View source for Social:Irish Section 110 Special Purpose Vehicle (SPV)

{{short description|Irish zero-tax legal structure}}

[[File:International Financial Services Centre, Dublin.jpg|thumb|International Financial Services Centre. Section 110 SPVs were created in 1997 to allow IFSC law firms administer securitisation business; in 2012 these firms would use the SPVs to assist U.S. distressed debt funds shelter over €40 billion of Irish investments (€80 billion in loan balances) from Irish tax.]]

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 ''[[Finance:Corporation tax in the Republic of Ireland|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.

Section 110 was created in 1997 to help [[Finance:International Financial Services Centre|International Financial Services Centre]] (IFSC) legal and accounting firms compete for the administration of global securitisation deals, and by 2017 was the largest [[Finance:Structured finance|structured finance]] vehicle in EU securitisation.<ref>{{cite news|url=https://www.independent.ie/business/irish/ireland-is-top-eurozone-jurisdiction-for-secretive-spvs-36047198.html|title=Ireland is top Eurozone jurisdiction for SPVs|newspaper=Irish Independent|date=19 August 2017}}</ref><ref>{{cite web|url=https://www.pwc.ie/services/tax/international-tax/structured-finance.html|title=Structured Finance (Section 110)|publisher=PWC Ireland|date=2016}}</ref> Section 110 SPVs have made the [[Finance:International Financial Services Centre|IFSC]] the third largest global [[Finance:Offshore financial centre#Shadow banking|Shadow Banking OFC]].<ref>{{cite news|url=https://www.independent.ie/business/irish/ireland-has-worlds-fourth-largest-shadow-banking-sector-hosting-202-trillion-of-assets-35701058.html|title=Ireland has world's fourth largest shadow banking sector, hosting €2.02 trillion of assets|newspaper=Irish Independent|date=18 March 2018}}</ref> While they pay no Irish tax, they contribute €100 million annually to the Irish economy in fees paid to [[Finance:International Financial Services Centre|IFSC]] legal and accounting firms.<ref name="idsa">{{cite web|url=http://www.idsa.ie/wp-content/uploads/2016/12/IDSA_Securitisation-Industry-in-Ireland.pdf|title=Ireland: The Leading European Jurisdiction for SPVs, Structured Finance and Securitised Structures|publisher=Irish Debt Securities Association|date=2016}}</ref><ref name="lawyer"/>

In June 2016, it was discovered that US distressed debt funds used Section 110 SPVs,<ref name="sundaybp"/> structured by [[Finance:International Financial Services Centre|IFSC]] service firms,<ref name="law"/> to avoid Irish taxes on €80 billion<ref name="sd"/> of Irish domestic investments.<ref name="l1"/><ref name="l2"/><ref name="l3"/><ref name="ifsc"/> The cost to the Irish exchequer has been material.<ref name="sd2"/><ref name="sd"/> Despite the scale of the avoidance, Irish Revenue attempted no investigation or prosecution.<ref name="nnn"/>  The Irish Government's response to the scandal in 2016–2017 was unusual, closing some [[Social:Loophole|loophole]]s but leaving others open, including a five-year capital gains tax (CGT) exemption to aid alternative restructuring.<ref name="kpmg1"/><ref name="fry1"/><ref name="fry2"/>  The affair is a source of dispute.<ref name="zza"/><ref name="zzb"/><ref name="sd3"/><ref name="dmw"/><ref name="noonan"/><ref name="noo1"/>

The abuses were discovered because Section 110 SPVs file public accounts with the Irish CRO.  In 2018, the [[Finance:Central Bank of Ireland|Central Bank of Ireland]] upgraded the [[Social:Qualifying investor alternative investment fund (QIAIF)#L-QIAIF rationale|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.

[[File:Michael Noonan (official portrait).jpg|thumb|Finance Minister Michael Noonan moved to partially close some of the abuses of Section 110 SPVs by U.S. distressed debt funds in the Irish domestic economy in the 2016 Finance Act, but controversially decided against full closure, or any investigation or Irish Revenue Commissioners sanction.]]

