S.L. 123.27 чл. 5EDeemedtransferof an interest in a partnership.

(1) Where a person (hereinafter referred to as "the transferee") acquires or increases a partnership share (hereinafter referred to as "the change"), other than by way of an acquisition of an interest in the partnership from another partner or partners, it shall be deemed that a transfer of an interest in the partnership has been made by the other partner or partners (hereinafter referred to as "the transferor") to that person. For the purposes of this rule, "partner or partners" means any person holding an interest in a partnership.

(2) The chargeable gain arising from the transfer referred to in sub-rule (1) shall be determined in accordance with the following formula:

Y = A – B where -

(a) 'Y' represents the amount to be determined;

(b) 'A' is the market value of the interest held by the partner in the partnership immediately before the change;

(c) 'B' is the market value of the interest held by the partner in the partnership immediately after the change. For the purpose of sub-rule (1), where the value of 'Y' in the formula results in a positive amount such partner shall be deemed to have transferred an interest in the partnership:

Provided that where the value of 'Y' is a negative amount or is below one hundred euro (€100), it shall be taken to be zero: Provided also that where the deemed transfer is made by the transferor to a person referred to in article 5(2)(e)(i) of the Act, the value of 'Y' shall be taken to be zero and the statement referred to in sub-rule (4) shall not be required to be submitted:

Provided also that, where a person ("the transferee") acquires or increases a partnership share, any payment made outside of the partnership accounts by such person to any other partner or partners shall, where such payment exceeds the chargeable gain as determined by the said formula, be the amount chargeable to tax.

(3) For the purpose of sub-rule (2), the market value of the interest in the partnership, immediately before and after the change, is to be determined in accordance with the provisions of rule 5D(3) and (4):

Provided that -

(a) paragraph (b) of the proviso of rule 5D(3) shall not apply for the purpose of determining the value of 'B' in the formula referred to in sub-rule (2);

(b) for the purpose of determining the value of 'B' in the formula referred to in sub-rule (2), any contribution consisting of money or other property made to the partnership by the transferee, which is credited to the capital or current accounts of the other partner or partners, shall be treated as being credited to the capital or current account of the transferee;

(c) for the purpose of carrying out the allocation of the market value of the partnership between the partners to satisfy each partner’s capital and current account balances, whether immediately before or after the transfer, as the case may be, any revaluations or goodwill adjustments credited to such accounts shall be disregarded and shall form part of the remaining balance of the market value.

(4) The transferor in any deemed transfer of an interest in a partnership shall submit to the Commissioner a statement prepared by a certified public accountant holding a practicing certificate in auditing made on the form prescribed in Schedule I including a computation of the market value of the interest as required by rule 5D(4), and such statement shall be accompanied, where applicable, by a Perit’s valuation of the market value of the immovable property taken into account in determining the value of the interest.

(5) The statement referred to in sub-rule (4) shall be delivered in triplicate to the Commissioner (Capital Transfer Duty Department) and the transferor shall, together with the delivery, pay to the Commissioner the provisional tax due on the transfer in accordance with article 43 of the Income Tax Management Act.

(6) The Commissioner shall stamp one of the copies of the certificate submitted in accordance with sub-rule (5) in acknowledgement of the receipt of same and return it to the person who submitted it.

(7) The provisions of rule 5(13) shall, apply mutatis mutandis, to this rule.

(8) (a) A reduction in the contribution of a partner in a partnership shall be deemed to be a transfer of such proportion of the partner’s interest in the partnership as is equal to the proportion of the reduction in the contribution of the partner and shall constitute a gain or loss in the year in which such reduction is effected: Provided that where there is a proportionate reduction in the contribution of all the partners, such that the proportion of the interest of each partner with respect to profit sharing ratios and share of assets on winding up is equal both before and after the reduction is effected, it shall be deemed that no loss or gain has arisen from the transfer: Provided further that the provisions of sub-rule (2) shall not apply in the case where this sub-rule applies.

(b) On any subsequent transfer of the remaining interest of such partner, the cost of acquisition shall be deemed to be the residual part of the cost of acquisition not taken into account on the reduction of the contribution.

(c) The provisions of rule 5D shall, mutatis mutandis, apply for determining the chargeable gains or profits derived from a deemed transfer of an interest in a partnership resulting from a reduction in the contribution of a partner: Provided that the provisions of rule 5D(6) to (11) shall also apply to the said transfer.