Taxes Consolidation Act, 1997 (Number 39 of 1997)
[2]>
110 Securitisation of assets.
[FA91 s31; FA96 s55(1)]
(1) In this section—
“qualifying asset” means—
(a) in the case of a qualifying company which is a qualified company (within the meaning of section 446), an asset—
[1]>
(i) denominated in a foreign currency which consists of, or of an interest in or a contractual right to, any loan, lease, trade or consumer receiveable or other debt or receiveable whether secured or unsecured, and
<[1]
[1]>
(i) which consists of, or of an interest in or a contractual right to, any loan, lease, trade or consumer receivable or other debt or receivable whether secured or unsecured, and
<[1]
(ii) of a person (in this section referred to as “the originator”), being any government, public or local authority, company or other body corporate which—
(I) is not resident in the State, and
(II) (A) is not carrying on a trade in the State through a branch or agency, or
(B) is carrying on a trade in the State through a branch or agency and the asset was not created, acquired or held by or in connection with the branch or agency,
and
(b) in any other case, a loan made by a company (in this section referred to as “the original lender”) on the security of a mortgage of a freehold or leasehold estate or interest in the ordinary course of a trade carried on by it which consists of or includes the lending of money on such security;
“qualifying company” means a company resident in the State which carries on a business of the management of qualifying assets which it acquired from the original lender or original lenders or the originator or originators, as the case may be, and does not carry on any other business, apart from activities which are ancillary to the business of the management of those qualifying assets, but a company shall not be a qualifying company if any transaction is carried out by it otherwise than by means of a bargain made at arm’s length.
(2) For the purposes of the Tax Acts—
(a) activities carried out in the course of a business carried on by a qualifying company shall be deemed to be activities carried out in the course of a trade, the profits or gains of which are chargeable to tax under Case I of Schedule D,
(b) there shall be deducted as an expense of the trade the amount, in so far as it is not—
(i) otherwise deductible, or
(ii) recoverable from the original lender or the originator, as the case may be, or under any insurance, contract of indemnity or otherwise howsoever,
of any debt which is proved to the satisfaction of the inspector to be bad and of a doubtful debt to the extent that it is estimated to be bad; but, in the case of a company referred to in paragraph (b) of the definition of “qualifying asset”, the amount of the debt shall not be deducted under this paragraph unless it would have been deductible as an expense of the trade of the original lender if that debt had been proved or estimated to be bad before it was acquired by the qualifying company, and
(c) where at any time an amount or part of an amount which has been deducted as an expense under paragraph (b) is recovered or is no longer estimated to be bad, the amount which has been so deducted shall, in so far as it is recovered or is no longer estimated to be bad, be treated as trading income of the trade at that time.
<[2]
[6]>
[2]>
110Securitisation of assets.
(1) In this section—
“initial period” in relation to any one originator or original lender means the 3 month period commencing on the day on which any qualifying assets were first acquired from that originator or original lender, as the case may be;
“original lender” means any government, public or local authority, company or other body corporate;
“originator” means an original lender who is not resident in the State;
“qualified company” has the same meaning as in section 446;
“qualifying asset” in relation to a company means—
(a) in a case where the company is a qualified company, an asset of an originator which the qualified company acquired directly or indirectly from the originator other than an asset which was created, acquired or held by or in connection with a branch or agency through which the originator carries on a trade in the State, and
(b) in any other case, an asset of an original lender which the company acquired directly or indirectly from the original lender,
where the asset—
(i) in a case where paragraph (a) applies, consists of, or of an interest in or a contractual right to, any loan, lease, trade or consumer receivable or other debt or receivable whether secured or unsecured,
(ii) and in the case of a company to which paragraph (b) applies, consists of, or of an interest in any financial asset (within the meaning of section 496);
“qualifying company” means a company—
(a) which is resident in the State,
(b) which carries on in the State a business of management of qualifying assets,
(c) which, apart from activities ancillary to that business, carries on no other activities in the State, and
(d) in relation to which the market value throughout the initial period of all qualifying assets acquired from any one originator or original lender, as the case may be, is not less than [5]>£10,000,000<[5][5]>€12,690,000<[5],
but a company shall not be a qualifying company if any transaction is carried out by it otherwise than by way of a bargain made at arm’s length[3]>, apart from a transaction where the provisions of paragraph (a) of subsection (3) apply to any interest or other distribution payable under the transaction unless the transaction concerned is excluded from the provisions of that paragraph (a) by virtue of paragraph (b) of that subsection<[3].
