Taxes Consolidation Act 1997 section 79A

Matching of relevant foreign currency assets with foreign currency liabilities

Section 79A allows a company to match foreign currency exchange gains and losses on certain share investments and related borrowings for capital gains tax purposes.

• A company that acquires at least 25% of the shares in a trading company (or its holding company) using a non-euro currency may elect to match that asset with a corresponding foreign currency liability.
• The election must be notified in writing to the tax inspector within three weeks of acquiring the shares.
• On disposal of the matched asset, any exchange rate loss on the liability reduces the disposal consideration (but not below the exchange rate gain on the asset), and any exchange rate gain on the liability increases the disposal consideration (but not beyond the exchange rate loss on the asset).
• If the asset is disposed of before the liability is discharged, the company is treated as having discharged and re-incurred the liability at the time of disposal.