New Irish Revenue Guidance on Section 110 Companies
The Irish Revenue published new technical guidance on 24 May 2018 relating to companies falling within the scope of section 110 of the Irish Taxes Consolidation Act 1997 (known as "section 110 companies"). The Revenue guidance is available by clicking this link.
There are a number of matters not covered in previous guidance including:
- the "arm's length" requirement for section 110 companies;
- the application of legislative provisions relating to trading companies to section 110 companies;
- the deductibility of the costs of issuing long term debt;
- the use of "orphan structures" to hold the shares of the section 110 company;
- the tax residence and "carrying on business" requirements for section 110 companies; and
- the treatment of payment in kind ("PIK") notes.
The guidance also updates existing Revenue guidance in relation to section 110 companies, including 2016 guidance regarding the holding of Irish real estate loans and 2012 guidance regarding the application of the "subject to tax" test for certain noteholders and the meaning of "commodities" as qualifying assets of a section 110 company.
Maples and Calder has been involved in consultation over a period of time with the Irish authorities regarding this guidance through industry associations including the Irish Debt Securities Association and Irish Funds.
If you require any further advice or assistance, please speak to your usual Maples and Calder contact or those listed above.