Academic research in 2016–2018, showed [[Finance:International Financial Services Centre|IFSC]] Section 110 SPVs are largely unregulated,<ref name="jim1"/><ref name="jim2"/> operating like [[Social:Brass plate company|brass plate]] companies with low supervision from the Revenue or the [[Finance:Central Bank of Ireland|Central Bank of Ireland]].<ref name="imf"/> It showed Section 110 SPVs were used by sanctioned/prohibited Russian banks.<ref name="rus1"/><ref name="rus2"/><ref name="rus3"/> A June 2017 study published in Nature listed Ireland as one of the global [[Finance:Conduit and Sink OFCs|Conduit OFC]]s which use SPVs to route funds to tax havens.<ref name="nature"/> In March 2018, the [[Organization:Financial Stability Forum|Financial Stability Forum]] showed SPVs had made Ireland the 3rd largest [[Finance:Offshore financial centre#Shadow Banking|Shadow Banking OFC]].<ref name="FSF1">{{cite web|url=http://www.fsb.org/wp-content/uploads/P050318-1.pdf|title=Global Shadow Banking and Monitoring Report: 2017|date=5 March 2018|quote=Jurisdictions with the largest financial systems relative to GDP (Exhibit 2-3) tend to have relatively larger OFI [or Shadown Banking] sectors: Luxembourg (at 92% of total financial assets), the Cayman Islands (85%), Ireland (76%) and the Netherlands (58%)|page=30|publisher=[[Organization:Financial Stability Forum|Financial Stability Forum]]}}</ref>  In June 2018, tax academics showed Ireland was the [[Finance:Tax haven#Tax haven lists|world's largest tax haven]].<ref name="gbz">{{cite web|url=http://gabriel-zucman.eu/missingprofits/|title=The Missing Profits of Nations|quote=Appendix Table 2: Tax Havens|page=31|author1=Gabriel Zucman|author2=Thomas Torslov|author3=Ludvig Wier|publisher=[[Organization:National Bureau of Economic Research|National Bureau of Economic Research]], Working Papers|date=June 2018|author1-link=Gabriel Zucman}}</ref><ref name="zuc10">{{cite news|url=https://www.wsj.com/articles/corporations-push-profits-into-tax-havens-as-countries-struggle-in-pursuit-study-says-1528634659|title=Zucman:Corporations Push Profits Into Corporate Tax Havens as Countries Struggle in Pursuit, Gabrial Zucman Study Says|quote=Such profit shifting leads to a total annual revenue loss of $200 billion globally|newspaper=Wall Street Journal|date=10 June 2018}}</ref><ref name="zux">{{cite news|url=https://www.irishtimes.com/business/economy/ireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Feconomy%2Fireland-is-the-world-s-biggest-corporate-tax-haven-say-academics-1.3528401|title=Ireland is the world's biggest corporate 'tax haven', say academics|quote=New Gabriel Zucman study claims State shelters more multinational profits than the entire Caribbean|newspaper=Irish Times|date=13 June 2018}}</ref><ref name="WPaidan.regan">{{cite news|url=https://www.washingtonpost.com/politics/2019/04/25/ireland-is-tax-haven-thats-becoming-controversial-home/?noredirect=on|title=Ireland is a tax haven — and that's becoming controversial at home|author=Aidan Regan|newspaper=Washington Post|date=25 April 2019|accessdate=25 April 2019}}</ref>

==Creation==
[[File:Charlie McCreevy portrait.jpg|thumb|Minister Charlie McCreevy's landmark 1997 Tax and Consolidation Act created Section 110 SPVs and laid the foundations for Ireland's leading corporate BEPS tools.]]


While Ireland had created securitisation SPVs from 1991 onwards for their emerging [[Finance:International Financial Services Centre|International Financial Services Centre]] (IFSC), Section 110 of the 1997 Taxes and Consolidation Act (TCA) introduced more advanced SPVs to enable the IFSC complete in the global [[Finance:Securitization|securitisation]] market.

The new Section 110 SPV was fully '''tax neutral''' (also known as '''tax transparent'''), which meant that with appropriate financial structuring, no Irish taxes (including Irish income taxes, capital gains taxes, withholding taxes or even Irish VAT and Irish [[Finance:Stamp duty|stamp duty]]) would apply inside the new Irish Section 110 SPV.

Full tax neutrality was available as standard in the offshore financial centres who already had zero domestic taxes (i.e. Bermuda, the Cayman).  As tax havens however, their reputation, and a restricted network of global tax treaties, made then less acceptable to the banks who originate [[Finance:Securitization|securitisation]] SPVs.<ref>{{cite web|url=http://www.finance-magazine.com/display_article.php?i=2825&pi=120|title=An Introduction to Securitisation in Ireland Dillon Eustace Law|date=July 2002}}</ref>

Onshore competitors, like Luxembourg and the Netherlands, used a civil law legal system, also less favored by [[Finance:Securitization|securitisation]] originators<ref>{{cite web|url=http://www.finance-magazine.com/display_article.php?i=2477&ht=|title=Securitisation to grow further in 2003|date=January 2003}}</ref>

Irish companies had access to the EU's network of tax treaties in a preferred common law legal system.  However, offering Irish companies as vehicles for tax neutral [[Finance:Securitization|securitisations]] bought risks to the tax base of the Irish economy as Irish domestic assets and businesses could be repackaged into Section 110 "qualifying assets".

