Establishing Special Purpose Vehicles In Ireland, May 2011 For Structured Finance Transactions

Profession:Arthur Cox

Ireland is a leading jurisdiction for the establishment of special purpose vehicles (SPVs) for structured finance transactions, particularly repackagings, securitisations, LPN structures, CLOs and CDOs, asset-backed commercial paper programmes, corporate and leverage finance structures, fund-linked structures, life settlement issues and a host of other receivables financing transactions.

The predominant reasons for Ireland's popularity as an SPV location are its favourable tax regime, the fact that it is an "on-shore" jurisdiction, its developed corporate legal system and the professional and administration services that are available locally.

Legal system

Like the United Kingdom and the U.S.A., Ireland is a common law jurisdiction and its legal concepts will be recognised by most investors, originators and advisers. Ireland recognises the concept of a trust and the laws in this regard are very similar to the laws of England. In addition, the laws relating to personal property, the enforcement of security, the transfer of assets and the concepts of legal and equitable title are similar to those in England.

Ireland's international status

Ireland is a member of the EU and also of the OECD. For many originators and potential investors, this is one of the more significant advantages of locating an SPV in Ireland. Investors in some jurisdictions may want to purchase debt issued by EU/OECD issuers only, and the inability to access those investors if the SPV is located elsewhere may affect the pricing of a transaction.

In addition, there is an ongoing international trend away from investing in so-called tax havens. Some investors take comfort from the fact that Ireland is not a tax haven and has a developed corporate legal system and tax structure.


The following tax points are of particular relevance:

Section 110 Regime

Section 110 of the Taxes Consolidation Act 1997 (Section 110) is the cornerstone of Ireland's securitisation regime which permits qualifying Irish resident SPVs to engage in an extensive range of financial and leasing transactions in a tax neutral manner. The scope of the regime is particularly broad, applying to companies involved in the holding or management of a wide category of financial assets ("qualifying assets"), and has recently been extended to include the leasing of plant and machinery, and the holding or management of commodities and carbon offsets issued under voluntary as well as compulsory schemes. The expansion to include leasing and the direct holding of plant and machinery is an exciting development for those involved in Ireland's world renowned aircraft finance and leasing industry and other big ticket leasing activities. The wider range of carbon offsets which can be held by Section 110 companies further strengthens Ireland's position in the burgeoning Green Tech sector.

Given the extensive range of assets, most structured finance vehicles can qualify as Section 110 companies in such a way that the transaction should be tax neutral. As a result, Ireland is an ideal jurisdiction for locating an on-shore, EU/ OECD issuer...

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