Establishing SPVs
Ireland is a leading jurisdiction for the establishment of special purpose vehicles (SPVs) for structured finance transactions and the unrivalled strength of the firm’s Capital Markets, Tax, Financial Regulation and Listing capabilities makes Arthur Cox LLP a market leader in this area.
The predominant reasons for Ireland’s popularity as an SPV location include its developed corporate legal system, the fact that it is an ‘on-shore’ jurisdiction, the professional and administration services that are available locally and its favourable tax regime.
Corporate law enables noteholders to be exposed only to liabilities and assets that are intended to be secured. In addition, favourable tax laws allow the structures to be, in most cases, tax neutral (with no material annual minimum profit or ‘spread’ required at the SPV level) and a ‘quoted eurobond’ exemption, together with numerous double taxation treaties, allows interest on securities to be paid gross. A minimum share capital requirement of €1 in most cases makes incorporating an Irish SPV a straightforward process. In addition, Euronext Dublin is a market leader in the listing of debt securities.
Cormac Kissane
Partner, Finance +353 1 920 1186 cormac.kissane@arthurcox.com
SUMMARY OF BENEFITS OF ESTABLISHING SPVs IN IRELAND
- EU jurisdiction with a broad double tax treaty network.
- Common law legal system, similar in many respects to US and UK.
- Favourable tax status for debt issuers which should result in: – Minimal corporate tax leakage in most cases. – No withholding tax and limited VAT leakage.
- Leading jurisdiction for listing SPVs.
- Cost efficient jurisdiction involving: – Minimal retained profit. – Competitive service provider and audit costs. – Competitive and sophisticated legal market.
- AIFMD certainty for debt issuance.
LEGAL SYSTEM AND COUNTRY STATUS
Legal System
Like the UK and the US, Ireland is a common law jurisdiction and its legal concepts will be recognised by most investors, originators and advisers.
Ireland is a member of the EU, the Eurozone and the OECD.
For many originators and potential investors, this is a key advantage 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.
Tax Structure
There is an 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.
Taxation
The Irish government has put in place advantageous tax laws for finance vehicles in Ireland. The key relevant points are:
Establishing SPVs in Ireland
Arthur Cox Listings have been guiding issuers through the relevant listing rules and requirements since 2004.
Listings
Euronext Dublin has become the largest European exchange for listing specialist debt securities. It is the listing venue of choice for many issuers seeking a European listing, and has over 48,000 bonds listed (representing more than 100 countries). Issuers can opt to list on Euronext Dublin’s regulated market or on its Global Exchange Market (an exchange-regulated market and multilateral trading facility). Through Arthur Cox Listing Services Limited, we advise on the listing of a wide variety of asset-backed debt and fund transactions.
