Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

Section 110 of the Taxes Consolidation Act 1997 sets out the regime for the taxation of special purpose vehicles set up to securitise assets. Securitisation is both useful for banks in freeing capital to allow them to continue to lend to all taxpayers and for the productive economy as it can underpin the supply of capital market financing to industries and companies in Ireland, Europe and further afield. Ireland is not unique in having a specific regime for securitisations. The importance of securitisation has been recognised by the European Commission through the work on the capital markets union, a main objective of which is to build a sustainable securitisation regime across the EU.

Section 110 companies can hold certain qualifying assets. Real property is not an asset that a qualifying company can hold but they can hold loans and other financial assets that derive their value from them. Following concerns raised by the Revenue Commissioners and subsequently by Deputies on the finance committee as to the use of section 110 companies to hold debt secured on Irish property, the Finance Act 2016 made changes to the taxation of section 110 companies to ensure profits derived from Irish land and buildings would be subject to tax in Ireland. Those changes took effect from 6 September 2016.

With regard to the specifics of the report proposed by the Deputies I am advised the Revenue Commissioners do not and could not collect the type of information required to calculate the tax that would have been paid had the section 110 process not existed. In the first instance, some of the business carried on through section 110 companies simply would not be carried on here, or it would have been carried on here differently. There is no method to take account of how behaviour would have changed had the regime not existed. Second, in the case of activity which would have taken place in Ireland in the absence of section 110, the hypothetical alternative tax would depend on exactly what the underlying business was and how it might otherwise have been structured, as a company, a partnership or an investment fund, for example. Any such estimate would therefore be highly subjective and could not be presented as an accurate assessment of the tax impact of section 110. I therefore cannot accept the Deputies’ amendment.

I will correct the Deputy's statement. The top 20 largest landlords in Ireland account for 3.8% of the total tenancies. The Deputy alluded to a large number of companies claiming use of section 110 but that is not the case.

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