Taxes Consolidation Act 1997 section 518

Costs of establishing profit sharing schemes

Section 518 allows a company to deduct the costs of establishing a Revenue-approved profit sharing scheme for corporation tax purposes.

• A company that incurs expenditure on or after 10 May 1997 in setting up a profit sharing scheme approved by the Revenue Commissioners under Part 2 of Schedule 11 may deduct that expenditure in computing its trading profits for Schedule D purposes.
• An investment company (or an assurance company to which section 83 applies by virtue of section 707) may instead treat the establishment costs as deductible management expenses under section 83(2).
• The deduction is only available where the scheme trustees have not acquired any shares before Revenue approval is granted.
• Where Revenue approval is given more than nine months after the end of the accounting period in which the costs were incurred, the expenditure is treated as incurred in the accounting period in which approval is given rather than the period in which it was actually spent.