(2) For the purposes of the Tax Acts in relation to activities carried out in the course of a business carried on by—
(a) a qualifying company which is a qualified company—
(i) such activities shall be deemed to be activities carried out in the course of a trade, the profits or gains of which are chargeable to tax under Case I of Schedule D,
(ii) there shall be deducted as an expense of the trade the amount in so far as it is not—
(I) otherwise deductible, or
(II) recoverable from the originator, or under any insurance, contract of indemnity or otherwise howsoever,
of any debt which is proved to the satisfaction of the inspector to be bad and of a doubtful debt to the extent that it is estimated to be bad, and
(iii) where at any time an amount or part of an amount which has been deducted as an expense under subparagraph (ii) is recovered or is no longer estimated to be bad, the amount which has been so deducted shall, in so far as it is recovered or is no longer estimated to be bad, be treated as trading income of the trade at that time, and
(b) any other qualifying company—
(i) profits arising from such activities shall, notwithstanding any other provisions of the Tax Acts, be treated as annual profits or gains within Schedule D and shall be chargeable to corporation tax under Case III of that Schedule, and for that purpose shall be computed in accordance with the provisions applicable to Case I of that Schedule,
(ii) there shall be deducted, in computing the amount of the profits to be charged to tax the amount, in so far as it is not—
(I) otherwise deductible, or
(II) recoverable from the original lender or under any insurance, contract of indemnity or otherwise howsoever,
of any debt which is proved to the satisfaction of the inspector to be bad and of a doubtful debt to the extent that it is estimated to be bad; but the amount of the debt shall not be deducted under this paragraph unless it would have been deductible as an expense of the trade of the original lender, where the original lender is a company or other body corporate, if that debt had been proved or estimated to be bad before it was acquired by the qualifying company, and
(iii) where at any time an amount or part of an amount which has been deducted as an expense under subparagraph (ii) is recovered or is no longer estimated to be bad, the amount which has been deducted shall, in so far as it is recovered or no longer estimated to be bad, be treated as income of the qualifying company at that time.
<[2]
[4]>
(3) (a) Any interest or other distribution which—
(i) is paid out of assets of a qualifying company, directly or indirectly, to—
(I) an original lender or, as the case may be, an originator,
(II) a company which is a 75 per cent subsidiary of the original lender or the originator,
(III) a company of which the original lender or the originator is a 75 per cent subsidiary, or
(IV) a company (other than the original lender or the originator) which is a 75 per cent subsidiary of a company such as is referred to in clause (III),
and
(ii) is so paid in respect of a security falling within section 130(2)(d)(iii),
shall not be a distribution by virtue only of section 130(2)(d)(iii) unless the application of this paragraph is excluded by paragraph (b).
(b) Paragraph (a) shall not apply where—
(i) an original lender or, as the case may be, an originator,
(ii) a company which is a 75 per cent subsidiary of the original lender or the originator,
(iii) a company of which the original lender or the originator is a 75 per cent subsidiary, or
(iv) a company (other than the original lender or the originator) which is a 75 per cent subsidiary of a company such as is referred to in subparagraph (iii),
(in this paragraph referred to as the “lender”) advances an amount or amounts of money to a qualifying company in respect of securities falling within section 130(2)(d)(iii) held, directly or indirectly, by the lender which amount or the total of which amounts, at any time, is in excess of 25 per cent of the market value of all qualifying assets acquired by the qualifying company from that original lender or originator at the time of the acquisition of the qualifying assets.
<[4]
<[6]
[6]>
110 Securitisation.
(1) In this section—
“authorised officer” means an officer of the Revenue Commissioners authorised by them in writing for the purposes of this section;
[13]>
“carbon offsets” means—
(a) an allowance, permit, licence or right to emit during a specified period, a specified amount of carbon dioxide or any other greenhouse gas as defined in Directive 2003/87/EC of the European Parliament and of the Council of 13 October 20031 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC of 24 September 19962, where such allowance, permit, licence or right is issued by a State or by an inter-governmental or supra-national institution pursuant to a scheme which—
(i) imposes limitations on the emission of such greenhouse gases, and
(ii) allows the transfer for value of such allowances, permits, licences or rights,
(b) an allowance, permit, licence or right to emit during a specified period, a specified amount of carbon dioxide or any other recognised greenhouse gas under a voluntary scheme sponsored by a State or by an inter-governmental institution, or regulated commercial enterprise, where such allowance, permit, licence or right is subject to recognised independent periodic verification, monitoring and [23]>reporting, or<[23][23]>reporting,<[23]
[24]>
(ba) a forest carbon offset issued pursuant to the United Nations [31]>Reduced<[31][31]>Reducing<[31] Emissions from Deforestation and Forest Degradation [31]>programme<[31][31]>process<[31], or
