Ten days ago, I made my way to Dublin Castle to meet with Niall Cody, the country’s top tax official. The Revenue Commissioners had just released its annual report detailing how, despite the headwinds of Brexit and Covid-19, it had landed a record tax haul for the year.

Cody had agreed to talk about these issues, as well as a range of other topics. Appearing at various Oireachtas committees, Cody can sometimes appear prickly and tough, which, as head of the national tax authority, is arguably no bad thing. In person, however, Cody, whose seven-year term has just been extended by a further three years, is polite, humorous, and insightful.

The conversation was wide-ranging and stretched the Revenue’s orchestration of Covid supports to the global tax reform agenda. Indeed, his comments on how Revenue will pragmatically approach the €2.9 billion in outstanding taxes sitting that are currently warehoused are significant for the 12,000 companies that have not repaid a cent since the warehouse opened.

But, in light of a number of articles published on the site in recent days, it was his comments about the authority’s efforts to battle aggressive tax planning that have been on my mind.

Cody explained how Revenue sought to quickly “close off legislative loopholes” but admitted that the nature of the system meant that the authority often found itself playing catch-up.

In particular, he highlighted potential arbitrage within the tax code, where practitioners were able to play one provision against another. “There is tax planning that is absolutely acceptable and is within the scale of what the law provides. But sometimes it is the interaction between two provisions where somebody can see a road through to strip out tax,” he said.

We wrote about two such examples of what is essentially tax arbitrage last week – the first related to property funds and the second to a husband and wife. In both cases, the taxpayer had sought to use intricate accounting techniques to lower their rate of tax.

Let’s start with the property funds. The Irish real-estate funds (Iref) regime was implemented in 2017 following a series of revelations about the accounting structures used by private equity giants and hedge funds to house Irish assets and dramatically reduce their tax bills (and by dramatically, I mean as low as €250 through the use of Section 110 structures).

However, it quickly became obvious the new regime was being legally manipulated also. A number of Irefs were being deliberately loaded with debt against assets, including sole shareholder and bank loans, in order to reduce the tax bill. This led to the Minister for Finance Paschal Donohoe introducing new anti-avoidance measures in 2019, including limitations on interest expenses and overleveraging, as well as a measure to combat what he described as the “artificial avoidance” of gains on redemption of Iref units.

Last week, Sean and I did a data exercise to see if the 2019 intervention had worked. We began by looking at Irefs’ taxable amount as a percentage of total assets. In 2017, the first year that the regime was operational, the figure was just 0.6 per cent. The following year, the tax figure was 2.8 per cent. The figure increased to 3.1 per cent in 2020.

Given the low level of tax, it was hardly surprising that the amount of property assets held in Irefs increased by 170 per cent between 2018 and 2020 – from €7.8 billion to €20.2 billion. For the last year on record, the state received just €36.8 million in dividend withholding tax from Irefs, according to our analysis of Revenue records.

Three years ago, Donohoe instructed his officials to “intensely scrutinise” activities in the Iref regime over the coming year to determine if more action was needed. Based on the low tax rate and the low tax take, it may well have to.

The second story related to a husband and wife who used diverging strands of the tax code to create a capital gains tax loss of €34.6 million through a rapid-fire yet highly complex corporate manoeuvre.

Essentially, within a month, the couple obtained a tax advantage of €6.9 million utilising a structure that the tax authority argued was a “largely circular transaction which achieved nothing commercially”. Revenue has been pursuing the scheme, which involved share acquisitions, put and call agreements, and the purchase of a €38 million structured bank bond from Barclays, for the best part of a decade.

In recent weeks, however, the Tax Appeals Commission has ruled against Revenue and found the scheme was within the scope of the tax law – if perhaps outside of the spirit.

The commission concluded that the legislation enacted by the Oireachtas failed to address the offset of artificial losses in respect of transactions between connected persons, and that the husband and wife had “not only avoided the anti-avoidance provisions but has in fact taken advantage of them for [their] own purposes to create the very artificial loss which they are designed to avoid”.

Revenue had signalled its intention to appeal the case to the High Court. And as similar cases have shown, it could run even further than the High Court.

But it also shows the contested nature of the tax system, whereby certain taxpayers are constantly looking for an edge, for a new way to lower their tax liability. It is just the way of things, and it is the job of the tax authority to uncover and unravel the schemes.

During the interview, I asked Niall Cody if he was worried about entrepreneurial efforts to reduce tax. “I am always worried,” he smiled.


The IBRC Commission has almost concluded its mammoth probe into the sale of Siteserv to Denis O’Brien and circulated its second draft report to witnesses. Last week, we published a three-part series by Tom into the deal. It is both in-depth and insightful, and details the personalities, the agendas, and the negotiations behind the controversial deal. It is a landmark series and well worth your attention.

With a new US headquarters and a cross-Atlantic move on the horizon, Nuritas CEO and founder Dr Nora Khaldi explained to Devin what led to the relocation and her plans for the next chapter of the company.

In his piece, Ronan Lyons unearthed stark new data that revealed that sitting tenants have seen rental increases of 40 per cent over the past decade, less than half the increase in the open market, while the average lease length has doubled over the last 15 years. He argued that raised significant questions about the effectiveness of rent controls.

Alan Holland’s sourcing automation firm Keelvar has just announced a $24 million series B funding round. The former academic talked to Tom about entrepreneurship, US expansion plans, and whether his company is a potential unicorn.

Meanwhile, the Dublin-based environmental data analytics start-up Ambisense has raised €5 million to date and is about to add flood defence monitoring to its existing products checking for the presence of contaminants in a range of situations. Its founder Stephen McNulty was Thomas’s guest on this week’s podcast.