Taxes Consolidation Act 1997 section 751B

Exchange of Irish Government bonds

Section 751B provides special tax treatment for the Exchange Programme in Irish Government bonds initiated by the National Treasury Management Agency (NTMA), allowing investors who exchanged old higher-coupon bonds for new lower-coupon bonds of equal value to defer the resulting tax liability until the new securities are sold or redeemed.

• The section applies to exchanges of Government and semi-state securities under the NTMA Exchange Programme, deferring the tax on the "clean price" gain (i.e. the gain excluding accrued interest) until the new securities are disposed of or redeemed.
• For financial traders (those taxable under Schedule D Case I on securities dealing), the deferred tax is calculated using one of two formulae depending on whether the trader accounts for interest on a receipts basis (A − B − C) or an accruals basis (A − B).
• For non-traders, including collective investment undertakings and life assurance company life funds, capital gains tax on the exchange is deferred, and accrued interest is charged immediately under the bond washing rules in section 815.
• The deferral is available only on election (made within two years), the deferred tax is payable at the rate in force at the date of the exchange, and the provision ceased to apply to exchanges occurring after 31 December 1999.