Channor Real Estate Group, a €200 million property group, has told Tánaiste Simon Harris that indigenous developers and landlords face “an unintended competitive disadvantage” compared to larger real estate funds due to a surcharge on their profits.
Irish real estate firms owned by five or fewer people, known as close companies, are subject to a 20 per cent surcharge on undistributed after-tax profits. The charge, on top of corporation tax, is waived if funds are distributed to owners within 18 months of the end of an accounting period.
In a pre-budget submission to Minister for Finance Simon Harris, Channor chief executive Darren Harrison has called for a “productive reinvestment exemption” from the surcharge if profits are used for construction costs, retrofit works, energy efficiency upgrades to buildings and other specific development expenses within three years.
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He added these criteria and clawback methods for Revenue would preserve the anti-avoidance purpose of the surcharge.
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“This is not a request for a broad tax shelter,” said Harrison in the letter.
“The current rules also create an unintended competitive disadvantage for Irish companies with a smaller shareholder base. Larger companies with a wider shareholder base, or non-close company structures, can generally retain profits for reinvestment without facing the same close company surcharge issue,” he said.
Retained earnings are often used by Irish businesses to fund design and planning of new projects, building refurbishments and debt reduction, Harrison said.
He added that family-owned companies like Channor, which controls €200 million of Irish investment property, have been “penalised” for having concentrated ownership structures.
“It risks favouring larger, more widely held or international capital platforms over indigenous Irish businesses that may have a long-term commitment to investing in the Irish market. That is not in the national interest.”
The close company surcharge was introduced to encourage real estate firms to distribute profits to shareholders. Harrison said in his letter that the need for large investment in housing and infrastructure means the surcharge “is increasingly misaligned with Ireland’s current economic needs”.
“A reform would support several Government priorities, including housing delivery, urban regeneration, commercial retrofitting, energy efficiency, infrastructure investment, tax neutrality between ownership structures and the mobilisation of domestic private capital.
“It would also help Irish family businesses and indigenous investors to reinvest through economic cycles, rather than being encouraged by the tax system to extract capital.”
Dublin-based Channor, established in 1990 and controlled by Aidan Harrison, has developed several large office and logistics properties in Blanchardstown Corporate Park.
It also has plans to develop a €200 million, 330-unit residential and retail scheme on a site formerly owned by Cadbury on Oscar Traynor Road, Dublin 5.
Consolidated accounts for Channor’s parent firm, Stempel Holdings Ltd, show it recorded €30.6 million in turnover during 2024 and an after-tax profit of €4 million. At the end of 2024, the group booked total assets less current liabilities of €226.3 million, which included €204.2 million of investment property.