<[24]
[25]>
(c) any right that is directly attributable to an allowance, permit, licence or right to emit within paragraph (a) or (b);
<[25]
[25]>
(c) any right that is directly attributable to an offset, allowance, permit, licence or right to emit within paragraph (a), (b) or (ba);
<[25]
“commodities” means tangible assets (other than currency, securities, debts or other assets of a financial nature) which are dealt in on a recognised commodity exchange;
<[13]
[14]>
“qualifying asset”, in relation to a qualifying company, means an asset which consists of, or of an interest [8]>(including a partnership interest)<[8] in, a financial asset;
<[14]
[14]>
“qualifying asset” means an asset which consists of, or of an interest (including a partnership interest) in—
(a) a financial asset,
(b) commodities, or
(c) plant and machinery;
<[14]
“financial asset” includes—
(a) shares, bonds and other securities,
(b) futures, options, swaps, derivatives and similar instruments,
(c) invoices and all types of receivables,
(d) obligations evidencing debt (including loans and deposits),
(e) leases and loan and lease portfolios,
(f) hire purchase contracts,
(g) acceptance credits and all other documents of title relating to the movement of goods, [10]>and<[10]
(h) bills of exchange, commercial paper, promissory notes and all other kinds of negotiable or transferable [9]>instruments;<[9][9]>instruments,<[9]
[11]>
[15]>
(i) greenhouse gas emissions allowance, and
<[15]
[15]>
(i) carbon offsets, and
<[15]
(j) contracts for insurance and contracts for reinsurance;
<[11]
[16]>
[12]>
“greenhouse gas emissions allowance” means an allowance, permit, licence or right to emit during a specified period, a specified amount of carbon dioxide or any other greenhouse gas as defined in Directive 2003/87/EC of the European Parliament and of the Council of 13 October 200311 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC of 24 September 199612, where such allowance, permit, licence or right is issued by a State or by an inter-governmental or supra-national institution pursuant to a scheme which—
(a) imposes limitations on the emission of such greenhouse gases, and
(b) allows the transfer for value of such allowances, permits, licences or rights;
<[12]
<[16]
“qualifying company” means a company—
(a) which is resident in the State,
(b) which—
(i) acquires qualifying assets from a person,
(ii) as a result of an arrangement with another person holds or manages qualifying assets, or
(iii) has entered into a legally enforceable arrangement with another person which arrangement itself constitutes a qualifying asset,
[17]>
(c) which carries on in the State a business of holding, managing, or both the holding and management of, qualifying assets,
<[17]
[17]>
(c) which carries on in the State a business of holding, managing or both the holding and managing of qualifying assets, including, in the case of plant and machinery acquired by the qualifying company, a business of leasing that plant and machinery,
<[17]
(d) which, apart from activities ancillary to that business, carries on no other activities,
(e) in relation to which company—
(i) the market value of all qualifying assets held or managed, or
(ii) the market value of all qualifying assets in respect of which the company has entered into legally enforceable arrangements,
is not less than €10,000,000 on the day on which the qualifying assets are first acquired, first held, or an arrangement referred to in subparagraph (iii) of paragraph (b) is first entered into, by the company, and
[32]>
(f) which has notified in writing the authorised officer in a form prescribed by the Revenue Commissioners that it is or intends to be a company to which paragraphs (a) to (e) apply and has supplied such other particulars relating to the company as may be specified on the prescribed form, [26]>on or before the specified return date (within the meaning of [30]>section 950<[30][30]>section 959A<[30]) for the first accounting period, in relation to which it is such a company,<[26]
<[32]
[32]>
(f) which has notified in writing the authorised officer in a form prescribed by the Revenue Commissioners that it is or intends to be a company to which paragraphs (a) to (e) apply and has supplied such other particulars relating to the company as may be specified on the prescribed form including details concerning the—
(i)type of transaction,
(ii)assets acquired,
(iii)originator,
(iv)intra-group transactions, and
(v)connected parties,
not later than 8 weeks from—
(I)1 January 2017 where the day referred to in paragraph (e) predates 1 January 2017 and the company has not yet made the notification in writing to the authorised officer in the form prescribed by the Revenue Commissioners as required to be made by the specified return date (within the meaning of section 959A) for the first accounting period in relation to which it is such a company, or
(II)the day referred to in paragraph (e),
and where information required is not available at the time the written notification is provided to the authorised officer, that information should be provided without undue delay upon becoming available,
<[32]
but a company shall not be a qualifying company if any transaction or arrangement is entered into by it otherwise than by way of a bargain made at arm’s length, apart from a transaction or arrangement where subsection (4) applies to any interest or other distribution payable under the transaction or arrangement unless the transaction or arrangement concerned is excluded from that provision [18]>by virtue of subsection (5)<[18][18]>by virtue of subsections [33]>(4A) and (5)<[33][33]>(4A), (5) and (5A)<[33]<[18].
