knowledge | 6 September 2016 |
Amendments Proposed to the Irish Securitisation Regime in Relation to Financial Assets Secured on Irish Real Estate
The Minister of Finance has today proposed certain amendments to the Irish securitisation tax regime (section 110 of the Taxes Consolidation Act 1997) which, if enacted in the proposed form, will apply to profits arising after the 6th of September 2016. From that date where a securitisation company holds financial assets that derive their value or greater part of their value directly or indirectly from land in Ireland, such business will be treated as a separate specified property business of the securitisation company.
The securitisation company will have to account for this specified property business under normal accounting rules and may not avail of historic GAAP for Irish tax purposes. In addition, profit participating interest related to this specified property business, to the extent that it is in excess of an arm’s length rate, will not be deductible in certain circumstances. The proposed changes are to address certain concerns which have arisen in relation to the use of Irish securitisation vehicles in structures used to acquire Irish real estate loans where the profits on such assets would have been subject to Irish tax but for the use of the securitisation company in the structure.
The changes should not impact on other securitisation activities or transactions availing of section 110.
Also contributed by Deirdre Barnicle.
This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.