Ireland is the location of choice for domiciling international debt capital markets structures, winning a larger share of new SPVs relative to its main competitors – The Netherlands and Luxembourg.
Why is this? All three countries are attractive in terms of tax neutrality and also provide access to a wide array of double taxation treaties to ensure that the returns to investors are paid free from withholding tax, to the extent possible. Let's skip lightly over these complexities!
The additional factors that tend to differentiate Ireland from its two main rivals are as follows:
Legal infrastructure: Ireland is a common law jurisdiction with a robust legislative infrastructure for securitisation transactions (Section 110, TCA). This degree of certainty provides increased clarity and assurance for investors.
Cost: Ireland tends to be a less costly location than its main rivals for setting up and maintaining securitisation transactions. SPV management fees and auditor costs are typically lower in Ireland than in Luxembourg or The Netherlands. SPV capitalisation in Ireland can be as little as one euro and corporate income tax is negligible because profits can be fully swept to investors. In comparison, Luxembourg securitisation companies may be subject to significant minimum capital requirements and minimum corporate income tax.
Efficiency: Establishing an Irish SPV is a quick process and Irish-based legal and tax advisors are highly-regarded internationally for their expertise, cost-competitiveness and responsiveness. In addition, the Irish Stock Exchange is a European leader in terms of quality and efficiency in listing debt securities.
Linguistic and cultural affinity with the US and UK: These subtle factors tend to favour Ireland over Luxembourg and the Netherlands in some circumstances.
While these are just a few of the factors that are helping Ireland to win securitisation structures, they do make a significant contribution to Ireland's attractiveness. Should you need additional information, please do not hesitate to get in touch with the Dublin team at QSV Group Limited - specialists in SPV management services.
Managing Director, QSV Group Limited