LABOUR WIN IN UK MAY SPARK FLIGHT OF WEALTHY TO IRELAND - Ireland could offer itself as a home to some of Britain’s wealthiest residents if a Labour government was elected in the UK and followed through on threats to abolish a rule which allows some people to mitigate their UK tax liability.
Labour leader Ed Miliband has declared that, if elected in the forthcoming election, he would end the regime which allows those who are resident, but not domiciled in the UK, to avoid paying tax on their worldwide income. Ireland operates the same non-domicile regime, a legacy of British rule, according to Tim O’Rahilly, a partner with PricewaterhouseCoopers. But unlike in the UK, there has been no political pressure here to abolish it, says the Irish Times. “It works in the same way. If a non-Irish person lives in Ireland and is tax-resident here, they only pay tax on Irish income and capital gains,” he says, adding that Irish tax is only payable on foreign income if it is brought into the State. John Bradley, a partner with KPMG, suggests the Irish non-dom regime is even more attractive than that in the UK, as a result of £90,000 charge, which was introduced in the UK last year, for non-doms who have lived there for 17 of the past 20 years. Mr Bradley says the non-dom regime is quite unique to Ireland and the UK. “Most European countries would tax citizens, once they’re resident, on worldwide income,” he says.
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US FIRM BUYS HUGE DUBLIN NAMA APARTMENT PORTFOLIO - A US investment firm has paid close to €120m for nearly 600 apartments around Dublin. New York-based Marathon Asset Management has agreed terms to buy the so-called Plum Portfolio from Nama. The portfolio includes 588 apartments across seven developments, writes the Irish Independent. The portfolio was put on the market last October by Nama with an asking price of €116m. It includes apartments at Beechwood Court in Stillorgan, Time Place on Corrig Road in Sandyford, Lad Lane in Dublin 2, Heywod Park in the Northwood development in Santry, Northern Cross on the Malahide Road, and part of the Waterside development, which is also on the Malahide Road. The deal is the latest large block of apartments to be sold off by the State bad bank to a large institutional investor.
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FOREIGN BUYERS SNAP UP IRISH GOVERNMENT BONDS - More than €2 billion worth of Irish government bonds were snapped up in February with foreign investors becoming increasingly interested in the State securities. The total value of outstanding government bonds stood at €122.13 billion in February, with those held by non-residents now making up almost 60% of the overall value. The Irish Examiner says that the percentage of Government bond holdings of non-residents climbed to 58.7% from 51.3% a year previous, with the increase principally due to a significant proportion of new Irish government bonds being purchased. At the end of February, resident holders held more than 41% of long-term Irish government bonds, with resident credit institutions and the Central Bank accounting for nine in every 10 euro of those holdings. Within the next five years, 31.3% of outstanding Government bonds will mature. More than a quarter of resident holdings fall under this maturity category, while the equivalent figure for non-resident holdings is higher again at 35%. In contrast, only a quarter of non-resident investors fall into this category.
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SWITZERLAND MAKES HISTORY BY SELLING 10 YEAR DEBT AT NEGATIVE INTEREST RATE - Switzerland has become the first government in history to sell benchmark 10-year debt at a negative interest rate, as falling prices and unprecedented action by the world’s major central banks send global markets further into unknown terrain. Bonds with negative yields have become one of the world’s fastest growing asset classes, accounting for around a quarter of Europe’s government debt market. In the last year Germany, Austria, Finland and Spain have all sold shorter-term debt at sub-zero yields. But this is the first time that investors were effectively charged for lending money to a government for such a prolonged period, writes the Financial Times. They bought 232.51 million Swiss francs (€222.4m) of Swiss debt that will not be repaid until 2025 at a yield of -0.055% - and the issue was comfortably oversubscribed. The rush into European bonds is the consequence of the global slide in inflation, which has made it easier for investors to accept negative yields as they expect prices to rise slowly in the future. Prices in Switzerland fell by 0.9%in the year to March, while inflation in the euro zone stood at -0.1%. Policy makers have responded to the fall in prices by cutting interest rates and launching programmes of asset purchases. The European Central Bank last month bought €52.5 billion-worth of government bonds, as part of its €1.1 trillion quantitative easing scheme to revive the euro zone economy.