Explicit solutions (i.e. the SPV could not hold Irish assets) were ruled out as the Section 110 SPV could be challenged as a non-ordinary Irish company, losing tax treaty access.  Instead, controls were introduced, that while less explicit, would collectively ensure Section 110 SPVs were confined to global [[Finance:Securitization|securitisation]]:
{{ordered list|type=lower-roman
| Section 110 SPVs were limited to entities licensed to operate within the [[Finance:International Financial Services Centre|IFSC]] (in 1997, the [[Finance:International Financial Services Centre|IFSC]] was an 11–hectare site in Dublin).
| Irish Revenue had to be notified on the creation of each individual Section 110 SPV (and could challenge any it found unacceptable).
| Existing Irish anti-avoidance tax rules would apply (e.g. [[Finance:Withholding tax|withholding tax]] rules would prevent domestic profits leaving Ireland, untaxed).
}}
While [[Finance:International Financial Services Centre|IFSC]] law firms lobbied for the removal of i. & iii. (above),<ref name="w1">{{cite web|url=http://www.financedublin.com/articles/2537/Section+110+of+the+new+Finance+Bill+will+help+the+Irish+securitisation+industry+play+catch-up|title=A&L Goodbody lobbies for Section 110 changes in 2003 Finance Act|publisher=Finance Dublin|date=Jan 2003}}</ref><ref name="w2">{{cite web|url=http://www.financedublin.com/article.php?i=2506&p=114|title=Securitisation framework modernised and IFSC non IFSC distinction removed|date=March 2003}}</ref><ref name="w3">{{cite web|url=http://www.finance-magazine.com/display_article.php?i=2824&pi=120|title=KPMG calls for removal of Irish withholding tax controls on Section 110 SPVs|date=July 2002}}</ref><ref name="w4">{{cite web|url=http://www.finance-magazine.com/display_article.php?i=6413&pi=235|title=Matheson 2006 Finance Act extends quoted Eurobond withholding tax exemption for Section 110 SPVs|date=September 2006|publisher=Finance Dublin}}</ref> and exemptions from improvements in Irish company law,<ref>{{cite web|url=http://www.finance-magazine.com/display_article.php?i=2126&pi=142|title=Securitisation industry lobby Government to amend Companies (Auditing & Accounting) Bill|publisher=Finance Magazine|date=January 2003}}</ref> these controls seemed to work.  There is no record of any entity (Irish or foreign) using Section 110 SPVs to avoid Irish tax on Irish domestic investments or businesses until circa 2012 ({{slink|#Abuses}}).

Note, Irish banks use Section 110 SPVs to raise capital to finance their Irish mortgage books in the global capital markets (they all have [[Finance:International Financial Services Centre|IFSC]] offices).  However, as the source Irish borrower pays loan interest to the Irish bank, who then incurs Irish taxes inside their Irish-taxed corporate bank structure, there is no loss of Irish taxes to the Irish exchequer.

In contrast, if Irish borrowers paid loan interest into a Section 110 SPV, no Irish taxes are ever paid, causing a permanent loss to the exchequer.  Irish anti-avoidance rules (iii. above), would kick-in and apply Irish withholding taxes of 20% in such situations, but the Irish Revenue would controversially set these anti-avoidance rules aside in 2016 ({{slink|#Abuses}}).

==Features==

===Qualifying company===

For Irish Section 110 SPVs to be accepted under EU tax treaties (and be OECD-whitelisted), they must to be ordinary Irish resident companies, in Irish and EU Company Law.

In this regard, more advanced and/or aggressive Irish tax-neutral vehicles, which are fully tax-free and can be operated in greater secrecy from public views, such as the [[Social:Qualifying investor alternative investment fund (QIAIF)|Qualifying investor alternative investment fund (QIAIF)]], or LQIAIFs and QIFs, were not deemed suitable for the global [[Finance:Securitization|securitisation]] transaction marketplace.

As an ordinary Irish company, a Section 110 SPV usually takes one of 3 main forms:<ref name="despv">{{cite web|url=http://www.dilloneustace.com/download/1/Publications/Financial%20Services/Ireland%20as%20a%20Domicile%20for%20Special%20Purpose%20Vehicles.pdf|title=Ireland as a domicile for Special Purpose Vehicles|publisher=Dillon Eustace|date=2016}}</ref>
* private limited company (LTD);
* public limited company (PLC); and
* designated activity company (DAC) (essentially a private limited company (LTD), but who can also use listed debt (but not equity) securities).

A "qualifying company" under Section 110 of the 1997 TCA means a company which:<ref>{{cite web|url=http://eyfinancialservicesthoughtgallery.ie/wp-content/uploads/2014/01/Pages-from-4996_FS-Marketing_101-Brochure-v2.pdf|title=The Irish Section 110 Company|publisher=Ernst and Young (Dublin)|date=2014}}</ref> 
{{ordered list|type=lower-alpha
| is resident in Ireland and files accounts (i.e. is a normal Irish Company)
| acquires "qualifying assets" (see list below)
| carries on in Ireland the business of the holding and/or management of "qualifying assets" (i.e. is not a "brass plate")
| apart from activities ancillary to that business carries on no other activities
| undertakes the first transaction for a value of not less than €10m
| notifies the Irish tax authorities that it is a company to which points (a) to (e) apply
}}

===Qualifying assets===

The list of "qualifying assets" which can be held inside an Irish Section 110 SPV is large (it has been extended with subsequent Irish Finance Acts).

