I propose to take Questions Nos. 188 and 192 together.
In view of the proposed changes to be introduced to Section 110 TCA 1997 in the Finance Bill 2016 Revenue undertook an examination of the financial accounts of a number of Section 110 companies to determine what the potential yield from any proposed changes might be.
The figure of €50 million is largely based on the potential profits made on a sample of mortgages valued at circa €1 billion held by a number of Section 110 companies that were examined. The results of the examination were then extrapolated to a potential mortgage book population of €20 billion. The key assumption that underlies the figure is that only normal trading deductions were allowable, such as interest charged at the normal third party market rates, in calculating the taxable profits (i.e. that no deduction for Profit Participating Notes would be availed of).
As you are aware I published proposals for Section 110 TCA 1997 on the Department of Finance website last month. The amendment has been redrafted to ensure that the proposal is targeted. During the consultation phase other issues concerning property and funds arose and will be addressed in the Finance Bill.