Taxes Consolidation Act 1997 section 247

Relief to companies on loans applied in acquiring interest in other companies

Section 247 provides relief for interest paid by a company on a loan used to invest in trading companies, rental companies, or holding companies, subject to conditions on ownership, directorship, and the use of the borrowed funds.

• A company can claim interest relief on a loan used to buy ordinary shares in, or lend money to, a trading company, a rental (Case V) company, or a holding company that holds shares in such companies — provided the funds are used for qualifying purposes such as trading, property acquisition or improvement, or holding shares.
• To qualify, the investing company must hold more than 5% of the ordinary share capital of the target company, must share at least one common director with it throughout the relevant period, and must not have recovered capital from the target or a connected company.
• Interest relief is restricted or denied where loans come from connected companies and are used to acquire shares in other connected companies, though exceptions exist for newly issued share capital used in trade, and for cases where matching taxable income ("relevant income") arises from the loan.
• Further restrictions apply where the borrowed funds are used to acquire specified intangible assets, to purchase assets from a connected company, or are on-lent to companies outside the Irish corporation tax net — in each case the relief is capped by reference to the income or profits generated by the use of those funds.