Gerald Nash (Louth, Labour)
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269. To ask the Minister for Finance if there is a citation in the relationship framework agreement between the Minister and a bank (details supplied) that prohibits or in any way prevents him from meeting with the bank to discuss and negotiate on a change to that agreement; and if he will make a statement on the matter. [12617/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy is aware and as set out in the Relationship Framework for PTSB, due to its systemic importance to the Irish financial system, the bank received significant support from the State in the financial crisis.

This support led to the State becoming the majority shareholder in PTSB with the approval of the European Commission. This approval was subject to the Minister and the Bank entering into the Relationship Framework on terms approved by the European Commission. One of the reasons for this was to ensure that the Minister’s shareholding did not result in breaches of competition law rules.

Critically, and as set out in the Relationship Framework, any amendments to, or revocation or replacement of, the Relationship Framework must be made following consultation with PTSB and upon the instruction, or with the agreement, of the European Commission.

As is clearly set out in the Relationship Framework, the board of PTSB has full responsibility and authority for all of the operations of the bank in accordance with its legal, fiduciary, and regulatory obligations. The Relationship Framework further provides for safeguards as to the separate management of each of the State’s interests in Irish credit institutions (including in PTSB) in order to ensure that those interests, and the management of those interests, do not lead to a prevention, restriction or distortion of competition in contravention of merger control or competition law rules.

It is therefore the case that any proposed amendment to the Relationship Framework must not only be in accordance with the regulatory requirements under which PTSB operates, the State Agreements referred to in the Relationship Framework and the law, the proposed amendments must also be approved by the European Commission following consultation with PTSB.

Gerald Nash (Louth, Labour)
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270. To ask the Minister for Finance if there is a citation in the relationship framework agreement between the Minister and a bank (details supplied) that prohibits or in any way prevents him from meeting with the bank to discuss and negotiate on a change to that agreement; and if he will make a statement on the matter. [12618/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy is aware and as set out in the Relationship Framework for Bank of Ireland, due to its systemic importance to the Irish financial system, the bank received significant support from the State in the financial crisis.

This support led to the State becoming a significant shareholder in Bank of Ireland with the approval of the European Commission. This approval was subject to the Minister and the Bank entering into the Relationship Framework on terms approved by the European Commission. One of the reasons for this was to ensure that the Minister’s shareholding did not result in breaches of competition law rules.

Critically, and as set out in the Relationship Framework, any amendments to, or revocation or replacement of, the Relationship Framework must be made following consultation with Bank of Ireland and upon the instruction, or with the agreement, of the European Commission.

As is clearly set out in the Relationship Framework, the board of Bank of Ireland has full responsibility and authority for all of the operations of the bank in accordance with its legal, fiduciary, and regulatory obligations. The Relationship Framework further provides for safeguards as to the separate management of each of the State’s interests in Irish credit institutions in order to ensure that those interests, and the management of those interests, do not lead to a prevention, restriction or distortion of competition in contravention of merger control or competition law rules.

It is therefore the case that any proposed amendment to the Relationship Framework must not only be in accordance with the regulatory requirements under which Bank of Ireland operates, the State Agreements referred to in the Relationship Framework and the law, the proposed amendments must also be approved by the European Commission following consultation with Bank of Ireland.

Gerald Nash (Louth, Labour)
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271. To ask the Minister for Finance the amount forgone to the Exchequer through past losses written-off against future tax liabilities by each of the pillar banks operating in the State (details supplied) from 2016 to 2020, in tabular form; and if he will make a statement on the matter. [12619/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy is aware, loss relief for corporation tax is a long-standing feature of the Irish corporate tax system and a standard feature of corporation tax systems in most OECD countries. It recognises the fact that a business cycle runs over several years and that it would be unfair to tax income earned in one year and not allow relief for losses incurred in another. Loss relief works by allowing a deduction for losses incurred in one accounting period against profits earned in another period.

In relation to the Deputy’s query, section 851A of the Taxes Consolidation Act, 1997 precludes Revenue officials from directly or indirectly disclosing taxpayer information to third parties unless this is specifically provided for in legislation. Therefore, neither Revenue nor I can comment on the tax affairs of any individual or company. However, as the State is the largest shareholder in PTSB, AIB and Bank of Ireland (owning 75%, 71% and 14% respectively of each bank), the Department of Finance monitors the overall strategic direction of these banks and develops and executes plans to optimise the value of the State’s investments.

