Ireland offers a favourable taxing regime under Section 110 for a broad range of structured finance and securitisation transactions. The Section 110 taxing regime is designed to allow an Irish tax resident special purpose vehicle (SPV) to be tax neutral provided the relevant legislative conditions are satisfied. These SPVs are typically referred to as ‘Section 110 companies’. This tax neutral regime has been in place for almost 25 years, with the legislation being expanded and improved upon on a regular basis. Section 110 companies are widely used in the international financial services sector for bank loan book securitisations, as bond issuance vehicles, asset leasing vehicles, investment fund subsidiaries, investment holding vehicles and for CDO, CLO and NPL structures etc.
Irish tax legislation contains a number of taxing regimes specifically designed to attract investment into the country. One such taxing regime is in respect of certain intangible assets developed or acquired and the taxing of income and gains generated therefrom. This intangible assets tax regime (commonly referred to as the “IP Tax Regime”) was introduced by in Finance Act 2009. Since its introduction, the IP Tax Regime has been enhanced on a number of occasions by the Irish authorities and this is expected to continue. The low 12.5% corporation tax rate (which is integral to the IP Tax Regime) is fixed policy of the Irish government, is not up for debate and simply will not change.
In March 2015 the Irish Collective Asset-management Vehicles Act 2015 (the “ICAV Act”) was signed into law by the Irish government. The ICAV Act provides for the establishment of a new Irish corporate vehicle specifically designed as an investment fund. Nexus Taxation has already worked on some of the first Irish Collective Asset-management Vehicles (“ICAVs”) to be authorised by the Central Bank of Ireland. An ICAV may be established as a UCITS or AIF (e.g. QIAIF). It is anticipated that the ICAV will become the preeminent Irish investment fund vehicle, replacing the current most popular fund vehicle – the variable capital investment company structured as a public limited company (the “Plc Fund”).