Pearse Doherty (Donegal, Sinn Fein)
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135. To ask the Minister for Finance further to Parliamentary Question No. 35 of 21 May 2025, to clarify that credit servicing firms, regulated by the Central Bank of Ireland, are permitted to hold legal title of mortgages without owning the underlying loan related to the mortgage; and if he will make a statement on the matter. [28360/25]

Pearse Doherty (Donegal, Sinn Fein)
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136. To ask the Minister for Finance if he will instruct the Central Bank of Ireland to collect the data regarding the number of legal titles held by credit servicing firms in relation to Irish property; and if he will make a statement on the matter. [28361/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 135 and 136 together.

The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (the 2015 Act) and the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 (the 2018 Act) applies to the activity of credit servicing in relation to relevant credit agreements. The Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Act 2022 and EU Directive 2021/2167, which was transposed by the European Union (Credit Servicers and Credit Purchasers) Regulations 2023, applies to the servicing of agreements within the scope of those enactments.

The 2015 Act made the activity of credit servicing a regulated activity. This legislation ensured that where an unregulated entity acquired the legal title to the rights of the creditor under a relevant credit agreement (legal title loan 'owner'), that entity had to become a regulated entity unless the agreement was serviced by a regulated credit servicing firm or by an alternative type of regulated entity such as a bank or retail credit firm.

Subsequently, the 2018 Act expanded the scope of credit servicing to include, in and of itself, holding the legal title to the rights of creditor and associated ownership activities. Any entity with such a legal interest in a relevant loan, if not already subject to Central Bank regulation, has to be authorised as a credit servicing firm even where the entity had already appointed a person authorised to carry out credit servicing activities. Under the 2018 Act, the determination of the overall strategy for the management and administration of a portfolio of credit agreements and the maintenance of control over key decisions relating to such a portfolio also became a credit servicing activity subject to regulation.

While credit servicing, including legal title loan ownership, in relation to a relevant agreement is a regulated activity, the holding of a beneficial interest in the entitlements of the creditor under such an agreement (beneficial loan 'owner') is not a regulated activity and, unless such an entity is also carrying on a credit servicing activity, it does not fall within the regulatory remit of the Central Bank.

Also as previously indicated, in its ‘Residential Mortgage Arrears & Repossessions Statistics’ the Central Bank publishes certain mortgage data, including the aggregated number and value of residential mortgage accounts, managed by resident banks and relevant non-bank regulated entities.

The most recent data, which is for end December 2024, indicates that there were 699,121 primary dwelling home mortgage accounts, of which 579,923 were managed by banks and 119,198 were managed by non-bank retail credit and credit servicing firms. In all these cases, the entity holding the legal title to the rights of the creditor is a Central Bank regulated entity. Accordingly such agreements fall within the Central Bank’s consumer protection framework which is the same irrespective of the particular class of regulated entity involved.

While the matter of data collection by the Central Bank for the purposes of its regulatory and supervisory functions is in the first instance a matter for the Bank, and is an issue which is kept under review, it is not considered that it is necessary to collect further data at this time from regulated entities, or a particular class of regulated entity, and, therefore, I do not propose to make such a request to the Bank at this time.

Pearse Doherty (Donegal, Sinn Fein)
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137. To ask the Minister for Finance further to Parliamentary Question No. 36 of 21 May 2025, to clarify a section 110 special purpose vehicle that holds only the loans related to residential mortgages but is not the subject under subsection (5A) on section 110; and if he will make a statement on the matter. [28362/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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As noted in response to Parliamentary Question No. 36 of 21 May 2025, Finance Act 2016 made certain changes to the taxation of qualifying companies, within the meaning of section 110 Taxes Consolidation Act 1997 (“TCA 1997”). The changes, which included the introduction of a new subsection (5A) in section 110, relate to the taxation of profits derived from the business of qualifying companies that involves the holding, managing or both the holding and managing of specified mortgages, including any activities which are ancillary to that business, after 6 September 2016. Specified mortgages refer to any financial assets that derive their value, or the greater part of their value, directly or indirectly from land in the State. Subsection (5A) requires that the part of the qualifying company's business that includes specified mortgages is treated as a separate business from any other business the company may carry on and, with certain exceptions, no interest above an arm's length rate is deductible in computing the taxable profits of that part of the business. This separate business of qualifying companies is referred to in legislation as the specified property business.

The restrictions for the specified property business do not apply where the transactions or business of the qualifying companies includes:

a) A collateralised loan obligation (CLO) transaction

b) A commercial mortgage backed security (CMBS) / residential mortgage backed security (RMBS) transaction

c) A loan origination business

d) A sub-participation transaction

e) Activities carried out in preparation of carrying out the above activities.

I am advised by Revenue, that based on provisional data available from corporation tax filings, the number of qualifying companies with specified mortgages where the restrictions for the specified property business do not apply are as follows: