Evolution of Securitisation in Ireland

Over the last two decades, Ireland has successfully established itself as one of the leading tax neutral locations for qualifying fund entities, whether equity-based (UCITS and AIFs) or debt-based (Section 110 SPVs/securitisations).  Why are funds granted tax neutral treatment in Ireland and many other countries?  One of the accepted international tax principles is that investing through collective investment vehicles should place investors in the same tax situation as if they had invested directly in the underlying assets.
Securitisation is a vital source of finance for banks, enabling them to strengthen their balance sheets and increase lending to individuals and businesses, and the entire economy benefits from increased investment.
Compared with The Netherlands, Luxembourg and other countries, Ireland was a little slow in introducing comprehensive legislation to facilitate securitisation. A brief chronology of securitisation developments in Ireland is presented below:
1991: Section 31 of the Finance Act permits securitisation of domestic mortgages by Irish banks and building societies.
1995: Ulysses Securitisation Plc, created in November 1995 for the purpose of securitising Irish local authority mortgages, was the first securitisation listed on the Irish Stock Exchange. The two bond issues in 1995 and 1996, totalling IR£190 million matured in 2006.
1996: The Finance Act facilitated the securitisation of international assets via SPVs located in the IFSC.
1997: Section 110 of the Taxes Consolidation Act set out eligibility criteria for qualifying SPVs.
1999: Section 110 eligibility extended to a wide range of financial assets.
2003: Further clarification of various taxation issues in relation to securitisation.  Asset eligibility increased to permit, inter alia, synthetic transactions.  A minimum €10m initial transaction threshold was introduced and non-IFSC-located SPVs were placed on an equal footing with IFSC-located SPVs.
2006:  Private Irish companies, as well as public companies, could now be used in Irish securitisations, subject to certain conditions.
2008: Irish Section 110 SPVs permitted to acquire greenhouse gas emission allowances and insurance contracts.
2011: Qualifying Section 110 assets extended to include carbon offsets (replacing greenhouse gas emission allowances), commodities, plant and machinery.