It goes well beyond the original classic securitisation categories and currently includes:
{{ordered list|type=lower-roman
| Shares, bonds and other securities
| Futures, options, swaps, derivatives and similar instruments
| Invoices and all types of receivables
| Obligations evidencing debt (including loans and deposits)
| Leases and loan and lease portfolios
| Hire purchase contracts
| Acceptance credits and all other documents of title relating to the movement of goods
| Bills of exchange, commercial paper, promissory notes and all other kinds of negotiable or transferable instruments
| Certain types of carbon offsets
| Contracts for insurance and contracts for reinsurance
| Commodities (i.e. tangible assets dealt in on a recognised commodity exchange)
| Plant and machinery
}}

===Structural elements===

There are three key elements relevant to structuring Irish Section 110 SPVs (as discussed in attached references):<ref name="gtt">{{cite web|url=https://www.grantthornton.ie/globalassets/1.-member-firms/ireland/insights/publications/grant-thornton---spv-taxation.pdf|title=Irish SPV Taxation|publisher=Grant Thornton|date=30 September 2015}}</ref><ref>{{cite web|url=http://www.dilloneustace.ie/download/1/Irish%20Structures%20for%20investing%20in%20Distressed%20Assets.pdf|title=Irish Structures for investing in Distressed Assets|publisher=Dillon Eustace Law Partners (Dublin)|date=2010}}</ref><ref name="despv"/><ref>{{cite web|url=http://www.arthurcox.com/wp-content/uploads/2012/06/Arthur-Cox-Establishing-SPVs-in-Ireland-for-Structured-Finance-Transactions-May-2014.pdf|title=Ireland as a Domicile for Structured Finance|publisher=Arthur Cox Law|date=2014|access-date=18 March 2018|archive-url=https://web.archive.org/web/20180316023100/http://www.arthurcox.com/wp-content/uploads/2012/06/Arthur-Cox-Establishing-SPVs-in-Ireland-for-Structured-Finance-Transactions-May-2014.pdf|archive-date=16 March 2018|url-status=dead}}</ref><ref>{{cite web|url=http://www.internationaltaxreview.com/Article/3439735/Irish-tax-regime-for-securitisation-vehicles.html|title=Irish Securitisation Section 110 Vehicles|publisher=International Tax Review|date=15 March 2015}}</ref>

These structuring elements are also discussed in more detail in the briefing notes issues by the Revenue Commissioners on Section 110 SPVs.<ref name="revp">{{cite web|url= https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-09-01.pdf|title=Section 110: entitlement to treatment|publisher=Revenue Commissioners|date=May 2018}}</ref><ref name="revq">{{cite web|url= https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-09-03.pdf|title=Notification to be a 'qualifying company' Section 110|publisher=Revenue Commissioners|date=February 2018}}</ref>

====Orphan structure====
In common with most securitisation vehicles, Irish Section 110 SPVs use an [[Social:Orphan structure|orphan structure]] in which the equity is held by an unconnected third party who has no effective rights or controls on the SPV. Irish registered charitable trusts were a common choice (some Irish law firms went so far as to create their own in-house registered charities<ref>{{cite news|url=https://www.irishexaminer.com/ireland/wealthy-firms-using-charitable-status-to-avoid-paying-taxes-409994.html|title=Wealthy firms 'using charitable status to avoid paying taxes'|newspaper=Irish Examiner|date=13 July 2016}}</ref><ref>{{cite news|url=https://www.irishtimes.com/business/financial-services/law-firm-defends-use-of-charities-to-help-hedge-funds-cut-tax-bills-1.2329919?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Ffinancial-services%2Flaw-firm-defends-use-of-charities-to-help-hedge-funds-cut-tax-bills-1.2329919|title=Law firm defends use of charities to help hedge funds cut tax bills|newspaper=Irish Times|date=27 August 2015}}</ref>). However, a public scandal in 2016 regarding use of Irish Section 110 SPVs in domestic Irish tax avoidance<ref>{{cite news|url=https://www.irishtimes.com/business/financial-services/revenue-queries-use-of-registered-charities-in-shadow-banking-1.2712725?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Ffinancial-services%2Frevenue-queries-use-of-registered-charities-in-shadow-banking-1.2712725| title=Revenue queries use of registered charities in "shadow banking"|newspaper=Irish Times|date=27 July 2016}}</ref> (see {{slink|#Abuses}}) led to a ruling by the Irish Charity Regulator prohibiting Irish registered charities from owning equity in Section 110 SPVs.<ref>{{cite news|url=https://www.irishtimes.com/business/retail-and-services/regulator-rejects-claim-matheson-charities-financial-services-ancillary-1.3064287|title=Irish Charities Regulator rejects Matheson Charities in Section 110 SPVs|newspaper=Irish Times|date=28 April 2017}}</ref>  Orphaning is a potentially strong tax avoidance tool as it allows equity to be restructured into tax-free debt (see {{slink|#Participation notes}}), and the Revenue Commissioners reserve the right to challenge cases created for tax avoidance,<ref name="revp"/> although they have never done so in practice.