[19]>
“quoted Eurobond” has the same meaning as in section 64;
“return agreement”, in relation to a qualifying company, means a specified agreement whereby payments due under the specified agreement are dependent on the results of the company’s business or any part of the company’s business;
“specified instrument” means a quoted Eurobond or wholesale debt instrument;
“specified person”, in relation to a qualifying company, means—
(a) a company which directly or indirectly—
(i) controls the qualifying company,
(ii) is controlled by the qualifying company, or
(iii) is controlled by a third company which also directly or indirectly controls the qualifying company,
[44]>where “controls” and “controlled” have the same meanings as they would have by the application of section 11 to this paragraph,<[44] or
(b) a person, or persons who are connected with each other—
(i) from whom assets were acquired, or
(ii) to whom the qualifying company has made loans or advances, or
[45]>
(iia) to whom loans or advances held by the qualifying company were made, or
<[45]
(iii) with whom the qualifying company has entered into specified agreements, where the aggregate value of such assets, loans, advances or agreements represents not less than 75 per cent of the aggregate value of the qualifying assets of the qualifying company;
[46]>
“significant influence” means a person with the ability to participate in the financial and operating decisions of a company;
<[46]
“specified agreement” means any agreement, arrangement or understanding that—
(a) provides for the exchange, on a fixed or contingent basis, of one or more payments based on the value, rate or amount of one or more interest or other rates, currencies, commodities, securities, instruments of indebtedness, indices, quantitative measures, or other financial or economic interests or property of any kind, or any interest therein or based on the value thereof, and
(b) transfers to a person who is a party to the agreement, arrangement or understanding or to a person connected with that person, in whole or in part, the financial risk associated with a future change in any such value, rate or amount without also conveying a current or future direct or indirect ownership interest in an asset (including any enterprise or investment pool) or liability that incorporates the financial risk so transferred;
“wholesale debt instrument” has the same meaning as in section 246A.
<[19]
(2) For the purposes of the Tax Acts, profits arising to a qualifying company, in relation to activities carried out by it in the course of its business, shall, notwithstanding any other provisions of the Tax Acts, be treated as annual profits or gains within Schedule D and shall be chargeable to corporation tax under Case III of that Schedule, and for that purpose—
(a) the profits or gains shall be computed in accordance with the provisions applicable to Case I of that Schedule,
(b) there shall be deducted, in computing the amount of the profits or gains to be charged to tax, the amount, in so far as it is not—
(i) otherwise deductible, or
(ii) recoverable from any other person or under any insurance, contract of indemnity or otherwise,
of any debt which is proved to be bad and of a doubtful debt to the extent that it is estimated to be [47]>bad, and<[47][47]>bad,<[47]
(c) where at any time an amount or part of an amount which had been deducted under paragraph (b) is recovered or is no longer estimated to be bad, the amount which had been deducted shall, in so far as it is recovered or no longer estimated to be bad, be treated as income of the qualifying company at that [48]>time.<[48][48]>time, and<[48]
[49]>
(d) in computing the profits or gains of a qualifying company, section 835C shall not apply to any amount deducted by a qualifying company for any interest or other distribution paid in respect of a security referred to in subsection (4).
<[49]
(3) (a) Notwithstanding Chapter 5 of Part 12, a qualifying company shall not be eligible to surrender in accordance with that Chapter any amount eligible for relief from corporation tax.
(b) (i) Where in an accounting period a qualifying company incurs a loss, the company may make a claim requiring that the amount of the loss be set off against the amount of any profits of the company for any subsequent accounting period for so long as the company continues to be a qualifying company, and the company’s profits for any accounting period shall be treated as reduced by the amount of the loss.
(ii) The claim referred to in subparagraph (i) shall be included with the return which the company is required to make under [28]>section 951<[28][28]>Chapter 3 of Part 41A<[28] for the subsequent accounting period concerned.
(iii) The amount of a loss incurred by a qualifying company in an accounting period shall be computed for the purposes of this paragraph in the same way as any profits of the company in that period would have been computed under subsection (2).
[20]>
(4) Any interest or other distribution which is paid out of the assets of a qualifying company to another person and is so paid in respect of a security referred to in section 130(2)(d)(iii) shall not be a distribution by virtue only of section 130(2)(d)(iii) unless the application of this subsection is excluded by subsection (5).
<[20]
[20]>
(4) Subject to subsections [34]>(4A) and (5)<[34][34]>(4A), (5) and (5A)<[34], any interest or other distribution which is paid out of the assets of a qualifying company to another person and is so paid in respect of a security referred to in section 130(2)(d)(iii), shall not be a distribution by virtue only of the provisions of that section.
<[20]
[21]>
(4A) (a) For the purposes of this subsection “relevant territory” and “tax” have the same meanings as in section 246.
(b) Subject to paragraph (c), as respects any interest or other distribution paid by a qualifying company to a person, other than—
[27]>
(i) a person who is resident in the State, or
<[27]
[27]>
(i) a person who is resident in the State or, if not so resident, is otherwise within the charge to corporation tax in the State in respect of that interest or other distribution, or
<[27]
(ii) a person, (not being a specified person) who is a pension fund, government body or other person resident in a relevant territory who, under the laws of that territory, is exempted from tax which generally applies to profits, income or gains in that territory,
subsection (4) shall only apply to so much of such interest or other distribution—
(I) as under the laws of a relevant territory, is subject, without any reduction computed by reference to the amount of such interest or other distribution, to a tax which generally applies to profits, income or gains received in that territory, by persons, from sources outside that territory, or
(II) as is a payment from which tax has been deducted at the standard rate in force at the time of the payment in accordance with section 246(2).
