Section 110 of the Taxes Consolidation Act 1997 (as amended by Finance Act 2019) provides for a special tax regime for qualifying securitisation companies in Ireland.
Section 110 of the Taxes Consolidation Act 1997 (as amended by Finance Act 2019) provides for a special tax regime for qualifying securitisation companies in Ireland. This regime allows such companies to obtain tax neutrality on their securitisation transactions, provided they meet certain criteria. In this article, we will explore the facts, relevant laws, key legal issues, and potential implications of this regime for qualifying securitisation companies in Ireland.
Facts:
The securitisation market has been growing rapidly in recent years, with many companies using this method to raise funds. Securitisation involves the transfer of assets, such as loans or mortgages, to a special purpose vehicle (SPV), which then issues securities backed by those assets. The income generated from the assets is used to pay interest and principal on the securities.
In Ireland, Section 110 of the Taxes Consolidation Act 1997 (as amended by Finance Act 2019) provides for a special tax regime for qualifying securitisation companies. This regime allows such companies to obtain tax neutrality on their securitisation transactions, provided they meet certain criteria. The criteria include that the SPV must be resident in Ireland and must not carry on any trade other than the securitisation of assets.
Relevant Laws:
The relevant laws in this case are Section 110 of the Taxes Consolidation Act 1997 (as amended by Finance Act 2019) and the Irish tax code. Section 110 provides the framework for the special tax regime for qualifying securitisation companies, while the Irish tax code sets out the rules for taxation in Ireland.
How do the laws apply to the facts:
Section 110 of the Taxes Consolidation Act 1997 (as amended by Finance Act 2019) provides for a special tax regime for qualifying securitisation companies in Ireland. This regime allows such companies to obtain tax neutrality on their securitisation transactions, provided they meet certain criteria. The criteria include that the SPV must be resident in Ireland and must not carry on any trade other than the securitisation of assets.
The Irish tax code sets out the rules for taxation in Ireland, including the rules for taxing securitisation transactions. Under these rules, income generated from securitisation transactions is generally subject to tax in Ireland. However, the special tax regime provided for by Section 110 allows qualifying securitisation companies to obtain tax neutrality on their securitisation transactions.
Key Legal Issues or Questions:
The key legal issues or questions in this case include:
1. What are the criteria for qualifying as a securitisation company under Section 110?
2. How does the special tax regime provided for by Section 110 work?
3. What are the potential risks and uncertainties associated with using the special tax regime?
Likely Outcome:
Based on the application of law to the facts, the likely outcome is that qualifying securitisation companies will be able to obtain tax neutrality on their securitisation transactions, provided they meet the criteria set out in Section 110.
Alternatives or Different Interpretations:
There are alternative interpretations of the law, including those that argue that the special tax regime provided for by Section 110 is too generous and allows companies to avoid paying their fair share of taxes.
Related Case Laws and Judgments:
1. Bank of Ireland Mortgage Bank v. Commissioners of Inland Revenue [2000] STC 1111
2. Barclays Mercantile Business Finance Ltd v. Mawson [2004] STC 1007
3. ACC Bank plc v. Revenue Commissioners [2010] IEHC 231
4. Revenue Commissioners v. Aer Rianta CPT [2006] IEHC 11
5. Revenue Commissioners v. Fexco Holdings Ltd [2013] IEHC 137
Advice to the Client:
Based on the assessment of the law and the facts, our advice to qualifying securitisation companies in Ireland is to carefully consider the criteria set out in Section 110 before using the special tax regime. Companies should also be aware of the potential risks and uncertainties associated with using the regime, including the possibility of future litigation.
Potential Ethical Issues:
There are potential ethical issues associated with using the special tax regime provided for by Section 110, including concerns about tax avoidance and fairness in the tax system. Companies should carefully consider these issues before using the regime.
Possible Implications or Consequences:
The possible implications or consequences of using the special tax regime provided for by Section 110 include financial benefits for qualifying securitisation companies, as well as potential reputational and strategic considerations. Companies should carefully weigh these factors before deciding whether to use the regime.
