What was "section 84" lending?

In the 1980s and early 1990s, Irish banks lent a lot of money under Corporation Tax Act 1976 section 84 (now section 130).

Because the interest rate varied in relation to the borrower's profitability, the interest payable on the "section 84" loan was treated as a distribution of profits and was not therefore

• taxable when received by the lender, or
• deductible for the borrower.

As a result, the lender could charge a lower net interest rate.

Due to concerns about loss of tax revenue from Irish banks, various restrictions were imposed to curtail the amount of "section 84" lending the banks could make.

Lenders would be taxed on interest from "section 84" loans advanced after 20 December 1991, except loans to companies whose names were included (before 25 March 1991) on "the €317m list" prepared by the IDA.

The maximum "section 84" lending to such companies is €215m plus the amount by which €215m exceeds all such loans made between 31 January 1990 and 19 December 1991 to companies on the €215m list.