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MASTER OF THE High Court, Edmund Honohan, has said a case on State aid rule breaches could be brought by the European Commission in relation to the special tax treatment given to the vulture funds in Ireland.
Honohan, by invitation of Luke Ming Flanagan MEP, made a presentation to politicians in the European Parliament this week, outlining that there are similarities to be drawn from the Apple case.
The EU Commission ruled in 2016 that Ireland gave multinational tech giant Apple illegal state aid worth up to €13 billion over a decade.
The European Commission said Apple paid an effective corporate tax rate of just 0.005% on its European profits in 2014 — equivalent to just €50 for every million.
The Department of Finance is appealing the decision because it denies that there was any sweetheart deal in place.
Referring to the Apple decision, Honohon said the European Commission’s investigation “will throw up an awful lot of interesting material that is not available to any parliamentarian in Dublin”.
Honohon said there are many similarities between the Apple case and the possible case that could be taken on the special tax treatment given to the vulture funds in Ireland.
“I’m sure it is well worth investigating, it is certainly a prima facie case,” said Honohon.
History of calling out banks and vulture funds
In recent years, Honohan has become known for his strong views on the treatment by financial institutions of debtors in distress. He has been particularly vocal in relation to possession cases and often engages in heated exchanges with barristers representing lenders. As far back as 2011, he called for debt forgiveness and criticised banks for the aggressive pursuit of homeowners.
Last year, he warned that thousands of people coming through the courts may lose their homes if stronger legal supports are not put in place to help them when they face off against banks and vulture funds.
He also said the government is not putting appropriate policy in place to prepare for the “wave of repossessions [of homes] that’s about to break”.
Honohan also wrote the Affordable Housing and Fair Mortgage Bill, which was introduced in the Dáil last year by Fianna Fáil TD John McGuinness.
In a letter sent to Fianna Fáil leader Micheál Martin at the end of December, the High Court Master said neither he nor the Taoiseach had come up with “any plan of action” to tackle the housing crisis at its root.
In January, the President of the High Court issued a direction to remove debt cases from Honohon.
The direction signed by Mr Justice Peter Kelly stated that motions for judgement in summary summons proceedings, the majority of which are debt cases, will no longer be set down for hearing before Honohan.
Instead, they now go directly to a judge of the High Court. The direction did not state the reason for this decision.
Section 110 loopholes
The focus of Honohon’s presentation was on the possible abuse in Ireland of Section 110 Special Purpose Vehicle (SPV) legislation, whereby companies are setting up and registering as charities.
https://www.facebook.com/Lukemingflanagan/videos/655587204901787/
Such loopholes have been highlighted before. In 2016, the government vowed to shut down a controversial loophole that allowed vulture funds to cut their tax rates.
A clause in an act from 1997 allowed large businesses and vulture funds to set up a qualifying section 110 company that was generally structured in such a way so that it was effectively tax-neutral.
Many large funds, which have acquired distressed Irish assets worth hundreds of millions of euro, registered as charities to pay very small amounts of tax, as low as €250 in several cases.
Then in July 2016, it was confirmed that the Department of Finance and the Revenue Commissioners would investigate vulture funds who are using section 110 in Irish tax law to pay small amounts of tax here.
In September 2016, the then Finance Minister Michael Noonan put forward an amendment to section 110 of the Finance Act 1997, which took an immediate effect, which prevented vulture funds from being able to use Section 100 vehicles to avoid profits on sales of Irish assets.
However, since then, some politicians such as Sinn Féin’s Pearse Doherty has said loopholes and ways around the legislation have been found.
In December 2018, The Irish Times, based on data from Revenue, reported that special purpose vehicles only paid €128 million of tax in Ireland in 2017, equivalent to less than 0.02% of the value of their assets.
In the same month, Permanent TSB Bank confirmed that the ‘special purpose vehicle’ that more than 6,000 of its mortgages have been transferred to will be exempt from tax.
Chief executive of PTSB, Jeremy Masding, appeared before the Oireachtas Finance Committee, along with other executives from his bank and from Pepper in Ireland (a company that acts as the middle man between the mortgage-holder and vulture fund).
Doherty attempted to confirm with the executives that they set-up the vehicle, also known as a Section 110 company, which would operate tax-free.
It took nine consecutive questions for bank executives to admit the €1.3 billion mortgage ‘vehicle’ won’t pay tax.
Varadkar vowed to close any loophole identified as being used in the case.
According to Honohan, who was an adviser to the former Finance Minister Charlie McCreevy when the securitisation tax break (Section 110) was introduced in the 1990s, it was never intended to be employed where the collateral consisted of Irish homes, farms or firms.
In his presentation, Honohan offered two possible solutions to tackle this anomaly, a “pincer movement” as he called it, whereby the Revenue Commissioners present the special vehicle companies with a tax assessment based on their entire profits.
He said this puts those companies on the defensive, where they would have to justify paying no tax.
If that fails, he said a case on the breach of State aid could be brought by the European Commission, simply asking how would the market look today if Section 110 did not apply to those companies availing of the loopholes.
Following his visit to the European Parliament this week, Honohon said he will now visit the European Commission.
Ming Flanagan said the issue of a case being taken against Ireland in relation to the State aid, Section 110 tax rules and vulture funds has already been raised with Max Lienemeyer, Head of Sector in the Task Force Tax Planning Practices in the European Commission, as well as the Directorate-General for Competition.
Must send some of me with the wife. She hasn’t moved a muscle in years.
Sick feckers!
Lad working with me was a supervisor in his last job. Russian lad working for him says the mother died needed to go home all above board so far. He returned two weeks later got chatting to your man. Would you like to see my mother he says ? Ah go on so show me the pictures. There they were all pictures with the dead mother in the casket giving thumbs up the works. He said he was disturbed for weeks after it. Some weird folk them Russians.
The sooner this planet is taken over by a superior alien race who wipe out most of the population leaving only a rag-tag bunch of intelligent survivors, the better.
Is it just me or are there an increasing number of sociopaths in our society?
In Russia selfie takes you.
The strange thing is, when photography first developed, there was a disturbing fad of people posing with dead loved ones. Still hasn’t stopped being creepy.
That “Fad” was family members posing one last time with the deceased. These stupid B******s pose with any dead person, Just for kicks.
A female paramedic was sacked last year,After being found posing with the dead in the back of her Ambulance .
How long before someone commits murder to win the ‘Selfie with Corpse’ competition?
I had to read that headline twice, looks like I’ll have to increase my medication or stop reading thejournal.
Well that’s just creepy.
From Russia with Love…
That’s Russia for you. Jeez what will they have next . Weird, distasteful and bizarre whatever way you look at it
have your say