Ireland is one of the leading jurisdictions of choice for the establishment of special purpose vehicles (Irish SPVs) for a broad range of financial transactions and is widely used by private equity and hedge funds when structuring European investments. There are a number of Irish investment vehicles which are commonly used to acquire such investments, including qualifying investor funds (QIFs) and Irish SPVs which are established as a "qualifying companies" under section 110 of the Taxes Consolidation Act 1997 (as amended) (Section 110) and are commonly referred to as "Section 110 companies". QIFs are subject to authorisation and regulation by the Central Bank of Ireland, while Irish SPVs are typically not subject to such authorisation and regulation. Subject to meeting certain conditions (as discussed below), Section 110 provides for a regime whereby Irish SPVs can participate in financial transactions on a tax neutral basis. A summary of the principal benefits of using an Irish SPV are set out below.
Ireland is an onshore EU and OECD tax jurisdiction with a wide and growing double tax treaty network (currently 69 treaties have been signed). As the financial market has become more sophisticated, the Irish regime has consistently evolved and responded, in terms of its legal and tax framework, in order to continue to position itself as the jurisdiction of choice for SPVs. More recently, Ireland extended the category of assets that may be held and/or managed by Irish SPVs to include commodities, carbon offsets and plant and machinery, such as aircraft and other chattels. Similar to the United Kingdom and the United States, Ireland is a common law jurisdiction and its legal concepts are readily recognised by fund managers in the United Kingdom and the United States. Ireland's Section 110 regime is grounded in legislation and unlike other SPVs jurisdictions in the EU, no special tax ruling or authorisation is required. In addition, no specified "spread" or "margin" is required to be retained at the Irish SPV level.
Corporate status of Irish SPVs
Irish SPVs are established as companies under Irish law, either as a private limited company or a public limited company. In the vast majority of transactions, unless the Irish SPV is involved in a large scale retail offer of securities (which may require the preparation of a "prospectus" in accordance with the Prospectus Directive), an Irish SPV is typically established as a private limited company which can be capitalised with a minimum share capital of EUR 1 (whereas a public limited company must be capitalised with a minimum share capital of EUR 38,100). A private limited company may be incorporated within 3 to 5 business days.
Depending upon the specifics of the transaction, an...