Business

Sunday 18 August 2019

Developers seek EU probe into Nama's 'special' tax treatment

Lawyers for O'Flynn and McKillen cite 'Apple' ruling in complaint to EU

Developer Michael O’Flynn. Photo: INM
Developer Michael O’Flynn. Photo: INM
Ronald Quinlan

Ronald Quinlan

Five of the country's biggest property developers have demanded the European Commission investigate the "selective" tax treatment afforded by the State to Nama, comparing the case of the so-called 'bad bank' to that of US tech giant Apple.

The extraordinary parallel is contained in a letter sent last Wednesday to the Commission's competition directorate by lawyers representing developers Michael O'Flynn, Paddy McKillen, David Daly, Pat Crean and Brian McKeown as part of their ongoing State aid complaint against Nama.

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 quotes 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 concede that a number of Nama's operations are conducted by SPVs (Special Purpose Vehicles), "which are not, of themselves" tax-exempt, they add 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 the Commission to investigate 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 adds "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: "Nama engages with the Department of Finance and the European Commission and Nama believes it is compliant with applicable State Aid rules".

The developers have sought clarity from the Commission on the status of their complaint, noting that over a year had passed since they submitted it. Referring to a meeting with the competition directorate on June 2 last, where they were advised the matter was receiving "priority treatment", the developers' lawyers said this had yet to be communicated in a formal letter to them. The letter warns that the complaint may now be brought to the General Court of the European Union to vindicate the developers' rights to obtain a decision.

Sunday Indo Business

Also in Business