Guidance published for Irish securitisation companies
01 July 2012
Irish section 110 finance companies now commonly feature in international finance structures. Over the years their use has expanded from being the issuing vehicle in more traditional securitisation and repackaging type transactions, to a broader range of applications, such as being the issuers of Islamic finance instruments, distressed debt acquiring companies, the underlying vehicle for US life settlement funds, and, more recently as aircraft leasing companies. James Somerville of A&L Goodbody explores this trend in light of recent guidance.
There were some important changes made to the section 110 regime in
the 2011 and 2012 Finance Acts and in April the Irish Revenue
Commissioners issued some interpretative guidance notes on these
changes. This article considers the background to these legislative
changes and the content of the guidance notes.
|Somerville believes section 110 companies are popular because of their transparent and flexible tax treatment in Ireland
One key factor in the popularity of section 110 companies has been
their transparent and flexible tax treatment in Ireland (other factors
include their onshore status and their ability to access Ireland's wide
double tax treaty network). Section 110 vehicles are standard Irish
companies which, provided they meet certain conditions, can avail of a
specific tax regime which allows them to take trading deductions even
though their activities may be passive in nature. Additionally, they
retain the ability to obtain a deduction for interest...
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