Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I move amendment No. 35:

In page 40, between lines 24 and 25, to insert the following:“other than a loan or a specified agreement which derives its value or the greater part of its value from a CLO transaction, a CMBS/RMBS transaction, a loan origination business or a sub-participation transaction,”.

Proposals for an amendment to section 110 of the Taxes Consolidation Act 1997 were initially published by the Department of Finance on 6 September to facilitate consultation on this complex and important issue. Since that date, a number of amendments have been made; however, the original policy intent of ensuring the tax base is appropriately protected in relation to Irish property transactions remains the same.

Amendment No. 35 is a technical amendment. It clarifies that a specified mortgage will not include a loan or a specified agreement which is part of a CLO transaction, a CMBS or RMBS transaction, a loan origination business or a sub-participation transaction. The origination of such loans was already excluded from the definition of loan origination; however, there was some uncertainty in the drafting which is clarified by the amendment which excludes these transactions from the definition of specified mortgage.

Amendments Nos. 36 and 37 provide that sub-participation structures will not be affected by the amendment to section 110 of the Taxes Consolidation Act 1997 brought forward by section 21 of the Bill. A sub-participation arrangement, sometimes called syndication, synthetic loan origination or synthetic securitisation, is required where, for example, a bank’s customer wants to borrow more than that bank can lend, usually for capital adequacy reasons. The bank will advance the money and then on-sell slices of the risk associated with the loan to other lenders. The customer continues to deal with its normal bank which is still the lender of record. The ability to ringfence the slices of debt, through the use of a section 110 company, reduces the cost of such structures without causing any tax leakage to the Exchequer. Such transactions are an essential part of a fully functioning domestic financial services market. I, therefore, commend the amendments to the House.

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