Monday 29 May 2017

Cerberus firms rake in €30m profits - but pay just thousands in Irish tax

Cerberus chairman Dan Quayle
Cerberus chairman Dan Quayle
John Mulligan

John Mulligan

Two more Irish firms owned by US investment firm Cerberus have revealed minuscule tax liabilities here despite making a combined £26m (€30m) in profits.

One of the firms, Promontoria Ram, was used to buy distressed loans from Ulster Bank and UIster Bank Ireland in May last year.

It paid just £1,846 (€2,168) tax on £16.6m (€19.5m) in profits that were generated in a six-month period from May to December last year, newly-filed accounts for the firm show.

Promontoria Ram was established last year as a special purpose vehicle to buy the loans from Ulster Bank.

"The assets purchased were non-performing commercial and real estate loans and related hedging instruments secured on property in Ireland and the United Kingdom," the accounts note. Collections on the loans in the six-month reporting period last year totalled £66.5m (€78.1m).

Newly-filed accounts for Promontoria Chestnut show that it generated profits of nearly £9.8m (€11.5m) in 2015, but paid just £1,638 (€1,977) in tax here. It collected £181.2m in payments on loans from borrowers in 2015.

The loans in the Chestnut portfolio are almost entirely attached to property in Britain.

The 'Irish Times' reported earlier this week that another Irish Cerberus firm, Promontoria Eagle, paid just €1,900 tax on €77m in profits it generated last year. The company was used to acquire €1.6bn of Nama's Northern Ireland loans.

The Comptroller and Auditor General has found that the sale to Cerberus of those loans could have lost the Irish taxpayer up to €200m.

The Promontoria firms established by Cerberus have legally availed of a special tax break - commonly known as a section 110 - that enabled some special purpose vehicles to offset loans used to acquire assets against their own tax bill.

In September, Finance Minister Michael Noonan introduced an amendment to the relevant tax act that closes a loophole that has enabled vulture funds to avoid taxes on profits made off acquired loans attached to Irish property assets.

Cerberus Global Investments is chaired by former US vice president Dan Quayle. It is one of a number of international investment firms that swooped on distressed Irish property assets during the economic downturn, later making huge profits.

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