As flagged in the Budget, this section amends section 110 TCA 1997. The Minister had already published a draft legislative amendment to this section in September but a number of changes have been made since.

The changes state that, subject to some exceptions, profits arising to a Section 110 company from the holding of financial assets that derive their value from Irish land will be treated as a separate business.

In calculating the profits of this business, the interest on profit participating loans will not be deductible unless it is paid to individuals within the charge to income tax or companies within the charge to corporation tax, Irish or EEA* pension funds, or EEA* citizens or companies who will pay tax on the receipt of such interest.

To ensure that bona-fide securitisations are not restricted by this amendment, the legislation states that defined Collateral Loan Obligation transactions, defined Commercial and Residential Mortgage Backed Securities transactions and defined loan origination businesses are excluded from the amendment.

All new Section 110 companies must notify Revenue of their intention to be a Section 110 company and provide the prescribed information to Revenue within a period of eight weeks of acquiring the relevant assets. Where the company’s activities pre-date 1 January 2017, the company will have 8 weeks from this date to notify Revenue. This change was introduced at Committee Stage.

The changes announced apply to accounting periods commencing on or after 6 September 2016 with some provision made for a company with an accounting period spanning this date.

*Although an EEA state is defined in the Bill as “...not being a Member State” we await clarification that EU Member States should be included in this definition.