====Participation notes====
The TCA 1997 legislation includes a headline tax rate of 25% on non-trading income so that the SPV is regarded as an Irish taxable entity. Thus, the Section 110 SPV is not presented overtly as a tax-free vehicle (i.e. unlike an Irish [[Social:Qualifying investor alternative investment fund (QIAIF)|QIAIF]]), which would attract adverse attention from other tax authorities (under tax treaty rules), or regulators (e.g. EU or OECD).<ref>{{cite web|url=https://www.charteredaccountants.ie/taxsource/1997/en/act/pub/0039/nfg/sec0110-nfg.html|title=Revenue Guidance Notes Section 110|publisher=Chartered Accountants of Ireland|date=August 2016}}</ref>

To get to a zero-tax position, the TCA 1997 allows "Profit Participation Notes" (PPNs). These are artificial internal loans to the SPV, whose rate of interest can be sufficiently variable to absorb all income/gains generated in the SPV. As an Irish trading company, the SPV can charge loan interest as an expense (deductible against Irish tax), rather than a deemed profit distribution (not deductible against Irish tax).

PPNs are often domiciled in a [[Finance:Tax haven|tax haven]] (a dutch sandwich may be needed to avoid Irish [[Finance:Withholding tax|withholding tax]] transferring the PPN interest payments to the [[Finance:Tax haven|tax haven]]).  PPNs are often sought to be classed as "Eurobonds" in the Irish tax legislation which gives them additional tax robustness, and also allows the PPN to be integrated with the Irish QIAIF regime, also tax-free, and held in a more stable [[Finance:Corporate tax haven|corporate tax haven]] such as Luxembourg.  Where the PPNs fail to achieve "Eurobond" classification, the PPNs can be owned by an Irish QIAIF, who will then issue qualifying "Eurobonds" from a [[Finance:Conduit and Sink OFCs|sink ofc]] jurisdiction.<ref name="gtt"/>

While the various Irish Finance Acts strengthened the rules on PPNs (the 2016 Finance Act mentions a "market rate" of interest and that structures should be created on an "arms length" bases), the effective rules, and the list of exemptions and exempted parties, allow considerable freedom in structuring PPNs to sweep up all income generated by the "qualifying assets" in the SPV (via PPN interest payments).<ref>{{cite web|url=https://www.pwc.ie/services/tax/fiscal-focus/fiscal-focus-insights/2016-fiscal-focus-jim-mcdonnell-section-110.html|title=The meaning of changes to Section 110|publisher=PWC Ireland|date=September 2016}}</ref>  Irish professional services firms, who lead the drafting of Irish tax legislation, can provide the corporate finance services needed to produce evidence satisfying the "market rate" and "arms length" tests.

As Ireland has no [[Finance:Thin capitalisation|thin capitalisation]] rules,<ref>{{cite web|url=http://www.dilloneustace.com/download/1/Publications/Tax/Holding%20Companies%20in%20Ireland.pdf|title=Holding Companies in Ireland|publisher=Dillon Eustace Law Partners (Dublin)|date=2016}}</ref> the Section 110 SPV can be 100% financed by PPN debt, making the SPV a fully tax-free vehicle (i.e. no equity leakage).

====Tax residence====
To qualify as an Irish resident company the Section 110 SPV needs to meet minimum tests from the Irish Revenue to demonstrate that the SPV is (a) incorporated in Ireland and (b) "managed and controlled" from Ireland. The [[Social:Orphan structure|orphaning process]] will ensure the relevant trust that "owns" the SPV equity is Irish domiciled, thus satisfying the incorporation test. The "managed and controlled" test is vaguer (based on UK case law) but typically results in the SPV requiring two Irish resident directors, a registered Irish office, an Irish-based administrator, and that the key Board meetings are held in Ireland.

===Approval process===
There is no process for approving the creation of a Section 110 SPV. [[Finance:Luxembourg Leaks|Luxembourg Leaks]] showed pre-approving vehicles, risks challenges under EU State aid rules, resulting in sanctions and fines.  The entire economic benefit of the SPV sector to Ireland (of which Section 110 is a subset) is only circa €100m in annual fees paid to Irish professional services firms (SPVs pay no Irish taxes).<ref>{{cite news|url=https://www.irishtimes.com/business/financial-services/lawyers-and-accountants-share-in-100m-fees-from-spvs-in-ifsc-1.2816023|title=Lawyers and accountants share in €100m fees from SPVs in IFSC|newspaper=Irish Times|date=4 October 2016}}</ref><ref>{{cite web|url=http://www.idsa.ie/wp-content/uploads/2016/12/IDSA_Securitisation-Industry-in-Ireland.pdf|title=SPVs in Ireland|publisher=Irish Debt Securities Association (IDSA)|date=2016}}</ref>

Irish Revenue Commissioners reserve the right to challenge existing Irish Section 110 SPVs under the general Irish anti-avoidance legislation.  However, as since the creation of Section 110 SPVs in 1997, no case has ever been brought by the Irish Revenue against an Irish Section 110 SPV.  Up until 2017, no audit even has ever been undertaken by Irish Revenue into the activities of an Irish Section 110 SPV.<ref>{{cite news|url=https://www.independent.ie/business/irish/revenue-probes-40-taxneutral-companies-for-suspected-abuse-34906490.html|title=Revenue probes 40 'tax-neutral' companies for suspected abuse | newspaper=Irish Independent|date=24 July 2016}}</ref>

