Two previous blogs have dealt with the registration in Ireland of Special Purpose Vehicles for Structured Finance Transactions. Many advantages have been noted, but here now are a few of the more ‘sideline’ benefits.
Stamp duty will not apply on the issue or transfer of notes issued by a Section 110 company. Stamp duty can apply on the transfer of Irish assets, but should not be payable on the transfer of non-Irish assets.
Special Purpose Vehicles are engaged in exempt activities, and so will generally have limited ability to recover any VAT charged to them. Irish VAT legislation confirms that management services (which includes portfolio management services) supplied to an SPV falling within Section 110, whether by an originator or otherwise, can be supplied exempt from Irish VAT. This exemption from VAT strengthens Ireland as a location of choice, as recent European Court decisions have confirmed that these services are otherwise within the VAT net.
Thus, to have a legislative exemption amount to the provision of absolute clarity, which is not available in other jurisdictions.
Any Special Purpose Vehicle, seeking to qualify for registration under Section 110, must notify the Irish Revenue and confirm that it satisfies the conditions in Section 110. Unlike other jurisdictions, this is a simple notification and self-certification process. No return approval or Revenue Ruling is required.
Ireland is party to an extensive range of double taxation treaties which, depending on the particular treaty, can ensure that the SPV receives income on its underlying assets free from withholding tax, or at least at a reduced rate. Avoiding tax leakage in this manner is very important to a transaction. A list of countries with which Ireland has a double tax treaty is available at http://www.revenue.ie/en/practitioner/law/tax-treaties.html
An Irish company is not required to make an annual statutory minimum profit for Irish tax purposes. Instead, the Special Purpose Vehicle need only receive a nominal fee (corporate benefit payment) at the start of the transaction.
The Irish Stock Exchange (ISE) has become the largest European exchange for the listing of asset backed debt securities, such as those issued by Special Purpose Vehicles. The ISE provides an efficient and comparatively speedy response time to draft offering circulars. Currently, the ISE guarantees comments within three days of receipt of the first draft of an offering circular.
All in all, it makes for a very attractive domicil for such transactions.