Written Answers Nos. 121-140
121. Deputy Michael McGrath asked the Minister for Finance the impact Ireland's revised GDP growth figure for 2015 will have on the financial contribution to the EU; when the final figure will be known and will fall due; if any additional payment will have an impact on the resources available for budget 2017; and if he will make a statement on the matter. [23884/16]
View answer168. Deputy Michael McGrath asked the Minister for Finance the impact revised 2015 growth figures will have on Ireland's EU budget contribution obligations; the total amount due to be contributed by Ireland in 2016; if this will have any impact on the anticipated fiscal space for 2017; and if he will make a statement on the matter. [24248/16]
View answerI propose to take Questions Nos. 121 and 168 together.
The latest estimates of fiscal space available for Budget 2017 were set out in the Summer Economic Statement (SES).
The significant revision to 2015 GDP by the Central Statistics Office is not expected to materially change the fiscal space of just under €1 billion for 2017 set out in the Summer Economic Statement (SES). This is because almost all the factors used to calculate the fiscal space for a particular year are fixed on the basis of the European Commission's spring forecasts in the previous year. The Commission adopts this approach to 'fixing' the inputs in order to provide ex ante clarity and certainty to Member States in relation to how their budgetary plans will be assessed.
This means that for 2017 almost all of the inputs to the expenditure benchmark calculation of fiscal space were fixed on the basis of the Commission's spring 2016 forecasts, which were published before the significant revisions to the GDP figures were made by the Central Statistics Office.
My Department currently estimates the impact of the CSO revision on our EU Budget contribution for 2017 at around €380m. However, other mitigating factors mean the overall increase in the EU budget contribution is now estimated to be in the order of €280m when compared to the forecast underlying the SES.
It must be emphasised that the final impact depends on a number of variables including the size of the overall EU budget for 2017 (which is not due to be agreed until November 2016), GNI movements in other EU Member States and other EU budget operational developments. My officials will continue to liaise with the European Commission in order to achieve greater clarity on the exact contribution.
122. Deputy Michael McGrath asked the Minister for Finance the current status of the special liquidation of IBRC; to provide details of the portfolio that is remaining; the estimated timeframe; the financial outturn from the liquidation; and if he will make a statement on the matter. [23885/16]
View answerThe status of the Special Liquidation as at 31 December 2015 is set out in a third progress update report published by the Special Liquidators on 27 May 2016 and which is available on the Department of Finance website through the following link:
http://www.finance.gov.ie/sites/default/files/Progress%20update%20report_31%20Dec%202015.pdf
I am advised by the Special Liquidators that there are €3.55 billion of loans remaining to be sold. The main reason these loans have not been sold is primarily due to ongoing litigation. It is not possible to provide a timeframe for the completion of the sale of these loans at this time due to the aforementioned litigation.
The Special Liquidators further advise me that it is not possible to estimate the financial outturn from the liquidation at this time given that there remains a number of tasks in the liquidation to be completed including the on-going management of over 350 legal cases, the completion of the creditor adjudication process, the work with the Commission of Investigation, the management of the remaining loan book and the realisation of all remaining assets.
124. Deputy Michael McGrath asked the Minister for Finance if the Government will be reviewing its financial services strategy; if the Government does not intend to review the strategy, the priority actions it is taking to implement the financial services strategy in light of the Brexit referendum result; and if he will make a statement on the matter. [23904/16]
View answerThe Government's IFS 2020 strategy is a framework in which both public and private stakeholders will work to ensure the further growth and development of the international financial services (IFS) sector in Ireland. The IFS sector now employs about 38,000 people across over 400 companies with a 10,000 of those employed outside Dublin.
In terms of the vision underpinning the Strategy, we want Ireland to be recognised as a global location of choice for specialised international financial services, building on our strengths in talent, technology, innovation and excellent client service while also focusing on capturing new opportunities in a changing market and embracing the highest forms of governance.
The IFS 2020 Action Plan is reviewed and updated annually. The Action Plan's individual measures are the responsibility of public and private stakeholders. The 2016 Action Plan is mostly on schedule, with measures expected to be completed by the end of 2016.
My Department is beginning the process of liaising with both public and private stakeholders through the IFS 2020 implementation framework to draft the 2017 action plan. It is intended that the 2017 Action Plan will include areas identified by stakeholders as requiring action to increase Ireland's attractiveness for financial services investment.