(c) Notwithstanding paragraph (b), subsection (4) shall apply to any interest or other distribution paid by a qualifying company in respect of a specified instrument other than so much of such interest or other distribution as is paid to a specified person in respect of a specified instrument where, at the time the instrument was issued, the qualifying company was in possession, or aware, of information, including information about any arrangement or understanding in relation to ownership of the instrument after that time, which could reasonably be taken to indicate that interest or other distributions which would be payable in respect of that instrument would not be subject, without any reduction computed by reference to the amount of such interest or other distribution, to a tax in a relevant territory which generally applies to profits, income or gains received in that territory, by persons, from sources outside that territory.
(4B) Where any amount, paid out of the assets of a qualifying company under a return agreement, that is dependent on the results of that company’s business or any part of that business, would not be deducted in computing profits or gains of that company if that amount were to be treated, for all the purposes of the Tax Acts, other than subsection (2) of section 246, as a payment of interest, in respect of securities of the company other than specified instruments, that was dependent on the results of the company’s business, then that amount shall not be so deducted.
<[21]
[22]>
(5) (a) Subject to paragraph (b), subsection (4) shall not apply in respect of any interest or other distribution paid or payable out of the assets of a qualifying company if such interest or other distribution has been paid as part of a scheme or arrangement the main purpose or one of the main purposes of which is to obtain a tax relief or the reduction of a tax liability, in either case arising from the operation of subsection (4), by a person within the charge to corporation tax (in this subsection referred to as the “beneficiary”) and the beneficiary is the person—
(i) from whom the qualifying assets were acquired by the qualifying company, or
(ii) with whom the qualifying company has entered into an arrangement referred to in subparagraph (ii) or (iii) of paragraph (b) of the definition of “qualifying company”.
(b) Paragraph (a) shall only apply where the qualifying company concerned is, at the time of the acquisition of the asset or the entering into of the arrangement, in possession, or aware, of information which can reasonably be used by it to identify the beneficiary.
<[22]
<[6]
[50]>
[22]>
(5) Subsection (4) shall not apply in respect of any interest or other distribution as is paid by a qualifying company where the qualifying company concerned is, at the time of the payment, in possession, or aware, of information that can reasonably be taken to indicate that the payment is part of a scheme or arrangement the main benefit or one of the main benefits of which is the obtaining of a tax relief or the reduction of a tax liability the benefit of which would be expected to accrue to a person who, in relation to the qualifying company, is a specified person.
<[22]
<[50]
[50]>
(5) Subsection (4) shall apply only in respect of any interest or other distribution as is paid by a qualifying company where it would be reasonable to consider that the payment is made, or the security to which the payment relates was entered into, for bona fide commercial purposes and does not form part of any arrangement or scheme of which the main purpose, or one of the main purposes, is the avoidance of tax.
<[50]
[35]>
(5A)(a)In this subsection—
“arrangement” includes any agreement, understanding, scheme, transaction or series of transactions;
“CLO transaction” means a securitisation transaction entered into by a qualifying company which is carried out in conformity with—
(a)a prospectus, within the meaning of Directive 2003/71/EC of the European Parliament and of the Council of 4 November 20033,
(b)listing particulars, where any securities issued by the qualifying company are listed on an exchange, other than the main exchange, of the State or a relevant Member State, or
(c)where the securities issued by the qualifying company will not be listed on an exchange in the State or a relevant Member State, legally binding documents,
that—
(i)may provide for a warehousing period, which for the purposes of this subsection means a period not exceeding 3 years during which time the qualifying company is preparing to issue securities, and
(ii)provide for investment eligibility criteria that govern the type and quality of assets to be acquired,
and where, based on the documents referred to in paragraphs (a) to (c) and the activities of the qualifying company, it would not be reasonable to consider that the main purpose, or one of the main purposes, of the qualifying company was to acquire specified mortgages;
“CMBS/RMBS transaction” means a securitisation transaction entered into by the qualifying company where—
(a) the originator (within the meaning of paragraph (a) of the definition of “originator” in Article 4 of the CRR) retains a net economic interest in the credit risk of the securitisation position in accordance with Article 405 of the CRR, or
(b) an originator (within the meaning of paragraph (b) of the definition of “originator” in Article 4 of the CRR) retains a net economic interest in the credit risk of the securitisation position in accordance with Article 405 of the CRR and is a financial institution (within the meaning of the CRR) or credit institution (within the meaning of the CRR) regulated by a competent authority in a relevant Member State or the State or is authorised by a third country authority, recognised by the European Commission as having supervisory and regulatory arrangements at least equivalent to those applied in a relevant Member State or the State, to carry out similar activities;
[52]>
“CRR” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 20134;
<[52]
[52]>
“CRR” means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 as amended by—
(a) Commission Delegated Regulation (EU) 2015/62 of 10 October 20145 amending Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to the leverage ratio,
