Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the Deputy. As he is aware, I am not in a position to comment on the activities of individual taxpayers. However, I can give the following overview of section 110 of the Taxes Consolidation Act 1997 as it relates to the securitisation of mortgages.

Securitisation allows banks to raise capital and share risk. By providing a repackaging and resale market for corporate debt it lowers the cost of debt financing. It is accepted that having the option of more diversified sources of financing is good for investment and business. It is also important for financial stability in the economy, as the ability to securitise loan books plays an important role in allowing banks to meet their capital requirement obligations and continue lending to businesses and individuals.

The role of securitisation has been recognised by the European Commission through its work on capital markets union. However, this regime is subject to several anti-avoidance provisions. For example, the Finance Act 2011 restricted the ability of section 110 companies to avail of a tax deduction for interest payments to connected persons in respect of profit participation notes. The Finance Act 2016 put further restrictions in place.

I am aware that there are competing concerns in this area. On the one hand, there are ongoing concerns regarding loan book sales and the appropriate levels of taxation. On the other hand, it is recognised that bona fide securitisation is important for both consumer lending and bank capital requirements. My officials, together with officials in Revenue, will continue to monitor the sector with a view to taking action if necessary.

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