Dáil Éireann Debate, Thursday - 1 May 2025
201. Deputy Mairéad Farrell asked the Minister for Finance the reason that in relation to table 17 of Revenue’s Corporation tax 2023 payments and 2022 returns, it is stated that Section 110 companies contributed €9.6 million in employment taxes in 2023, given that Section 110 companies take the form of special purpose vehicles which do not have employees (details supplied). [21770/25]
Amharc ar fhreagraSection 110 of the Taxes Consolidation Act 1997 (TCA 1997) sets out a regime for the taxation of special purpose companies set up to securitise assets. The tax provisions are intended to create a tax neutral regime for bona-fide securitisation and structured finance purposes. The section 110 regime enables noteholders to invest through one structured vehicle, without giving rise to an additional layer of tax as compared to a direct investment in the underlying assets.
Securitisation allows banks to raise capital and to share risk and, by providing a repackaging and resale market for corporate debt, it lowers the cost of debt financing. It is accepted that having the option for more diversified sources of financing is good for investment and business. It is also important for financial stability in the economy, as the ability to securitise loan books plays an important role in allowing banks to meet their capital requirement obligations and to continue lending to businesses and individuals.
To come within the section 110 regime, a company must be a “qualifying company” and fulfil a number of conditions, including in relation to the type of assets that the company can hold and in turn the nature of activities that may be undertaken by the company. To be a qualifying company, section 110 TCA 1997 requires (among other things) that:
The company is tax resident in Ireland and carries on the business of holding or managing "qualifying assets". Generally speaking, qualifying assets are assets in respect of which securitisation transactions are undertaken. This includes a broad range of financial and other assets including shares, bonds, derivatives, loans, deposits, commodities, plant and machinery and invoices and other types of receivable.
The value of qualifying assets is at least €10 million at the time they were acquired by the section 110 company
Apart from the holding or managing of the qualifying assets, the company is not carrying on any other activities.
In response to your question, Revenue have advised me that section 110 of the TCA 1997 does not specifically preclude qualifying companies from having employees, however, they are required to have directors as a matter of Irish company law.
Directors of Irish incorporated companies, including qualifying companies for the purposes of section 110 of the TCA 1997, hold for taxation purposes an Irish public office, the remuneration arising from which is subject to employment taxes and is within the scope of the Pay As You Earn (PAYE) system.
