Robert Troy (Longford-Westmeath, Fianna Fail) | Oireachtas source

Fianna Fáil will support these resolutions. Financial Resolution No. 6 relates to avoidance opportunities identified by the Revenue Commissioners with regard to the OECD base erosion and profit shifting report of October 2012. Agreement was reached at EU level to progress five separate anti-avoidance measures via the anti-tax avoidance directives agreed in 2016 and 2017. Ireland signed up to both programmes and we are happy to support the financial resolution.

Financial Resolutions Nos. 7 and 8 relate to Irish real estate funds. A total of 25% or more of these funds must comprise Irish assets. With regard to IREFs and REITs, tax is charged not on gains within the fund but on funds extracted. The amendments proposed in Financial Resolution No. 7 include the introduction of a debt to property cost limit and an income to interest rate ratio to combat excessive leveraging and related party interest expenses in IREFs and a provision to ensure a partial redemption of IREF units results in a proportionate realisation of any accrued gains.

The amendments being made in Financial Resolution No. 8 are to ensure that REITs pay appropriate levels of tax. These proposals will generate approximately €135 million per annum, which is very welcome. In recent years, we have all become very aware of cuckoo funds swooping in, outbidding private individuals and paying little or no tax. Heretofore, cuckoo funds have had a totally unfair competitive advantage over private citizens looking, in many instances, to acquire their first home. In 2007, the funds purchased approximately 600 properties. This increased fivefold in 2018, when they purchased 3,000 units. We are late in coming to the game and this is very much a reactionary measure. These funds have avoided a lot of tax in the past two years, at a time when private individuals were finding it so difficult to afford their first homes. These funds can readily access the best professional advice from accountants and legal experts in order to ensure that they pursue an aggressive tax strategy to avoid and reduce their tax liabilities.

While we support the two resolutions, it is important that this is kept under regular review and that it will be part of the tax strategy annual papers to ensure we keep pace with new potential tax avoidance mechanisms to ensure a level playing field. Heretofore, there was not a level playing field. Institutional investors were coming in and buying large-scale properties and not paying tax. They had an unfair competitive advantage over small Irish landlords. More importantly, they had an unfair competitive advantage over people trying to acquire their first homes. We support the resolutions.

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