations carried out in respect of the completed development, being expenditure which is incurred up to the relevant date, excluding—

(a) any capital expenditure so incurred, and

(b) ineligible expenditure;

‘enhanced deduction’ has the meaning given to it by subsection (4);

‘ineligible expenditure’, in relation to a completed development, means any expenditure incurred by a relevant person in respect of the completed development in respect of any or all of the following:

(a) financing costs;

(b) insurance costs;

(c) professional and legal fees;

(d) sales and marketing costs;

(e) taxes, duties, levies or charges under the care and management of the Revenue Commissioners;

(f) the acquisition of, or rights in or over, any land;

(g) levies, fees, charges or contributions imposed by, or under, any enactment in respect of the completed development concerned, however described in the relevant enactment, including any—

(i) development contributions,

(ii) utility connection charges,

(iii) environmental levies,

(iv) planning application fees,

(v) building control fees, or

(vi) building energy rating fees;

‘land’ includes any interest in land;

‘material change’ shall be construed in accordance with subsection (2);

‘property developer’ means a company carrying on a relevant property development trade;

‘qualifying apartment block’ means a building that—

(a) is a multi-storey building,

(b) is principally comprised of not fewer than 10 apartments, and

(c) is—

(i) a newly erected building, or

(ii) not being a building referred to in subparagraph (i), a building that meets the requirements of paragraphs (a) and (b) as a result of a material change,

and includes an area of land for occupation and enjoyment by its occupants with the building as its gardens or grounds;

‘qualifying refurbishment’ means any work of construction, reconstruction, restoration, repair or renewal, including the provision or improvement of water, sewerage or heating facilities, carried out on a building or structure, or part of a building or structure;

‘qualifying trade’, in relation to a relevant contractor, means a trade carried out by the relevant contractor, which—

(a) is not an excepted trade, and

(b) consists wholly or mainly of the construction or refurbishment of buildings or structures;

‘relevant accounting period’ means the accounting period in which the relevant certificate of compliance on completion in respect of a completed development is lodged with the relevant local authority;

‘relevant beneficial owner’ means a beneficial owner of a completed development that is not a relevant person in respect of that completed development;

‘relevant certificate of compliance on completion’ means a certificate of compliance on completion lodged with the relevant local authority or, where there is more than one such certificate of compliance on completion, the last such certificate of compliance on completion so lodged, in respect of a completed development;

‘relevant commencement notice’ means a commencement notice lodged with the relevant local authority or, where there is more than one such commencement notice, the first such commencement notice so lodged, in respect of a completed development;

‘relevant contractor’, in relation to a completed development, means a company that develops the completed development pursuant to a contract entered into with the beneficial owner, or where there is more than one beneficial owner, the beneficial owners, of that completed development;

‘relevant date’, in relation to a completed development, means the date on which the relevant certificate of compliance on completion is lodged with the relevant local authority in respect of that completed development;

‘relevant declaration’ means a declaration that is made under and in accordance with subsection (3);

‘relevant local authority’, in relation to a completed development, means the local authority in whose functional area the completed development is situated;

‘relevant person’ means—

(a) a property developer that—

(i) in the course of a relevant property development trade, develops a completed development, and

(ii) on the relevant date is a beneficial owner of the completed development,

or

(b) a relevant contractor—

(i) that, in the course of a qualifying trade, develops a completed development, and

(ii) to which a relevant declaration has been made by a relevant beneficial owner, or where there is more than one relevant beneficial owner, a relevant declaration has been made by each relevant beneficial owner, in respect of that completed development;

‘relevant property development trade’, in relation to a property developer, means a trade carried out by the property developer, which—

(a) is not an excepted trade, and

(b) consists wholly or mainly of the construction or refurbishment of buildings or structures with a view to their sale.

(2) For the purposes of this section, there is a material change where, following a qualifying refurbishment, a building or part of a building, or a structure or part of a structure—

(a) although not originally constructed for occupation as a dwelling, or

(b) although originally constructed for occupation as a dwelling, was not suitable for use as a dwelling or has been appropriated to other purposes,

becomes suitable for use as a dwelling.

(3) (a) Where, on the relevant date, a completed development is beneficially owned by a relevant beneficial owner, then—

(i) the relevant beneficial owner, or

(ii) where there is more than one relevant beneficial owner, each relevant beneficial owner,

may make a declaration in accordance with paragraph (c) to a relevant contractor for the purposes of the relevant contractor making a claim for an enhanced deduction under this section.

(b) A relevant declaration shall not be made to more than one relevant contractor in respect of a completed development and, where a relevant declaration is made to more than one relevant contractor in respect of the same completed development, it shall be deemed that no relevant declaration has been made to any relevant contractor in respect of that completed development.

