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

It would be incorrect to assume that we can tax these assets because we do not tax assets. I presume the Deputy is talking about tax on the income stream in respect of rent-mortgage repayments or capital gains tax. One or the other would be subject to tax. The first move by investment companies of this nature is to seek to change behaviour to either eliminate or reduce their tax liability. We know that there are changes in this behaviour already. As I said, those that continue in the business will be taxed at 25%.

Capital gains tax is a feature of the property price. Property prices are increasing. This means there would be additional capital gains to be paid as property prices continue to rise, such that to predict what tax might be payable by any individual fund by 2018 or 2019 is not possible. The Revenue Commissioners have estimated the amount to be paid in 2017 will be €50 million, which amount they say is conservative and prudent. I hope it will be exceeded. As I said, there are changes in behaviour already under way. Most of the bulk buying of Irish property commenced in 2014. The Deputy will be aware that under tax law these companies must file their returns by September 2015, such that they were operating for 21 months in some cases before the Revenue was given the data on which it could make assumptions. In late 2015, the Revenue began to suspect there was something untoward happening in regard to the application of section 110, which was legitimately introduced for the financial services industry. It then informed my Department of the position in early 2016. It was a difficult issue to address but we worked hard on it and as soon as we had a solution we published it ahead of the Finance Bill in September 2016.

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