(b) Regulation (EU) 2016/1014 of the European Parliament and of the Council of 8 June 20166 amending Regulation (EU) No 575/2013 as regards exemptions for commodity dealers,
(c) Commission Delegated Regulation (EU) 2017/2188 of 11 August 20177 amending Regulation (EU) No 575/2013 of the European Parliament and of the Council as regards the waiver on own funds requirements for certain covered bonds,
(d) Regulation (EU) 2017/2395 of the European Parliament and of the Council of 12 December 20178 amending Regulation (EU) No 575/2013 as regards transitional arrangements for mitigating the impact of the introduction of IFRS 9 on own funds and for the large exposures treatment of certain public sector exposures denominated in the domestic currency of any Member State,
(e) Regulation (EU) 2017/2401 of the European Parliament and of the Council of 12 December 20179 amending Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms,
(f) Commission Delegated Regulation (EU) 2018/405 of 21 November 201710 correcting certain language versions of Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012,
(g) Regulation (EU) 2019/630 of the European Parliament and of the Council of 17 April 201911 amending Regulation (EU) No 575/2013 as regards minimum loss coverage for non-performing exposures,
(h) Regulation (EU) 2019/876 of the European Parliament and of the Council of 20 May 201912 amending Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements, and Regulation (EU) No 648/2012,
(i) Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 201913 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014, and
(j) Regulation (EU) 2020/873 of the European Parliament and of the Council of 24 June 202014 amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards certain adjustments in response to the COVID-19 pandemic;
<[52]
“EEA state” means a state, not being a Member State or the State, which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2 May 1992 as adjusted by the Protocol signed at Brussels on 17 March 1993;
“loan origination business” means the making of an advance, other than a specified security to a borrower that has a specified property business—
(a)in respect of which the qualifying company is the original creditor, or
(b)that is acquired by the qualifying company on or about the date on which it was advanced,
provided that such advance is not made as a result of a novation or refinancing of a specified mortgage, other than for bona fide commercial reasons and did not form part of an arrangement the main purpose, or one of the main purposes, of which was to avoid the application of this subsection;
“relevant Member State” means a Member State, other than the State, or not being such a Member State, an EEA state;
“securitisation” means a securitisation within the meaning of the CRR;
“specified mortgage” means—
(a)a loan which is secured on, and which derives its value from, or the greater part of its value from, directly or indirectly, land in the State,
(b)a specified agreement which derives all of its value, or the greater part of its value, directly or indirectly, from land in the State or a loan to which paragraph (a) applies, other than a loan or a specified agreement which derives its value or the greater part of its value from a CLO transaction, a CMBS/RMBS transaction, a loan origination business or a sub-participation transaction, [36]>or<[36]
(c)the portion of a specified security treated as attributable to the specified property business in accordance with paragraph (c)(ii)[37]>, or<[37][37]>;<[37]
[38]>
(d)units in an IREF (within the meaning of Chapter 1B of Part 27);
<[38]
[39]>
“specified property business”, in relation to a qualifying company, means the whole, or part, of the business of the qualifying company that involves the holding, managing or both the holding and managing of specified mortgages, and shall not include—
(a)a CLO transaction,
(b)a CMBS/RMBS transaction,
(c)a loan origination business,
(d)a sub-participation transaction, or
(e)activities which are preparatory to the transactions or business mentioned in paragraphs (a) to (d),
where the qualifying company, in respect of paragraphs (a) or (b), apart from activities incidental or preparatory to that transaction or business, carries on no other activities;
<[39]
[39]>
“specified property business” in relation to a qualifying company, means the whole, or part, of the business of the qualifying company that involves the holding, managing or both the holding and managing of—
(a) specified mortgages,
(b) units in an IREF (within the meaning of Chapter 1B of Part 27), or
(c) shares that derive their value from, or the greater part of their value from, directly or indirectly, land in the State,
and shall not include—
(i) a CLO transaction,
(ii) a CMBS/RMBS transaction,
(iii) a loan origination business,
(iv) a sub-participation transaction, or
(v) activities which are preparatory to the transactions or business mentioned in subparagraphs (i) to (iv),
where the qualifying company, in respect of subparagraph (i) or (ii), apart from activities incidental or preparatory to that transaction or business, carries on no other activities;”,
<[39]
“specified security” means a security where subsection (4) would, or would but for this subsection, apply to any interest or other distribution payable thereon;
“sub-participation transaction” means a transaction which involves the acquisition of an economic interest in a loan by the qualifying company in the ordinary course of a bona fide syndication of such loan to one or more lenders where the originator of the loan—
(a)is a financial institution (within the meaning of CRR) or credit institution (within the meaning of CRR)—
(i)regulated by a competent authority in a relevant Member State or the State, or
(ii)authorised by a third country authority, recognised by the European Commission as having supervisory and regulatory arrangements at least equivalent to those applied in a relevant Member State or the State, to carry out similar activities,
(b)remains a lender of record, and
(c)retains a material net economic interest in the credit risk of the loan of not less than 5 per cent.