Minister of State Eoghan Murphy chaired a meeting of the IFS2020 High Level Implementation Committee this morning which considered recent developments in the UK. This follows-on from the work on this issue done both before and after the UK referendum result. Minister Murphy has worked closely with the IDA and Enterprise Ireland on the impact of the UK referendum result on international financial services and he has engaged on this matter with both domestic and international stakeholders on recent visits to Luxembourg and London.
There will be considerable work on this issue as part of the IFS 2020 Strategy in respect of the forthcoming 2017 Action Plan and it will also inform the 2017 European Financial Forum scheduled for 24 January 2017. Minister Murphy has also an extensive schedule of international engagements which will be coordinated through our embassy network along with the IDA and EI over the next six months to engage with international stakeholders in the overall area of financial services.
125. Deputy Michael McGrath asked the Minister for Finance the plans the Government has to communicate to the financial services sector that Ireland has the regulatory capacity and expertise to deal with potential new entrants to Ireland following Brexit; and if he will make a statement on the matter. [23905/16]
View answerI can assure the Deputy that the Central Bank has confirmed to me that it is committed to providing a clear, open and transparent authorisation process and it is open to applications. At present, the Central Bank Commission is satisfied that it has the resources required to regulate the financial sector. I am confident based on the Central Bank's ability to significantly expand its regulatory resources in the last seven years that it is capable of doing so, if required to properly supervise and regulate additional financial service activity that may relocate to Ireland as a result of the UK referendum on the EU.
It is also important to note the increased role the European Central Bank plays in the banking licence authorisation process in Ireland and throughout the euro system. Therefore, the Central Bank will respond to any major changes to the Irish financial landscape, including potential new entrants as a result of the outcome of the UK Referendum on EU membership, in collaboration with the ECB.
Minister of State Murphy, who has responsibility for Financial Services, is closely engaging with the financial sector and IDA Ireland on developments in this area. He has also met with the Central Bank in its role as regulator, who have assured him that the Bank is open to authorisation applications.
The Government will of course work to promote and maintain Ireland's attractiveness to investors, including those in the financial services sector.
126. Deputy Michael McGrath asked the Minister for Finance the strategic plans the Government has to engage directly with key UK stakeholders related to potential inward investment from the financial services sector; and if he will make a statement on the matter. [23906/16]
View answerThe Government will continue, through the IDA, to promote the attractiveness of Ireland as a location of choice for investment and talent. This is based on our unique competitive strengths and our position as an English-speaking country in Europe.
Naturally, there may be new opportunities arising for Ireland in certain sectors, many of which already form part of the IDA's marketing strategy. In this regard, both Enterprise Ireland and IDA are in close contact with their clients on the challenges and opportunities that this vote presents. We will, for example, continue to implement our clear strategy for driving growth in the financial services sector and we will maximise any opportunities that might arise.
The Government's IFS 2020 strategy is a framework in which both public and private stakeholders will work to ensure the further growth and development of the international financial services (IFS) sector in Ireland. The IFS sector now employs about 38,000 people across over 400 companies with a 10,000 of those employed outside Dublin.
In terms of the vision underpinning the Strategy, we want Ireland to be recognised as a global location of choice for specialised international financial services, building on our strengths in talent, technology, innovation and excellent client service while also focusing on capturing on new opportunities in a changing market and embracing the highest forms of governance.
The Government will continue to remain focussed on the successful implementation of the IFS 2020 strategy and the development of a robust and sustainable financial services sector in Ireland. As we have always done, we will continue to market Ireland across the globe as the number one location for foreign direct investment.
Minister of State Eoghan Murphy chaired a meeting of the IFS2020 High Level Implementation Committee this morning which considered recent developments in the UK. This follows-on from the work on this issue done both before and after the UK referendum result. Minister Murphy has worked closely with the IDA and Enterprise Ireland on the impact of the UK referendum result on international financial services and he has engaged with both domestic and international stakeholders on recent visits to Luxembourg and London.
There will be considerable work on this issue as part of the IFS 2020 Strategy in respect of the forthcoming 2017 Action Plan and it will also inform the 2017 European Financial Forum scheduled for 24 January 2017. Minister Murphy has also an extensive schedule of international engagements which will be coordinated through our embassy network along with the IDA and EI over the next six months to engage with international stakeholders in the overall area of financial services.
