IRELAND Law and Practice Contributed by: Diarmuid Mawe, Craig Kenny, Katelin Toomey and William Fogarty, Maples Group
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
the company’s power to borrow and to mort - gage or charge its property, subject to Irish law and its constitutional documents. The 2023 Act will affect foreign lenders in certain situations, and they should understand its implications. See 2.11 Legal Restrictions on Foreign Investors for further details on the 2023 Act. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security Registration of Security A fee of EUR40 is payable in respect of the reg - istration of security with the Companies Regis - tration Office (the CRO). It is a statutory require - ment for security created by an Irish company to be registered with the CRO within 21 days, and registration must be completed electroni - cally. Failure to comply may only be remedied by a costly court application. The creation of security does not attract tax, although a written notification must be made to Revenue by both the charge-holder and any subsequent transferee of that charge where a company creates a fixed charge over its book debts. Witholding Tax Where repayments under a security document or loan agreement include interest payments with an Irish source, a 20% withholding tax must be applied to the payments in Ireland. Numerous exemptions are available to companies that make payments of Irish-source interest to for - eign lenders. Foreign lenders, which are “quali - fying lenders”, should be entitled to receive Irish-source interest payments free from the withholding tax; qualifying lenders include cer - tain foreign banks, companies that are resident for tax purposes in the EU or in jurisdictions with a double tax treaty agreement with Ireland, and certain treaty lenders.
Acquisitions are financed by banks and non- bank lenders advancing both senior and mez - zanine debt to fund the acquisition and develop - ment of commercial property. The choice between bank financing or financing by alternative lenders is influenced by the com - mercial terms on offer. Alternative lenders are not subject to the regulatory restraints imposed on banks, so have a different appetite for risk. There is a trend towards alternative lenders providing development finance at much higher loan-to-value ratios than banks. Such financing is usually made available at a higher margin with prepayment, arrangement and exit fee mecha - nisms, as well as equity interests in the transac - tions. 3.2 Typical Security Created by Commercial Investors A lender will provide finance secured over the relevant property that will be registered as first- ranking in the appropriate property registry, thereby securing priority of the security for the lender’s benefit. Where a lender is providing finance for development purposes, it would be normal for them to receive collateral warranties from the members of the professional team, such as architects, designers and engineers, as well as step-in rights. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders There are no restrictions on the granting of security over real estate to foreign lenders or repayments to foreign lenders. Pursuant to the Companies Act 2014 (the CA), the directors of an Irish company have the authority to exercise
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