Peter McGeoghegan, Director, Financial Services Tax, Grant Thornton: The OECD published a fourth set of Administrative Guidance in June 2024, which addressed a number of areas including the treatment of securitisation vehicles. This guidance provided that a jurisdiction could choose between various options when applying QDTT to securitisation entities:
Peter McGeoghegan
1. Bring securitisation entities within the scope of QDTT and the QDTT Safe Harbour; or
2. Leave securitisation entities outside the scope of QDTT (in which case the Safe Harbour “switch-off” would apply); or
3. The OECD Guidance states that if a jurisdiction includes securitisation entities within the scope of its QDTT, but contains provisions to impose any top-up tax relating to the securitisation entity on either:
• Another constituent entity of the MNE Group that is not a securitisation entity, or
• The securitisation entity itself if the top-up tax cannot be otherwise collected, the MNE Group would be allowed to apply the QDTT Safe Harbour for that jurisdiction. This is the direction Ireland has chosen.
A new section 111AAC(4)(a) and (b) TCA 1997 has been introduced in Finance Act 2024 which implements this option in relation to securitisation entities in Ireland.
1. Where a securitisation entity is a member of an MNE group, QDTT will not be imposed on that securitisation entity but will be allocated to other members of the group located in Ireland that are not securitisation entities, based on their proportionate share of qualifying income.
2. If there are no other such members of the group, QDTT will be charged on the securitisation entity itself, ensuring the “switch-off rule” is not utilised when applying the QDTT Safe Harbour.
It is important to note that as the legislative definition of securitisation is specific, it will not necessarily apply to all Section 110 registered companies or special purpose vehicles (SPV).
This approach to securitisation entities is retrospectively effective for fiscal years commencing on or after 31 December 2023.
This amendment is welcome and reflects that the Irish Government are keen to ensure the Irish legislation is kept up to date with the ever-increasing rounds of guidance being published by the OECD.
This article appeared in the November 2024 edition of the Irish Tax Monitor.