The Section 110 SPV is therefore set up and a notice sent to the Irish Revenue declaring the intention of the Directors to file under Section 110 of the 1997 TCA.  Before 2010, there was no obligation the Irish Revenue to acknowledge this notice was received,<ref>{{cite web|url=https://www.revenue.ie/en/tax-professionals/historic-material/ebrief/2010/no-012010.aspx|title=Exemption from Encashment Tax for "Qualifying Company" within the meaning of Section 110 of the Taxes Consolidation Act, 1997.|publisher=Irish Revenue|date=14 January 2010}}</ref> however, this has recently been formalised to an 8–week notice period.<ref name="gt"/>  The IDSA is lobbying for a 24–hour "online" approval system (as per the [[Social:Qualifying investor alternative investment fund (QIAIF)|QIAIFs]]).<ref>{{cite news|url=https://www.independent.ie/business/irish/call-for-spv-shakeup-to-make-ireland-world-leader-36197489.html|title=Call for SPV shake-up to make Ireland world leader by the IDSA|newspaper=Irish Independent|date=5 October 2017}}</ref>

==Evolution==
[[File:2013 launch of the Irish Debt Securities Association (IDSA).jpg|thumb|260px|Irish Debt Securities Association (IDSA) launch in 2013 with Minister Richard Bruton, IDSA CEO Gary Palmer, and IDSA Chairman Turlough Galvin of Matheson’s Tax Practice.]]

By 2017, the Irish Section 110 SPV was the most popular securitisation SPV in the EU.<ref>{{cite news|url=https://www.irishtimes.com/business/economy/irish-special-purpose-vehicle-assets-reach-763bn-1.3158808|title=Irish special purpose vehicle assets reach €763bn|newspaper=Irish Times|date=18 July 2017}}</ref> In addition, the Irish Section 110 SPV expanded its adoption and use far beyond the original securitisation market to make the IFSC the 3rd largest [[Finance:Offshore financial centre#Shadow banking|Shadow Banking OFC]] in the world.<ref>{{cite news|url=https://www.independent.ie/business/irish/irish-shadow-banking-dwarfs-more-traditional-sectors-36673706.html|title=Irish shadow banking dwarfs more traditional sectors|newspaper=Irish Independent|date=17 March 2018}}</ref>  While SPVs pay no Irish tax, the generate circa €100m annually for the Irish economy in fees paid to law firms.<ref name="idsa"/>

[[Finance:International Financial Services Centre|IFSC]] law firms successfully lobbied in the 2003 and 2005 Finance Acts for the [[Finance:Withholding tax|withholding tax]] rules to be relaxed for Section 110 SPVs (and especially for Eurobond financing).  They argued Irish Revenue could still challenge any Section 110 SPV deemed unfit ('''ii.''' {{slink|#Creation}}), and that the [[Finance:Withholding tax|withholding tax]] rules put the [[Finance:International Financial Services Centre|IFSC]] at a disadvantage versus Luxembourg.<ref name="w1"/><ref name="w2"/><ref name="w3"/><ref name="w4"/>

[[File:Enda Kenny Feargal O'Rourke Taken at IBEC 2014 Conference Flickr.jpg|thumb|260px|Irish Taoiseach Enda Kenny and PwC (Ireland) Managing Partner Feargal O'Rourke]]

Successive Irish Finance Acts (2003, 2008, 2011 and 2016) extended the list of "qualifying assets" beyond the classic categories that make up the bulk of the global securitisation market.  According to IDSA (Irish Debt Securities Association, the Section 110 SPV lobby group created by IFSC tax-law firm, [[Finance:Matheson (law firm)|Matheson]] in 2013), the only asset which Irish Section 110 SPVs cannot invest in is direct Irish or non-Irish property (Ireland has REITs for this).<ref>{{cite web|url=http://www.idsa.ie/wp-content/uploads/2016/12/IDSA_Securitisation-Industry-in-Ireland.pdf|title=Special Purpose Vehicles and the Securitisation Industry in Ireland Q&A|publisher=Irish Debt Securities Association (IDSA)|date=2016}}</ref>

Section 110 SPV legislation has been refined around the treatment of PPNs so they are acceptable to the widest tax treaty network.  The focus has been around tightening the language around "arm's length" or "market tested" rates of PPN interest. However the rules remain sufficiently broad, and the exclusions sufficiently general, to materially limit the effect of these changes.  A particular aim is enabling the PPN's to be classed as "Eurobonds" so they can be legally domiciled in Luxembourg, which has become a key "backdoor" out of the [[Finance:Corporation tax in the Republic of Ireland|Irish corporate tax regime]] into a full [[Finance:Conduit and Sink OFCs|Sink OFC]].<ref name="luxx">{{cite web|url=https://www.imf.org/en/Publications/CR/Issues/2018/06/28/Ireland-Selected-Issues-46027|page=20|quote=Figure 3. Foreign Direct Investment - Over half of Irish outbound FDI is routed to Luxembourg|title=Ireland:Selected Issues|publisher=[[Organization:International Monetary Fund|International Monetary Fund]]|date=June 2018}}</ref><ref>{{cite web|url=https://www.williamfry.com/newsandinsights/news-article/2016/09/08/changes-to-section-110-regime-relating-to-irish-spvs-holding-irish-property-assets|title=Changes to the Section 110 Regime|publisher=William Fry Law Firm|date=September 2016}}</ref>

