Finance Bill 2016 Update – Proposed Amendments to Ireland's Section 110 Regime – Irish Real Estate Related Assets

Finance Bill 2016 was published today and contains some important clarifications to the proposals published on 6 September 2016 to amend Ireland’s Section 110 regime in respect of profits derived from Irish real estate. Section 110 companies that have no exposure to Irish real estate (which is the vast majority of section 110 companies) remain unaffected by the proposed amendments. The following points are of note:

  • Securitisation transactions involving Irish mortgage loans such as CMBS and RMBS, as well as CLOs, are now expressly excluded from the scope of the provisions. While it was never the intention to include these types of transactions, the drafting now makes this clear. This is in line with previous statements by the Minister for Finance on the importance of securitisation to the Irish economy and is a welcome clarification.
  • Loan origination by a Section 110 company has also been expressly excluded from the proposals and will be welcomed by providers and recipients of alternative finance to the Irish real estate development sector.
  • Where applicable, the proposals are to apply to accounting periods commencing on or after 6 September 2016 (the date the original proposals were published) with a deemed split for tax purposes where an accounting period straddles that date. It is disappointing that no provision has been made for a Section 110 company investing in Irish mortgage loans to obtain a step up in base cost to market value on 6 September. Depending upon the accounting policies adopted by the Section 110 company, this may bring unrealised gains prior to 6 September 2016 within the scope of the proposals.

A summary of the proposals is set out in the link below.

If you have any queries or would like to discuss please contact us or your regular Walkers contact.


Download a printer friendly PDF version of the advisory here