(b)(i) In calculating the portion of the value of [40]>a loan or specified agreement<[40][40]>shares, a loan or specified agreement<[40] attributable directly or indirectly to land in the State for the purposes of paragraph (a), account shall not be taken of any arrangement that—
(I) involves a transfer of assets, other than a [41]>specified mortgage<[41][41]>specified mortgage, units in an IREF or shares referred to in paragraph (c) of the definition of ‘specified property business’ in paragraph (a)<[41], from a person connected with the qualifying company, and
(II) the main purpose, or one of the main purposes, of which is the avoidance of tax.
(ii) In calculating the portion of the value of [42]>each loan or specified agreement<[42][42]>each share holding, loan or specified agreement<[42] attributable directly or indirectly to land in the State for the purposes of paragraph (a), regard shall be had to the gross value of the assets from which the [43]>specified mortgage<[43][43]>specified mortgage, units in an IREF or shares referred to in paragraph (c) of the definition of ‘specified property business’ in paragraph (a), as the case may be,<[43] derives its value of which the land in the State is part.
(c)(i) Notwithstanding the generality of section 70(1), the profits arising to a qualifying company from its specified property business shall be treated for the purposes of the Tax Acts, other than any provision relating to the commencement or cessation of a trade, as a separate business which is distinct from any other business or part of a business carried on by the qualifying company.
(ii) For the purposes of treating the specified property business of a qualifying company as a separate business, in accordance with subparagraph (i), any necessary apportionment shall be made so that expenses laid out or expended in earning the profits of that separate business shall be attributed to the separate business on a just and reasonable basis and the amount of the expenses so apportioned shall be an amount which would be attributed to a distinct and separate company, engaged in the same activities, if it were independent of, and dealing at arm's length with, the qualifying company.
(d) Subject to subsections (4A) and (5), subsection (4) shall only apply to the calculation of the profits of a specified property business of a qualifying company in respect of so much of any interest or other distribution payable in respect of a specified security—
(i) as is paid by a qualifying company to—
(I) a person —
(A) being an individual who is resident in the State and within the charge to income tax, or
(B) in any other case, who is or will be within the charge to corporation tax,
in the State in respect of that interest or other distribution,
(II) a fund approved under section 774, 784(4) or 785(5), [53]>a PRSA within the meaning of section 787A,<[53][53]>a PRSA within the meaning of section 787A, a PEPP within the meaning of Chapter 2D of Part 30,<[53] a person exempt from income tax under section 790B or a fund authorised by a Member State or an EEA state and subject to supervisory and regulatory arrangements at least equivalent to the supervisory and regulatory arrangements applied to those funds in the State,
(III) a person (referred to in this clause as the “non-resident person”) who—
(A) being an individual is a national of a relevant Member State, or
(B) being a company, is formed under the laws of, and is registered in, a relevant Member State,
where under the laws of any relevant Member State the interest or other distribution is subject, without any reduction computed by reference to the amount of such interest or other distribution, in respect of any interest or other distribution which is to any extent dependent on the interest or other distribution payable on the specified security, or in respect of any imputed, deemed or notional expenses calculated by reference to an amount of debt, equity or hybrid financing, including instruments which are neither debt nor equity financing to a tax which generally applies to income or profits (other than gains), received in that state, by persons, from sources outside that state where it would be reasonable to consider that—
(AA) the holding of the specified security by the non-resident person does not form part of any arrangement or scheme the main purpose, or one of the main purposes, of which is the avoidance of a liability to tax, and
(AB)where the non-resident person is a company, genuine economic activities, relevant to the holding of the specified security, are carried on by the non-resident person in any relevant Member State,
(IV)an IREF (within the meaning of Chapter 1B of Part 27), or
(V)an investment undertaking, other than an investment undertaking which would be a personal portfolio IREF (within the meaning of section 739M) if all references in that section to IREFs were references to investment undertakings, and references to IREF assets and IREF business were references to the assets and activities of that investment undertaking,
(ii)as on the creation of the specified security, would represent no more than a reasonable commercial return which is not dependent on the results of the qualifying company for the use of that principal, or
(iii)from which tax has been properly deducted at the standard rate in force at the time of the payment in accordance with section 246(2) and such tax which has been properly deducted is not refundable.
(e)(i) Subject to subparagraph (ii), this subsection shall apply to accounting periods commencing on or after 6 September 2016.
(ii) Where the accounting period of a company begins before 6 September 2016 and ends after that date, for the purposes of this subsection, that accounting period shall be divided into 2 parts, one beginning on the date on which the accounting period begins and ending on 5 September 2016 and the other beginning on 6 September 2016 and ending on the date on which the accounting period ends.
<[35]
[7]>
(6) (a) Subject to paragraph (b), section 76A shall have effect in relation to a qualifying company as it would if, in section 4, the following were substituted for the definition of generally accepted accounting practice:
“generally accepted accounting practice” means Irish generally accepted accounting practice as it applied for a period of account ending on 31 December 2004.
