Loan originations involve a company fronting for a foreign bank and either lending directly to larger more sophisticated borrowers, or immediately issuing newly made loans to smaller borrowers from the foreign bank. Provided the foreign bank is established in one of the countries with which we have signed a double tax agreement, then no Irish tax would have arisen on its interest income had it lent directly to the Irish borrowers.
Section 110 of the Taxes Consolidation Act 1997 sets out the Irish 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 securitisation and structured finance purposes. If the loan origination company is a qualifying company (within the meaning of section 110 TCA 1997) then it would be able to operate in in Ireland in a tax neutral way.
Section 110 is therefore equally available to all participators in the loan origination market provided that the qualifying conditions set out in legislation are met.
