Ireland: Offshore Business Sectors
The Irish Finance Act 1996 included provisions which installed a favourable regime for the establishment of 'SPVs' ( Special Purpose Vehicles for the securitisation of assets) within the International Financial Services Centre in Dublin. Profits were treated as trading receipts and taxed at 10%; and there were no withholding taxes on interest payments on bonds. See Offshore Legal and Tax Regimes for fuller details.
Certificates granting tax advantages within the IFSC were issued by the Minister for Finance; initial application was made to the Industrial Development Authority. The 10% rate applied to new SPVs only until the end of 2002, when the general rate of 12.5% came into effect for all Irish companies.
In order to ensure future competitiveness in the area of securitisation, a review group of industry and Government agency members was set up in 2002 to identify where legislation needed to be amended. The Finance Bill 2003 overhauled the rules and any securitisation vehicle established in Ireland on or after February 6th 2003 was subject to the new legislation. From this date, there is no difference between vehicles set up in the IFSC and non-IFSC SPVs. Existing IFSC SPVs were unchanged by the new legislation.
Under the amended legislation, excessive or profit participating interest is now allowed to be a tax-deductible expense in the SPV. The scope of qualifying activities has been broadened so that SPVs can now carry on a business of holding or managing, or holding and managing, qualifying assets.