(c) A relevant declaration shall be a declaration in writing to a relevant contractor which—

(i) is made by a relevant beneficial owner of a completed development (in this paragraph referred to as ‘the declarer’) for the purposes of the relevant contractor making a claim for an enhanced deduction under this section,

(ii) is signed by the declarer,

(iii) is made in such form as may be prescribed or authorised by the Revenue Commissioners,

(iv) declares—

(I) that on the relevant date the declarer is a relevant beneficial owner of the completed development and the percentage of the completed development of which the declarer is a relevant beneficial owner on the relevant date,

(II) that the relevant contractor developed the completed development pursuant to a contract entered into by the declarer and the relevant contractor,

(III) that the declarer is not a relevant person,

and

(v) contains—

(I) the name, address and tax reference number of the declarer and relevant contractor,

(II) the address of the completed development and the number of apartments in the completed development, and

(III) such other information as the Revenue Commissioners may reasonably require for the purposes of this section.

(d) Where, in respect of a completed development—

(i) a relevant declaration is made by the relevant beneficial owner, or

(ii) where there is more than one relevant beneficial owner, a relevant declaration is made by each relevant beneficial owner,

to a relevant contractor, then, for the purposes of this section, the relevant contractor shall be deemed to be the beneficial owner, on the relevant date, of the percentage of the completed development beneficially owned on the relevant date by each relevant beneficial owner, who makes the relevant declaration.

(e) A relevant contractor to which a relevant declaration has been made shall keep and retain the relevant declaration for a period of 6 years from the end of the accounting period in which a return has been delivered making a claim under this section in respect of the completed development to which the relevant declaration relates.

(4) Where—

(a) a relevant person has incurred eligible expenditure in respect of a completed development, and

(b) the relevant person is, in the computation of the amount of the profits or gains of a relevant property development trade or a qualifying trade, as the case may be, to be charged to corporation tax under Case I of Schedule D for an accounting period, entitled to any deduction on account of eligible expenditure in respect of the completed development,

then, the relevant person shall, on the making of a claim, be entitled, in the computation of the amount of the profits or gains of that trade for the relevant accounting period, to a further deduction (in this section referred to as an ‘enhanced deduction’) equal to the amount determined under subsection (5).

(5) Subject to subsections (6) and (7), the amount of the enhanced deduction in respect of a completed development shall be equal to the amount determined by the formula—

A x 25%

where—

A is the amount of eligible expenditure incurred by the relevant person in respect of the completed development in respect of which the relevant person is entitled to a deduction in the computation of the amount of the profits or gains of a relevant property development trade or a qualifying trade, as the case may be, to be charged to corporation tax under Case I of Schedule D for an accounting period.

(6) The amount of the enhanced deduction in respect of a completed development shall not exceed the amount determined by the formula—

B x C x D

where—

B is the number of apartments in the completed development,

C is €50,000, and

D is the percentage of the completed development that is beneficially owned by the relevant person, or in the case of a relevant person who is a relevant contractor is deemed, by virtue of subsection (3)(d), to be beneficially owned by the relevant person, on the relevant date.

(7) Any amount of eligible expenditure incurred by a relevant person in respect of a completed development which—

(a) has been or is to be met, directly or indirectly, by grant assistance or any other assistance which is granted by or through the State, any board established by statute, any public or local authority or any other agency of the State,

(b) exceeds the amount which would be payable between independent persons acting at arm’s length in a transaction similar to that in respect of which the expenditure was incurred, or

(c) is incurred as part of a scheme or arrangement, where it is reasonable to consider that the main purpose, or one of the main purposes, is the avoidance of, or reduction in, liability to tax,

shall, in calculating the amount of the enhanced deduction in respect of a completed development, be excluded from the amount represented by ‘A’ in the formula in subsection (5).

(8) Where expenditure is incurred by a relevant person in connection with construction operations in respect of both a completed development and a development that is not a completed development, such expenditure shall be apportioned by the relevant person on a just and reasonable basis.

(9) (a) A claim under this section shall be made by a relevant person within 12 months from the end of the relevant accounting period to which the claim relates and shall be made in the return filed under Part 41A, in respect of that accounting period.

(b) The relevant person shall, when making a claim in accordance with paragraph (a), provide details of—

(i) the eligible expenditure incurred in relation to the completed development and in respect of which the relevant person is claiming an enhanced deduction,

(ii) the number of apartments in the completed development, and

(iii) such other information as the Revenue Commissioners may reasonably require for the purposes of this section.

(10) (a) Where, in computing for tax purposes the profits of a relevant property development trade or a qualifying trade, as the case may be, an enhanced deduction has been claimed by a relevant person and, in computing that deduction, a debt incurred by the relevant person was included in the amount of eligible expenditure, then, if the whole or any part of that debt is thereafter released, an amount equal to the portion of the enhanced deduction which was determined based on the amount released (in this subsection referred to as the ‘disallowed deduction’) shall be treated as a receipt of the relevant property development trade or a qualifying trade, as the case may be, arising in the period in which the release is effected.

(b) Where paragraph (a) applies, and the trade concerned has been permanently discontinued at or after the end of the period for which the enhanced deduction was claimed and before the release was effected, or is treated for tax purposes as if it had been so discontinued, section 91 shall apply as if the disallowed deduction were a sum received after the discontinuance.”.