To protect the PPNs from the Generally Accepted Accounting Principles (GAAP), and [[Finance:International Financial Reporting Standards|International Financial Reporting Standards]] (IFRS), which target instruments like PPNs, the Irish Government allows Section 110 SPVs to file accounts under old Irish GAAP (GAAP 2004).<ref>{{cite web|url=http://www.finance-magazine.com/display_article.php?i=5402&pi=142|title=PwC calls for Section 110 to be exempted from 2005 Finance Bill|publisher=Finance Mangazine|date=2005}}</ref> In addition the 2010 Transfer Pricing rules do not apply to Section 110 SPVs.<ref>{{cite web|url=https://www.algoodbody.com/media/Irishfinancecompanies-aguidetotaxandlegalissuesJan20121.pdf|title=Irish Finance Companies Tax Issues|publisher=A&L Goodbody|date=2012}}</ref><ref name="despv"/>

Irish professional services have developed ways to link Irish Section 110 SPVs with Irish [[Social:Qualifying investor alternative investment fund (QIAIF)|QIAIFs]] (or QIFs) to create an '''Orphaned Super–QIAIF'''.<ref>{{cite web|url=https://www.scribd.com/document/321040583/Ireland-as-a-Location-for-Distressed-Debt-Section-110-QIF-Super-QIF-Davy-Stockbokers|title=Ireland as a location for Distressed Debt: Super QIF Example|publisher=Davy Stockbrokers|date=2014}}</ref> This vehicle combines the secrecy of the Irish [[Social:Qualifying investor alternative investment fund (QIAIF)|QIAIF]] structures (unlike SPVs, QIAIFs don't file Irish public accounts), with the tax neutrality and global acceptability of the Irish Section 110 SPV.<ref>{{cite web|url=http://www.fstaxation.ie/Brochures/FS%20taxation%20-%20Super%20QIF%20Brochure.pdf|title=Irish Qualifying Investor Funds and Section 110 Companies|publisher=FS Taxation|date=October 2013}}</ref><ref>{{cite web|url=https://www.mhc.ie/uploads/mhc277-update-financial-funds-email.pdf|title=Ireland's Super QIF|publisher=Mason Hayes+Curran Law|date=2012}}</ref>  Using a [[Social:Qualifying investor alternative investment fund (QIAIF)|QIAIF]] to "own" the Section 110 PPNs, which can be "back-to-backed" with newly issued "eurobonds" from the QIAIF, is an established "backdoor" out of the Irish tax system to Luxembourg, the main [[Finance:Conduit and Sink OFCs|Sink OFC]] for Ireland.<ref name="luxx"/><ref name="kpmgq">{{cite web|url=https://assets.kpmg.com/content/dam/kpmg/pdf/2016/05/ie-qiaif-nov-2015-2.pdf|title=KPMG Ireland: QIAIFs|publisher=KPMG|date=November 2015}}</ref><ref name="kpmgq2">{{cite web|url=http://www.dilloneustace.com/download/1/Publications/Financial%20Services/A%20Guide%20to%20Qualifying%20Investor%20AIFs%20(2nd%20Edition).PDF|title=A Guide to Investing in QIAIFs|publisher=Dillon Eustace|date=November 2015}}</ref>

Abuses of Section 110 SPVs in the Irish domestic market (see below), led Finance Minister Michael Noonan to make changes in light of ".. use of aggressive tax practices by some Section 110 companies to avoid paying tax..."<ref>{{cite news|url=https://www.independent.ie/business/irish/loophole-allowing-vulture-funds-to-pay-almost-no-irish-profit-tax-shut-35026753.html|title=Loophole allowing Vulture Funds to pay almost no Irish profit tax shut|newspaper=Irish Independent|date=16 September 2016}}</ref><ref name="rte1">{{cite web|url=https://www.rte.ie/news/2016/0906/814471-revenue-nama-foi/|title=Government moves to amend Section 110 to close tax loophole used by vulture funds|publisher=RTÉ News|date=6 September 2016}}</ref>  The new rules are complex but prohibit Section 110 SPVs from holding direct Irish property<ref>{{cite web|url=http://www.financedublin.com/taxmonitor/article.php?i=16490&t=Finance-Bill-2016---Amendments-to-Securitisation-Regime|title=Finance Bill 2016 Amendments to Securitisation Regime|publisher=Finance Magazine|date=January 2017}}</ref> and tighten the Irish Revenue notification process to 8 weeks.<ref name="gt">{{cite web|url=https://www.grantthornton.ie/insights/factsheets/section-110-companies---new-notification-requirements/|title=Section 110 companies - New notification requirements|publisher=Grant Thornton|date=March 2017}}</ref><ref name="revq"/> ({{slink|#Abuses}})

