One-off 2.5% tax on the special long-term capital gains reserve

Section IV of Article 39 of the 2004 Amending Finance Act requires companies subject to corporate tax to transfer to an ordinary reserve account, before 31 December 2005, the amounts held in the special long-term capital gains reserve at the end of the first financial year ending on or after 31 December 2004, up to €200 million. These amounts, plus those incorporated into capital and losses charged to the reserve since 1 September 2004, bear a one-off tax of 2.5% after a €500,000 allowance. Companies may opt, until 31 December 2006, to transfer the portion above €200 million, which is then taxed in full. In case of non-compliance the rate is 5%. Half is paid on 15 March 2006 and the balance on 15 March 2007; it is not deductible and no tax credit can be offset against it.