The Irish Government acknowledges the key role Ireland’s taxation system plays in ensuring that Ireland remains one of the leading jurisdiction for aircraft leasing and related business. In this regard, the recent Finance Bill 2013 (as initiated) contained further measures which will only enhance Ireland’s growing reputation for conducting aviation related business.
The Bill contains relieving provisions granting tax depreciation (in the form of industrial building allowances) for capital expenditure incurred on the construction or refurbishment of buildings and structures used for the maintenance, repair or overhaul of commercial aircraft used to carry passengers or cargo for hire or reward.
The new provisions are subject to the issue of a Ministerial Order however, the relief will apply for capital expenditure incurred during the 5 year period commencing from the passing of the Finance Act. The relief will be granted on a straight line basis over a 7 year period (15% in years 1 to 6 and 10% in year 7) with no clawback of the tax relief arising where the property is held for at least 7 years from when the building or structure is first used.
The Bill also extends an existing stamp duty exemption, the loan capital exemption, to include the issue, transfer or redemption of loan capital issued by a company to raise finance to acquire, develop or lease an aircraft (known as an “enhanced equipment trust certificate”). This is a further positive development for the asset finance and aviation industries. Previously such securities were potentially stampable at a rate of 2%.