(b) A qualifying company may, as respect any accounting period, by notice in writing given to the inspector by the specified return date (within the meaning of [29]>section 950<[29][29]>section 959A<[29]) for the accounting period, elect that this subsection shall not apply as respects that or any subsequent accounting period; and any election under this paragraph shall be irrevocable.
(c) Schedule 17A shall apply with any necessary modifications to a company which makes an election under paragraph (b).
<[7]
[51]>
(7) For the purposes of this section, a person has control of a company where that person has—
(a) the power to secure—
(i) by means of the holding of shares or the possession of voting power in or in relation to that or any other company, or
(ii) by virtue of any powers conferred by the constitution, articles of association or other document regulating that or any other company,
that the affairs of the first-mentioned company are conducted in accordance with the wishes of that person, or
(b) significant influence over the first-mentioned company and holds, directly or indirectly, more than—
(i) 20 per cent of the issued share capital of the company,
(ii) 20 per cent of the principal value of any securities referred to in subsection (4) issued by that company, or any such securities where those securities have no principal value, or
(iii) the right to 20 per cent of the interest or other distribution payable in respect of any securities referred to in subsection (4) issued by that company.
<[51]
[12]>
Footnotes
[16]>
11 OJ No. L275, 25 October 2003, p.32
12 OJ No. L257, 10 October 1996, p.26
<[16]
[13]>
1OJ No. L275 of 25.10.2003, p.32
2OJ No. L257 of 10.10.1996, p.26
<[13]
[35]>
3OJ No. L354, 31.12.2003, p.64
4OJ No. L176, 27.6.2013, p.1
<[35]
5 OJ No. L. 11, 17.1.2015, p. 37.
6 OJ No. L. 171, 29.6.2016, p. 153.
7 OJ No. L. 310, 25.11.2017, p. 1.
8 OJ No. L. 345, 27.12.2017, p. 27.
9 OJ No. L. 347, 28.12.2017, p. 1.
10 OJ No. L. 74, 16.3.2018, p. 3.
11 OJ No. L. 111, 25.4.2019, p. 4.
12 OJ No. L. 150, 7.6.2019, p. 1.
13 OJ No. L. 314, 5.12.2019, p. 1.
14 OJ. No. L. 204, 26.6.2020, p. 4.
<[12]
[3]
Inserted by FA00 s82(1)(a). This section shall apply as respects any interest paid on or after 10 February 2000.
[4]
Inserted by FA00 s82(1)(b). This section shall apply as respects any interest paid on or after 10 February 2000.
[7]
Inserted by FA05 s48(1)(d). This section applies as respects any period of account beginning on or after 1 January 2005.
[23]
Substituted by FA12 s41(1)(a). Deemed to have come into force and takes effect on and from 1 January 2012.
[24]
Inserted by FA12 s41(1)(b). Deemed to have come into force and takes effect on and from 1 January 2012.
[25]
Substituted by FA12 s41(1)(c). Deemed to have come into force and takes effect on and from 1 January 2012.
[26]
Inserted by FA12 s41(2). Deemed to have come into force and takes effect on and from 1 January 2012.
[27]
Substituted by FA12 s41(3). Deemed to have come into force and takes effect on and from 1 January 2012.
[30]
Substituted by FA13 sched1(part2)(b). Applies— (a) in the case of a chargeable period (within the meaning of section 321(2)) which is an accounting period of a company, as respects chargeable periods that start on or after 1 January 2013, and (b) in a case other than that referred to in paragraph (a), as respects the year of assessment (within the meaning of section 2(1)) 2013 and subsequent years of assessment.
[34]
Substituted by FA16 s22(b). Comes into operation on 6 September 2016 subject to the provisions of s110 5A (e) (ii) TCA 1997.
[36]
Inserted by FA17 s20(1)(a)(i)(I). Applies to interest or other distribution payable on or after 19 October 2017.
[37]
Substituted by FA17 s20(1)(a)(i)(II). Applies to interest or other distribution payable on or after 19 October 2017.
[38]
Deleted by FA17 s20(1)(a)(i)(III). Applies to interest or other distribution payable on or after 19 October 2017.
[39]
Substituted by FA17 s20(1)(a)(ii). Applies to interest or other distribution payable on or after 19 October 2017.
[40]
Substituted by FA17 s20(1)(b)(i)(I). Applies to interest or other distribution payable on or after 19 October 2017.
[41]
Substituted by FA17 s20(1)(b)(i)(II). Applies to interest or other distribution payable on or after 19 October 2017.
[42]
Substituted by FA17 s20(1)(b)(ii)(I). Applies to interest or other distribution payable on or after 19 October 2017.
[43]
Substituted by FA17 s20(1)(b)(ii)(II). Applies to interest or other distribution payable on or after 19 October 2017.