127. Deputy Stephen S. Donnelly asked the Minister for Finance the assurances given by him and or his Department, in writing, electronic or other, in person, or in any other way, to the bidders and purchasers of any distressed debt loan books sold by NAMA, IBRC, or any other entity on the establishment of section 110 companies to purchase and or manage the loans; and if he will make a statement on the matter. [23916/16]
View answer129. Deputy Stephen S. Donnelly asked the Minister for Finance the assurances given by IBRC or any entity or person involved in the liquidation of IBRC, in writing, electronic or other, in person, or in any other way, to the bidders and or purchasers of any distressed debt loan books sold by NAMA, IBRC, or any other entity, on the establishment of section 110 companies to purchase and or manage the loans; and if he will make a statement on the matter. [23918/16]
View answer130. Deputy Stephen S. Donnelly asked the Minister for Finance the assurances given by any State agency or official, in writing, electronic or other, in person, or in any other way, to the bidders and or purchasers of any distressed debt loan books sold by NAMA, IBRC, or any other entity, on the establishment of section 110 companies to purchase and or manage the loans; and if he will make a statement on the matter. [23919/16]
View answer131. Deputy Stephen S. Donnelly asked the Minister for Finance the assurances given by him and or his Department, and or any State agency or official, in writing, electronic or other, in person, or in any other way, to the bidders and or purchasers of any distressed debt loan books sold by NAMA, IBRC, or any other entity, on the offshoring of profits by those companies; and if he will make a statement on the matter. [23920/16]
View answerI propose to take Questions Nos. 127 and 129 to 131, inclusive, together.
I or my Department did not give assurances in any form to the bidders and purchasers of any distressed debt loan books sold by NAMA, IBRC, or any other entity in relation to the offshoring of profits by such companies or the establishment of section 110 companies to purchase and or manage the loans. Furthermore I am not aware of any other state agency or official giving such assurances.
The Special Liquidators of IBRC devised and ran a competitive sales process, following the receipt of independent advice, for all loan assets of IBRC which they have sold. I had no role in this process and would therefore be unaware of potential bidders during the sales process or how these potential bidders were structured as a company
I understand that Officials from the Department of Finance and the Revenue Commissioners are currently examining coverage concerning the use of certain vehicles for property investments. Should these investigations uncover tax avoidance schemes or abuse, which erodes the tax base and causes reputational issues for the State, then appropriate action will be taken and any necessary legislative changes that may be required will be put forward for my consideration.
128. Deputy Stephen S. Donnelly asked the Minister for Finance the assurances given by NAMA, in writing, electronic or other, in person, or in any other way, to the bidders and or purchasers of any distressed debt loan books sold by NAMA, IBRC, or any other entity, on the establishment of section 110 companies to purchase and or manage the loans; and if he will make a statement on the matter. [23917/16]
View answerI am advised that NAMA, as the seller of loans does not provide assurances to bidders and/or purchasers of loans from it concerning the establishment of section 110 companies to purchase or manage sold loans. The company structures set up by purchasers for purchasing or managing loans are a matter for the bidder and/or purchaser acting on their own tax and legal advice.
132. Deputy Stephen S. Donnelly asked the Minister for Finance the concerns raised, by any means, with him and or his Department by the Revenue Commissioners, NAMA, IBRC, the Central Bank or any other source, about the tax structures of any entities bidding for, or purchasing, loan books sold by NAMA, IBRC, or any other entity; and if he will make a statement on the matter. [23921/16]
View answer133. Deputy Stephen S. Donnelly asked the Minister for Finance the concerns raised, by any means, with him and or his Department by the Revenue Commissioners, NAMA, IBRC, the Central Bank or any other source, about the potential for lost revenue to the State due to firms purchasing loans books being established as section 110 companies; and if he will make a statement on the matter. [23922/16]
View answer137. Deputy Stephen S. Donnelly asked the Minister for Finance the analysis which has been conducted by his Department or any other agency of the State, about the potential lost revenue to the State due to the use of section 110 companies to purchase and or manage loan books sold by NAMA, IBRC or any other source; if he will provide that analysis; and if he will make a statement on the matter. [23927/16]
View answer138. Deputy Stephen S. Donnelly asked the Minister for Finance his views on the fact that several companies that have bought loan books from the State and other sources are using section 110 status to offshore earnings on those loan books, thus avoiding corporation and withholding tax here; and if he will make a statement on the matter. [23928/16]
View answer139. Deputy Stephen S. Donnelly asked the Minister for Finance his views on section 110 status being granted to companies whose primary function is to manage loan books consisting primarily of Irish-based property; and if he will make a statement on the matter. [23929/16]
View answer140. Deputy Stephen S. Donnelly asked the Minister for Finance his views on section 110 status being granted to companies using section 110 status to avoid paying certain taxes on profits made here from managing loan books consisting primarily of loans on properties here; and if he will make a statement on the matter. [23930/16]
View answerI propose to take Questions Nos. 132, 133, and 137 to 140, inclusive, together.
