Irish Section 110 Special Purpose Vehicle

An Irish Section 110 special purpose vehicle (SPV) or section 110 company is an Irish tax resident company, which qualifies under Section 110 of the Irish Taxes Consolidation Act 1997 (TCA) for a special tax regime that enables the SPV to attain "tax neutrality": i.e. the SPV pays no Irish taxes, VAT, or duties.

For broader coverage of this topic, see Ireland as a tax haven.

Section 110 was created in 1997 to help International Financial Services Centre (IFSC) legal and accounting firms compete for the administration of global securitisation deals, and by 2017 was the largest structured finance vehicle in EU securitisation. Section 110 SPVs have made the IFSC the third largest global Shadow Banking OFC. While they pay no Irish tax, they contribute €100 million annually to the Irish economy in fees paid to IFSC legal and accounting firms.

In June 2016, it was discovered that US distressed debt funds used Section 110 SPVs, structured by IFSC service firms, to avoid Irish taxes on €80 billion of Irish domestic investments. The cost to the Irish exchequer has been material. Despite the scale of the avoidance, Irish Revenue attempted no investigation or prosecution. The Irish Government's response to the scandal in 2016–2017 was unusual, closing some loopholes but leaving others open, including a five-year capital gains tax (CGT) exemption to aid alternative restructuring. The affair is a source of dispute.

The abuses were discovered because Section 110 SPVs file public accounts with the Irish CRO. In 2018, the Central Bank of Ireland upgraded the L–QIAIF, to give the same tax-free structure on Irish assets held via debt as the Section 110 SPV, but without having to file public accounts with the Irish CRO.

Academic research in 2016–2018 showed IFSC Section 110 SPVs are largely unregulated, operating like brass plate companies with low supervision from the Revenue or the Central Bank of Ireland. It showed Section 110 SPVs were used by sanctioned/prohibited Russian banks. A June 2017 study published in Nature listed Ireland as one of the global Conduit OFCs which use SPVs to route funds to tax havens. In March 2018, the Financial Stability Forum showed SPVs had made Ireland the 3rd largest Shadow Banking OFC. In June 2018, tax academics showed Ireland was the world's largest tax haven.

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