Section 126 Certain statements of interest

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(1)(a) In this section-

"corporation tax" means the corporation tax charged by the Taxes Consolidation Act, 1997;

"Corporation Tax Acts" has the same meaning as in section 1 of the Taxes Consolidation Act, 1997;

"relevant interest" means any interest or other distribution which-

(i) is received by a company (in this section referred to as "the lender") which is within the charge to corporation tax,

(ii) is payable out of the assets of another company (in this subsection referred to as "the borrower") which is resident in the State for the purposes of corporation tax, in respect of a security of the borrower which is a security falling within subparagraph (ii), (iii) (I) or (v) of section 130(2)(d) of the Taxes Consolidation Act, 1997, and

(iii) is a distribution for the purposes of the Corporation Tax Acts;

"relevant period" means any period of 6 months ending on the 31st day of January or the 31st day of July.

(b) For the purposes of this section, any amount which, in a relevant period, is debited to a borrower's account with a lender in respect of relevant interest shall be treated as an amount received by the lender in that relevant period.

What levy is imposed on "section 84" loans?

(1) This section imposes an annual levy in respect of relevant interest, i.e., interest received by a lender in respect of "section 84" loans.

(2) A lender shall, within 30 days from the end of each relevant period, deliver to the Commissioners a statement in writing showing the amount of the relevant interest for that lender in respect of that relevant period.

If I am a lender, what statement must I file with Revenue?

(2) Within 30 days of the end of each relevant period (i.e., six month period ending on 31 January, or 31 July), a lender must send a written statement to Revenue showing the relevant interest for that period.

(3) There shall be charged on every statement delivered in pursuance of subsection (2) a stamp duty of an amount equal to 12 per cent of the amount of the relevant interest shown in the statement.

At what rate is duty charged on relevant interest?

(3) Stamp duty is charged at 12% on the relevant interest mentioned in (2).

(4) Notwithstanding subsection (3), in a case where the amount of the relevant interest received by a lender in respect of a security referred to in subsection (1) is an amount which is less than what would have been received by that lender had the security yielded simple interest at the rate of 6 per cent per annum throughout the period for which the relevant interest was payable, the stamp duty charged on the statement on the amount of the relevant interest for that security shall be an amount equal to 8 per cent of the amount received.

When does the 12% rate not apply?

(4) Stamp duty is charged at 8% on the relevant interest if the "section 84" interest received by a lender is less than simple interest of 6% per annum throughout the relevant period.

(5) The duty charged by subsection (3) on a statement delivered by a lender pursuant to subsection (2) shall be paid by the lender on delivery of the statement.

If I am a lender, when do I have to pay the duty charged?

(5) You must pay the total duty charged in (3) when filing the statement mentioned in (2).

(6) There shall be furnished to the Commissioners by a lender such particulars as the Commissioners may deem necessary in relation to any statement required by this section to be delivered by a lender.

As a lender, can I be required to provide any other information to Revenue apart from the statement?

(6) You must also provide any other information that Revenue deem necessary in relation to the statement.

(7) In the case of failure by a lender to deliver any statement required by subsection (2) within the time specified in that subsection or of failure by a lender to pay any duty chargeable on any such statement on the delivery of such statement, the lender shall be liable to pay, ...¹ in addition to the duty, interest on the duty at the rate of 2.5 per cent for each month or part of a month from the expiration of the relevant period to which the statement relates until the date on which the duty is paid.

Amendments

1 Deleted by Finance (No. 2) Act 2008 section 98 and Schedule 5 Part 5 Chapter 2 para 7(w) from 24 December 2008 and to the extent that Chapter 3A applies to penalties incurred under the Stamp Duties Consolidation Act 1999 before 24 December 2008 which by 24 December 2008 have not been paid, it shall not apply to such penalties which are in the form of interest accrued under any provisions of the act.

What interest or penalty apply for failure to file the statement or pay the duty on time?

(7) A lender who does not file the statement or pay the duty on delivery of the statement must pay penalty interest at the rate of 2.5% for each month or part of a month the duty remains unpaid.

(8) The delivery of any statement required by subsection (2) may be enforced by the Commissioners under section 47 of the Succession Duty Act, 1853, in all respects as if such statement were such account as is mentioned in that section and the failure to deliver such statement were such default as is mentioned in that section.

Do Revenue have power to compel a lender to file a statement?

(8) Yes.

(9) The stamp duty charged by this section shall not be allowed as a deduction for the purposes of the computation of any tax or duty under the care and management of the Commissioners payable by the lender.

Is stamp duty charged on relevant interest tax deductible?

(9) No - stamp duty charged by this section is not tax-deductible to the lender.