Irish Revenue has released eBrief No. 307/24 on 10 December 2024, providing new guidance on leasing ringfences, outlined in the Tax and Duty Manual 12-04-02 – Leasing Ringfences – Sections 403 and 404 of the Taxes Consolidation Act 1997.
The ringfences aim to prevent the creation of tax advantages using leasing structures by restricting how excess capital allowances arising from leased machinery and plant may be used by a leasing company or group as the case may be.
Section 403 places a ringfence around the leasing of machinery or plant generally such that capital allowances on leased machinery or plant can be set off only against leasing income, or amounts arising from “lease-adjacent” activities and not against any other income or gains of the company or wider group. Part A of this TDM covers the section 403 ringfence.
Section 404 places additional restrictions on “balloon leases.” These are leases that are structured to give rise to accelerated allowances while deferring the taxation of lease receipts to the end of the lease. This ringfence may also apply to certain restructuring and sale and leaseback arrangements. Part B of this TDM covers the section 404 ringfence.
