Nama state-aid complaint may go to EU General Court
Five of the country's biggest property developers are understood to be weighing up a decision to refer a complaint they made in December 2015 to the European Commission's competition directorate on the alleged "selective" tax treatment afforded by the State to Nama, to the EU's General Court.
The potential move comes on foot of comments made by Europe's competition commissioner Margethe Vestager during her appearance before the Oireachtas Committee on Finance, Public Expenditure and Reform last Tuesday. It also comes in response to what the developers see as the "continued delay" in delivering a ruling on their case.
Asked by Fine Gael senator Paddy Burke to comment on the progress or otherwise of the Commission's investigation of the state-aid complaint submitted by developers Michael O'Flynn, Paddy McKillen, David Daly, Pat Crean and Brian McKeown, Ms Vestager said that it was up to the Irish Government to decide if the case should be prioritised.
"If the Government want to prioritise the case, then, of course, we can put more effort into it," Ms Vestager told the members of the Finance Committee.
The European competition chief's comments have been met with a degree of alarm by the developers as they would appear to contradict an earlier assurance from her own office that the complaint was already being prioritised.
The developers referred to the assurance they had received from Ms Vestager's officials on June 2 last in correspondence to the Commission last December. In the same letter, they contended that Nama was being afforded "selective" tax treatment by the State, comparing the case of the so-called 'bad bank' to that of US tech giant Apple.
Having highlighted the fact that Nama is not liable for income tax, corporation tax or capital gains tax by virtue of Section 214 of the Nama Act, the letter quoted directly from European competition commissioner Margrethe Vestager's statement on the Apple case, following her ruling that the company had received some €13bn in illegal State aid from Ireland.
While the developer's lawyers conceded that a number of Nama's operations are conducted by SPVs (Special Purpose Vehicles), "which are not, of themselves" tax-exempt, they added that "it is understood that the taxable profits in the SPVs may be reduced through profit-participating loans or other instruments which extract profits through interest payments to lower tax or exempt entities".
Calling for an investigation into the extent to which the "low tax charges" they say are "evident in Nama's accounts are related to Nama's unique tax exemption" the letter added that "if it is determined that they are connected, it would appear to be imperative that a finding of illegality must follow if the same principles applied in the Apple case are to be consistently applied".
Asked for comment on the developers' claims, a spokesman for Nama said at the time that: "Nama engages with the Department of Finance and the European Commission, and Nama believes it is compliant with applicable State Aid rules".