In addition, Deputies may recall that in 2018, Department of Finance officials produced a detailed technical note for the Committee on Finance, Public Expenditure and Reform, and Taoiseach on the subject of both bank losses and corporation tax losses more generally (see ). It was further updated and re-circulated to members during the 2019 Finance Bill process. Based on the banks’ published annual reports, the technical note estimated that the value of tax losses brought forward that were utilised by the State’s three banks in 2017, 2018 and 2019 were as shown below. Data for 2016 was not included in the report and the banks’ 2020 annual reports have only recently been published and have not yet been analysed by officials.

Value of tax losses forward utilised per annual reports

The annual reports state that the banks have tax losses in Ireland and the United Kingdom (UK); although the above figures include utilisation of UK losses, they are understood to only represent only a small portion of the total. *Also, BOI executed an intragroup transaction in 2017 for the purpose of capital optimisation which reduced the quantum of tax losses utilised in the year to €17 million. Accordingly, the amount of tax losses utilised in 2016 of €84 million has been used in the above table as being representative of a more typical year.

It should also be noted that these banks do currently pay Irish corporation tax, as the tax losses do not shelter profits made in all their corporate entities in Ireland. At an Oireachtas committee meeting in 2018, Bank of Ireland indicated that it paid corporation tax of €31 million in Ireland in 2017. AIB also disclosed that it paid €58m in corporation tax in Ireland over the two years 2016/7, which would be an average of €29m each year. According to the banks’ 2019 financial statements, Bank of Ireland, AIB and PTSB incurred current year corporation tax charges in Ireland totalling €70 million. These corporation tax payments are in addition to the bank levy, which raised €295 million over the years 2017 to 2019, as shown below.

Gerald Nash (Louth, Labour)
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272. To ask the Minister for Finance the amount forgone to the Exchequer through past losses written-off against future tax liabilities by all companies from 2016 to 2020; the amount written off by company size and by the number of employees, respectively, in tabular form; and if he will make a statement on the matter. [12620/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy is aware, loss relief for corporation tax is a long-standing feature of the Irish corporate tax system and a standard feature of corporation tax systems in most OECD countries. It recognises the fact that a business cycle runs over several years and that it would be unfair to tax income earned in one year and not allow relief for losses incurred in another. Loss relief works by allowing a deduction for losses incurred in one accounting period against profits earned in another period.

Each year, Revenue publishes detailed analyses of the previous year’s corporation tax returns and payments which includes breakdowns of corporation tax loss relief by sector (available at ). These reports explain that, while a company must record losses claimed on their corporation tax returns, losses can only be used if there is an appropriate corporation tax liability to offset. Also, after the first year of claim, any losses and capital allowances carried forward are combined in tax returns data. Therefore, it is not possible to separately identify capital allowances and losses in the carry forward at aggregate level and the figures below for loss relief include excess capital allowances carried forward.

The amount of loss relief used in all 2016, 2017 and 2018 tax returns is as shown below. These figures include current year losses used in each year (i.e. losses incurred in the current year and offset against other sources of income) in addition to prior-year losses carried forward into that year. Revenue is currently analysing the 2019 corporation tax returns and will publish the results of this analysis later this year (the last of these returns were not due to be filed until September 2020). 2020 corporation tax returns are due to be filed up to September 2021 and Revenue will publish their analysis of these returns in 2022.

An analysis of loss relief used on the corporation tax returns for 2018 by company size by number of employees is shown in the following table. It should be noted that this data refers to the individual companies claiming the loss relief. Where such companies form part of a larger corporate group, the overall level of related employment may be significantly larger. Similar analysis is not readily available for earlier years, but I am advised that the distribution is not expected to vary greatly from year to year.

It should also be noted that the above tables show the amount of loss relief used by companies, but the valueof this loss relief depends on whether the losses were incurred in the course of a trade that is taxable at 12.5% or 25%. (The profits of an ‘excepted trade’ are chargeable to corporation tax at the 25% rate. An ‘excepted trade includes’: (i) subject to exclusions, a trade of dealing in or developing land; (ii) a trade involving working scheduled minerals, mineral compounds or mineral substances; and (iii) a trade relating to certain petroleum activities).

I am advised by Revenue that the value of loss relief used for all years up to 2018, the latest year available, is published at . This includes the cost associated with current year losses used and the cost of claims by self-employed taxpayers registered for income tax (Revenue advises me that over 90% of the cost shown for 2018 is associated with companies).