I am informed by Revenue that a company that is, or intends to be, a qualifying company within the meaning of section 110 Taxes Consolidation Act 1997 must notify Revenue in writing. In notifying Revenue of such intent, the company confirms that it complies with the conditions attaching to a qualifying company. This notification is a self-assessment process.
Section 110 TCA 1997 was introduced primarily to facilitate the securitisation of loan books by banks. Therefore, section 110 was designed to provide a tax neutral vehicle for the securitisation of mortgages. Section 110 companies can only hold a number of specific assets and real property is not an asset that they can hold they can only hold loans secured thereon.
As I have previously stated, Revenue constantly review the affairs of taxpayers for both tax evasion and tax avoidance. In particular Revenue uses analytical tools and strategies to detect and combat taxpayers using tax avoidance schemes. They are currently reviewing a small number of structures which may have been put in place for tax avoidance purposes. These structures, including any structures involving Irish property, will be challenged if it is deemed to be appropriate.
Because of the small number of structures under review, Revenue are precluded, by taxpayer confidentiality, from providing any specific details.
I understand that Officials from the Department of Finance and the Revenue Commissioners are currently examining coverage concerning the use of certain vehicles for property investments. Should these investigations uncover tax avoidance schemes or abuse, which erodes the tax base and causes reputational issues for the State, then appropriate action will be taken and any necessary legislative changes that may be required will be put forward for my consideration.
134. Deputy Stephen S. Donnelly asked the Minister for Finance his views on the bidding processes for loan books being sold by IBRC, NAMA or any other source, if any bidders were structured as section 110 companies; and if he will make a statement on the matter. [23923/16]
View answer136. Deputy Stephen S. Donnelly asked the Minister for Finance the list of the purchasers of loan books from NAMA, IBRC, or any other source; to indicate which of these entities had section 110 status; the nature of the loan book, the sales value in each case, if available; and if he will make a statement on the matter. [23926/16]
View answerI propose to take Questions Nos. 134 and 136 together.
NAMA's market activities mean that it competes on an ongoing basis with banks and other financial institutions to attract investors and competitive bids for its loans and for the assets securing them. In that context, and in line with its competitors, I am advised that NAMA does not identify the counterparties with which it transacts, as to do so would discourage potential buyers from participating in NAMA loan and other asset sales and would place NAMA and by extension Irish taxpayers at a competitive disadvantage relative to its competitors. This commercial imperative is recognised in FOI legislation: Schedule 1 of the FOI ACT 2014 excludes from the scope of FOI "purchasers or potential purchasers of any asset or loan or of any asset securing loans held or managed" by NAMA and a number of other bodies.
Additionally, the Special Liquidators of IBRC devised and ran a competitive sales process, following the receipt of independent advice, for all loan assets of IBRC which they have sold. I had no role in this process and would therefore be unaware of potential bidders during the sales process or how these potential bidders were structured as a company.
135. Deputy Stephen S. Donnelly asked the Minister for Finance the contacts from legal firms, financial firms and any other sources about the establishment of section 110 companies for entities interested in purchasing loan books from NAMA, IBRC or any other source; and if he will make a statement on the matter. [23925/16]
View answer144. Deputy Stephen S. Donnelly asked the Minister for Finance the details of all lobbying carried out by the Irish Debt Securities Association regarding the use of section 110 status for companies interested in purchasing loan books consisting primarily of property located in Ireland; and if he will make a statement on the matter. [23969/16]
View answer145. Deputy Stephen S. Donnelly asked the Minister for Finance the details of all lobbying carried out by the Irish Funds Industry Association regarding the use of section 110 status for companies interested in purchasing loan books consisting primarily of property located in Ireland; and if he will make a statement on the matter. [23970/16]
View answerI propose to take Questions Nos. 135, 144 and 145 together.
I am unaware of any contacts from legal firms, financial firms or any other sources in relation to the establishment of section 110 companies for entities interested in purchasing loan books from NAMA, IBRC or any other source.
Furthermore, I am unaware of any lobbying carried out by the Irish Debt Securities Association or the Irish Funds Industry Association regarding the use of section 110 status for companies interested in purchasing such loan books.
