Taxes Consolidation Act 1997 section 79C

Exclusion of foreign currency as asset of certain companies

Section 79C provides that foreign exchange gains and losses arising from foreign currency bank deposits held by certain holding companies are chargeable to Corporation Tax rather than Capital Gains Tax, with a formula to ensure the effective tax rate matches the Capital Gains Tax rate.

• Foreign currency held in Irish bank accounts by qualifying holding companies is removed from the Capital Gains Tax regime and instead charged to Corporation Tax under Case IV of Schedule D.
• A qualifying ("relevant") holding company must have at least one wholly-owned trading subsidiary, or must acquire or establish one within one year of a net foreign exchange gain being credited to its accounts.
• The taxable amount is calculated using the formula A × C/B (where A is the net gain, C is the Capital Gains Tax rate, and B is the Corporation Tax rate on Case IV income), which increases the chargeable amount so that the Corporation Tax payable equals what would have been payable under Capital Gains Tax.
• Unused foreign exchange losses existing when this section came into effect may be treated as losses under either the Corporation Tax loss provisions (section 383) or the Capital Gains Tax loss provisions (section 546), but relief cannot be claimed under both.