Ireland: The Lending And Secured Finance Review, 4th Edition


The corporate lending market in Ireland continues to be particularly active in the real estate (investment and development), pharma and technological sectors – all of these being significant drivers of the Irish economy. Much of the lending in terms of volume tends to be to the small to medium-sized enterprise (SME) sector.

Currently market conditions are positive, albeit that the impending departure of the United Kingdom from the European Union (Brexit) has created a great deal of uncertainty in the economy. As with a number of other EU Member States, there is an oversupply of credit to meet available demand. In addition to banks, there are a number of venture capital and private equity credit providers. There are also a number of bespoke lenders providing SME finance in the property development sector. The recently enhanced competition in the Irish lending market has contributed to a 'covenant-lite' environment and somewhat increased bargaining power for borrowers. Therefore, if a credit proposition is favourable, there is a very healthy market for debt finance. However, the challenge at the moment is matching the amount of available credit to sound investment opportunities.

Currently deal activity is most active in the real estate sector. Regulated financial institutions have, since the financial crisis, sold large loan portfolios in response to regulatory requirements to consolidate their balance sheets. The number of portfolio sales by Irish licensed banks has greatly increased recently (including non-performing loans (NPLs). Over time, portfolio sales have introduced to the Irish debt market a large number of US and UK private equity funds that have since established a very significant presence. There has been, therefore, a good supply of substantial property-based financings (including bank and mezzanine financing of property development groups). There is also a steady flow of aircraft finance work in Ireland, with a number of leading global aircraft leasing firms headquartered in Ireland.

Syndicated lending occurs in Ireland, but this tends to be in deals towards the larger end of the corporate spectrum and is the exception rather than the rule. For large financings, structures commonly used involve senior and mezzanine finance models (often with a regulated institution providing senior finance and private equity the mezzanine piece), or fund structures. These include investment companies, and Irish collective asset-management vehicles – a bespoke statutory corporate fund tailor-made for tax-transparent fund strategies.

Loan Market Association (LMA) documentation is commonly used in large to medium-sized transactions. Irish law firms that are players in the commercial loan space are used to adapting the LMA to Irish requirements. Ireland is a common law jurisdiction with a long and close common history with the United Kingdom, and, therefore, the LMA is easily adapted to meet particular Irish law requirements.

Irish and EU banks continue to be the main players in all sectors, but increasingly, alternative finance providers such as private equity houses, fund lending structures and asset managers play an ever more significant role. Specialist lending vehicles structured as qualifying investor alternative investment funds (QIAIFs) regulated by the Central Bank of Ireland are becoming more commonly used. EU-sourced funding plays a significant role too, in particular the Irish Structural Investment Fund (ISIF), often partnering with other credit providers in projects that are suitable for ISIF's portfolio. There is a limited peer-to-peer and crowdfunding market in Ireland. This is an area that will likely be subject to regulation quite soon.

Notable recent deals include the acquisition by Avolon (a major Irish-based aircraft lessor) of CIT Group's aircraft leasing business. This US$10.38 billion deal was one of the largest transactions of its kind during 2017 and involved a syndicated term loan, intergroup financing and equity investment, and a US$3 billion private placement.

Overall trends include increasing competition on the lender side with more alternative lenders entering the market to fund large and medium-sized deals. This is has led to a covenant-lite environment. Real estate still leads the way, in particular, with development deals to provide office space and housing in large urban centres.


The key legal and regulatory development in the area of secured lending has been as the coming into effect, in June 2015, of the Companies Act 2014 (CA 2014). This substantially removed from security registration requirements many types of financial asset (such as bank accounts and units in collective investment schemes). This is to reflect the intent of the EU financial collateral regime. However, CA 2014 requires urgent amendment to bring charges over shares in non-Irish companies outside the scope of the registration regime. This issue has now been addressed in amending legislation affecting a number of 'running repairs' to CA 2014. It also changed procedures for registering security introducing a one and two-stage process and electronic filing. CA 2014 also ironed out some difficulties in predecessor legislation dealing with the whitewash of financial assistance transactions and connected party security.


There is a general trend internationally and in the Irish market in which investors are allocating capital to the origination of loans as an asset class. The structures being utilised in an Irish context typically involve the use of an Irish investment vehicle such as the Irish 'Section 110 company' (that is a company that meets the conditions set out in the Section 110 Taxes Consolidation Act 1997 for the tax treatment therein) and QIAIFs. The Central Bank of Ireland recently relaxed the rules on loan origination by QIAIFs. The borrowers are typically based in Ireland, Europe and the United States, and investors include EU and US investment firms and sovereign wealth funds.

The key Irish tax considerations that impact loan transactions principally relate to the following.

i Deductibility of interest

Interest payable by an Irish corporate borrower is deductible as a trading expense, as a charge on income or as a deduction against rental income for a property rental business. While there is generally no relief for interest on money used to acquire general investments (apart from certain shares and realty) a deduction is given for interest payable by a Section 110 company provided that, where the interest is profit dependent, it is paid to an Irish-resident lender or is subject to tax in an EU or treaty state or is paid on a quoted Eurobond. Special rules apply to related party debt. Recent changes to the Section 110 company regime have restricted deductibility where a company holds assets that derive their value from Irish land unless they are held as part of a CLO, CMBS/RMBS or loan origination transaction and certain conditions are met.

ii Withholding taxes

Irish-source interest on loans of more than one year is subject to withholding at a rate of 20 per cent unless an exemption applies. Perhaps the most common exemptions in the secured lending context are for payments to the following types of lender: Irish banks and Irish branches of EU-regulated banks, companies resident in an EU or treaty state and Irish Section 110 companies. LMA standard loan documentation includes 'qualifying lender' provisions. The effect of these provisions is that, if withholding tax applies to any interest payments, the borrower does not have to compensate the lender by increasing those payments ('gross up') unless the lender is a 'qualifying lender', as defined, on the date they became a party to the loan agreement. The definition of 'qualifying lender' is drafted to reflect the conditions for the many exemptions from Irish withholding tax in the Irish tax legislation. As a result, the day-one risk of withholding is placed on the lender whereas any change of law risk is taken by the borrower.

iii Stamp duty

There is typically no stamp duty on the making of a loan or on any security for the loan. Stamp duty can apply on the transfer of the loan where it contains certain equity-like features (e.g., convertible into Irish shares), but if the loan is sold in the ordinary course of business of either the vendor or the purchaser, then no stamp duty should apply.

iv Foreign Account Tax Compliance Act and Common Reporting Standard

FATCA and CRS have been implemented in Ireland by regulations. Both require reporting of investors by Irish 'financial institutions' (which generally includes funds and investment vehicles) unless the investors are themselves financial institutions in participating states. In our experience, the impact of Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) on the structuring of secured lending transactions has been limited. There are typically mutual obligations to provide information to enable the parties to comply with their FATCA and CRS reporting obligations, if any.

To view the full article, please click here

Originally published in The Law Reviews

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions