Kennedy Wilson warned Noonan over changes to ‘vulture’ taxation
FINANCE Minister Michael Noonan was warned by one of the country’s largest landlords that changing how so-called vulture funds are taxed would hurt Ireland’s business reputation.
The US property company Kennedy Wilson says it has invested more than €1bn since 2012 in commercial and residential property in Ireland.
Just before October’s Budget, the company contacted Noonan advising him any changes to the taxation of Qualifying Investor Alternative Investment Funds (QIAIFs) would be detrimental to the Irish economy.
The company was trying to warn the minister off the idea of closing a tax loophole that allowed foreign property investors to pay little or no tax on Irish earnings. The existence of this loophole put significant political pressure on the minister before he announced that he would be clamping down on international investors using special-purpose vehicles, or Section 110 companies, to buy cheap loans and property.
Noonan received a letter from Kennedy Wilson chief operating officer Peter Collins five days before October’s Budget speech.
“Any change to the well-established QIAIF regime on which international investors based their original investment decisions will have a very negative impact on the perception of Ireland as being a stable and reliable market in which to invest,” Collins said in the letter.
Documents released under the Freedom of Information Act show Collins then highlighted four points the Government needed to consider in light of closing the tax loophole. However, the specific points were redacted from the documents released to the Sunday Independent on grounds of commercial sensitivity.
Collins said Kennedy Wilson defended his company’s work in Ireland. “While some commentators have characterised the use of QIAIFs to hold Irish property by international investors as ‘an abuse’ the truth is that the current regime is very clear and well established for over 10 years.
“We made significant investment decisions off the back of this understanding and are extremely concerned that any material changes could undermine both those original investment decisions and our capacity to further grow our business.”
He added that the QIAIFs it operates in Ireland worked in line with legislation. Their regime is replicated in other countries, he said, and he claimed they have added diversity and positivity to the property market.
“In the early stages of the current recovery cycle it was international investors who were the first to support the market and over the last four years have accounted for well over half of new investment.”