{"id":11033,"date":"2022-04-18T14:10:43","date_gmt":"2022-04-18T14:10:43","guid":{"rendered":"http:\/\/legalblog.ie\/?p=11033"},"modified":"2022-04-18T14:10:43","modified_gmt":"2022-04-18T14:10:43","slug":"investment-companies","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/investment-companies\/","title":{"rendered":"Investment Companies"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/investment-companies\/#S_110_Companies\" title=\"S. 110 Companies\">S. 110 Companies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/investment-companies\/#Interest_Deduction\" title=\"Interest Deduction\">Interest Deduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/investment-companies\/#Property_Investments\" title=\"Property Investments\">Property Investments<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/investment-companies\/#REITS\" title=\"REITS\">REITS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/investment-companies\/#Disallowance_of_Treatment\" title=\"Disallowance of Treatment\">Disallowance of Treatment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/investment-companies\/#REIT_Withholding_Tax\" title=\"REIT Withholding Tax\">REIT Withholding Tax<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"S_110_Companies\"><\/span>S. 110 Companies<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Section 110 companies were orginally used by financial institutions for the purpose of securitisation. See the separate sections on securitisation.<\/p>\n<p>The company must have at least \u20ac10M qualifying assets. It must be Irish resident and carry out no other activities, than holding and managing these assets. It must notify Revenue and furnish certain details of its group and connected parties. It must carry on any activities with connected parties at arm&#8217;s length.<\/p>\n<p>Its business and trade must be carried on in Ireland. This requires a minimum degree of activity including key decisions to be undertaken with in Ireland.Qualifying assets include shares bond&#8217;s and other securities as well as a range of other other recognised investment instruments.<\/p>\n<p>The profits of a section 110 company comprising investment income is taxed at 25%.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Interest_Deduction\"><\/span>Interest Deduction<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Interest paid in respect of securities of the company (being the instrument issued in respect of the assets they hold) are allowed as a deduction in computing profits and is not a distribution as would normally be the position.<\/p>\n<p>The interest must be paid to<\/p>\n<ul>\n<li>an Irish tax resident entity<\/li>\n<li>a non-resident in a DTA tax country which taxes the income without giving a deduction for that interest<\/li>\n<li>certain tax-exempt entities such as pension funds<\/li>\n<li>holders of certain debt instruments unconnected with the company<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Property_Investments\"><\/span>Property Investments<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Anti-avoidance legislation has restricted the availability of the full benefits of section 110 status to companies holding Irish property interests of distressed loans related to them. In this case only interest based on \\ commercial rate is deductible in respect of that business which must not be linked to the profits of the company concerned.<\/p>\n<p>This legislation applies to companies holding certain mortgage and property assets either directly or through shareholdings which derive their value from property assets and investments in investment in funds and instruments deriving their value from property<\/p>\n<p>That part of the business is to be treated as separate and subject to the above restrictions. There are exceptions to the application of the restrictions.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"REITS\"><\/span>REITS<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Real estate investment trusts are vehicles for the collective holding of commercial and residential property. Real estate investment trusts must be Irish resident companies quoted on an Irish or EU stock exchange. hey must not be a close or connected company, so that a spread of shareholding is required. There may be only one class of ordinary share.<\/p>\n<p>They are required to distribute a high proportion of their income and gains. Provided they do so, no corporation tax applies at the company&#8217;s level and the the shareholders are subject to tax on the income received, dependent upon their status.<\/p>\n<p>An REIT must hold at lest three properties and the market value of any one property must not be more than 40% of the totaly. A certain ratio of property value to lending is required. At least 75% of the market value of its assets must relate to property rental business. Debt must not exceed 50% of the market value of its assets.<\/p>\n<p>Not less than 75% of income must derive from property rental business. It must distribute at least 85% of its property income annually.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Disallowance_of_Treatment\"><\/span>Disallowance of Treatment<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Under certain circumstances, the treatment is disallowed. This includes for undistributed income, . There are conditions in relation to<\/p>\n<ul>\n<li>undistributed disposals,<\/li>\n<li>excessive finance costs breaching the required ratios,<\/li>\n<li>overseas shareholder with over 10% of shareholding rights.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"REIT_Withholding_Tax\"><\/span>REIT Withholding Tax<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Dividend withholding tax applies at 25%. Irish resident shareholders will be subject to tax at the marginal rate with credit for the tax withheld. Distributions received by companies are subject to 25% tax with the credit for the dividend withholding tax.<\/p>\n<p>Disposals of shares are treated as capital gains in the hands of the shareholder.<\/p>\n<p>Where investment funds hold Irish real estate and similar assets as to 25% or more, they fall within the definition of an Irish real estate fund. An Irish real estate fund deducts withholding tax on distributions including the disposal of units by investor.<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-11033\" data-postid=\"11033\" class=\"themify_builder_content themify_builder_content-11033 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>S. 110 Companies Section 110 companies were orginally used by financial institutions for the purpose of securitisation. See the separate sections on securitisation. The company must have at least \u20ac10M qualifying assets. It must be Irish resident and carry out no other activities, than holding and managing these assets. It must notify Revenue and furnish [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[99],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/11033"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=11033"}],"version-history":[{"count":1,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/11033\/revisions"}],"predecessor-version":[{"id":11034,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/11033\/revisions\/11034"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=11033"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=11033"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=11033"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}