News and Insights

Print this page

Search News & Insights

Ireland enhances its structured finance offering

AUTHOR(S): Alan Keating, Gerry Thornton
PRACTICE AREA GROUP: Tax, Structured Finance and Securitisation
DATE: 01.04.2011

Ireland has extended the asset classes which Irish structured finance companies (frequently referred to as ‘section 110 companies’) may hold to include commodities, plant and machinery and carbon offsets.

The attraction of Irish structured finance companies is that, with careful planning, it is possible to ensure that they are effectively tax neutral and can claim a tax deduction for all accrued expenses, including any results-dependent interest. Any margin earned by the company is taxed at the rate of 25%.

The inclusion of commodities is a very welcome development, particularly as investors in structured products are increasingly seeking to diversify their investment risk by taking direct exposure to commodities. Any commodities which are dealt with on a recognised commodities exchange may now be held by Irish structured finance companies. This inclusion will also further facilitate the issuing of Shariah-compliant structured products from Ireland.

The extension of the regime to plant and machinery is also a very significant development. This will allow Irish structured finance companies to engage in securitisation of aircraft, ship and rolling stock  portfolios. It will also permit the use of other forms of debt and derivative financing to fund the acquisition of plant and machinery by Irish special purpose companies and should, in particular, benefit the aircraft leasing/financing industry.

Finally, the additional of carbon offsets, issued under both compulsory and voluntary schemes, is part of a broader initiative to develop Ireland as one of the leading global ‘green’ financial centres, building on Ireland’s existing financial services industry and expertise.

Changes have also been introduced to restrict the tax deductibility of certain interest and swap payments made by Irish structured finance companies. However, it is not anticipated that these changes (from which existing transactions are grandfathered) will impact on the vast majority of transactions.

This extension of asset classes undoubtedly enhances the range of structured finance and securitisation transactions which may be carried out through Irish structured finance companies and is a further commitment by Ireland to position itself as the location of choice for structured finance and securitisation special purpose companies.

This article first appeared in International Tax Review (1 April 2011).


About cookies on our website

Following a revised EU directive on website cookies, each company based, or doing business, in the EU is required to notify users about the cookies used on their website.

Our site uses cookies to improve your experience of certain areas of the site and to allow the use of specific functionality like social media page sharing. You may delete and block all cookies from this site, but as a result parts of the site may not work as intended.

To find out more about what cookies are, which cookies we use on this website and how to delete and block cookies, please see our Which cookies we use page.

Click on the button below to accept the use of cookies on this website (this will prevent the dialogue box from appearing on future visits)