The abuses highlighted that the [[Finance:Central Bank of Ireland|Central Bank of Ireland]] provides little effective regulation on Section 110 SPVs, however, they were only uncovered because the Section 110 SPV must file public accounts with the Irish CRO.  In late 2016 the [[Finance:Central Bank of Ireland|Central Bank of Ireland]] began a consultation process to upgrade the little-used [[Social:Qualifying investor alternative investment fund (QIAIF)#L-QIAIF rationale|L–QIAIF]] regime.<ref name="cbi1">{{cite web|url=https://www.matheson.com/news-and-insights/article/enhancements-to-irish-loan-originating-funds-regime-announced|title=CENTRAL BANK OF IRELAND: Enhancements to the L–QIAIF regime announced|publisher=[[Finance:Matheson (law firm)|Matheson (law firm)]]|date=29 November 2016}}</ref><ref name="arthurcox1">{{cite web|url=http://www.arthurcox.com/wp-content/uploads/2016/12/Update-on-Changes-to-Loan-Originating-Qualifying-Investor-AIF-Regime.pdf|title=Update on Changes to Loan Originating Qualifying Investor AIF Regime|publisher=Author Cox Law Firm|date=December 2016}}</ref>  In February 2018, the Central Bank of Ireland changed its AIF "Rulebook" to allow L–QIAIFs hold the same assets that Section 110 SPVs could own.  However, the upgraded L–QIAIFs offered two specific improvements over the Section 110 SPV:<ref name="dillon1">{{cite web|url= http://www.dilloneustace.com/uploads/files/L-QIAIF20CBI20Update202018.pdf|title=Central Bank of Ireland publishes notice of intention to amend the requirements for Loan Origination Qualifying Investor AIF|publisher=Dillon Eustace Law Firm|date=February 2018}}</ref><ref name="wf">{{cite web|url= https://www.williamfry.com/docs/default-source/articles-insights-william-fry-news-pdfs/loan-originating-funds.pdf?sfvrsn=0|title=Irish Loan Originating Funds (L–QIAIFs): An Introduction|publisher=William Fry Law Firm|date=February 2018}}</ref>
{{ordered list|type=lower-roman
|Tax secrecy.  L–QIAIFs do not file public accounts (how Section 110 SPV tax abuses were uncovered), but send confidential reports to the Central Bank, who will not screen for tax avoidance;
|No need for Profit Participating Notes (PPN).  A weakness of Section 110 SPVs is their reliance on artificial PPNs for the BEPS movement. L–QIAIFs do not need PPNs.
}}

Three months after the Irish Central Bank updated its AIF "Rulebook", the Irish Revenue Commissioners issued new guidance in May 2018 on Section 110 SPV taxation which would further reduce their attractiveness as a mechanism to avoid Irish taxes on Irish assets.<ref name="revp"/> In June 2018, the Central Bank of Ireland reported that €55 billion of U.S.-owned distressed Irish assets, equivalent to 25% of Irish [[Finance:Modified gross national income|GNI*]], moved out of Section 110 SPVs and into L-QIAIFs.<ref name="cbi2">{{cite news|url= https://www.irishtimes.com/business/economy/tax-free-funds-once-favoured-by-vultures-fall-55bn-1.3546101|title=Tax-free funds once favoured by 'vultures' fall €55bn: Regulator attributes decline to the decision of funds to exit their so–called 'section 110 status'|newspaper=Irish Times|date=28 June 2018}}</ref>  The L–QIAIF, and the ICAV wrapper, is expected to take over as the main structure for avoiding Irish tax on Irish assets in a confidential manner.

==Abuses==

[[File:THE CENTRAL BANK OF IRELAND (NEW HEADQUARTER BUILDING ON NORTH WALL QUAY)- ALONG BOTANIC AVENUE (JANUARY 2018)-135337 (39605114602).jpg|thumb|260px|Central Bank of Ireland (CBI) regulates Section 110 SPVs.  When Irish public scandals concerning the Section 110 SPV emerged in 2016–2017, the CBI upgraded the little-used L–QIAIF,<ref name="cbi1"/> to give the same benefits as Section 110 SPVs, but with full confidentiality and tax secrecy.<ref name="cbi2"/>]]

The abuses below were uncovered because Section 110 SPVs have to file public accounts with the Irish CRO.  The [[Finance:Central Bank of Ireland|Central Bank of Ireland]] has addressed this aspect of Section 110 SPVs by upgrading the little used [[Social:Qualifying investor alternative investment fund (QIAIF)#L-QIAIF rationale|L–QIAIF]] regime in February 2018 to give the same tax-free structure to hold Irish assets via debt instruments, but in a confidential structure (discussed further in [[Finance:Ireland as a tax haven|Ireland as a tax haven]]).

===Vulture fund tax avoidance===
[[File:Stephen Donnelly 2016.jpg|thumb|Stephen Donnelly TD. Estimated US distressed funds would avoid €20 billion in Irish taxes from 2016–2026 on circa €40 billion of Irish investments made from 2012–2016 (which represented circa €80 billion in headline Irish loan balances).<ref name="sd"/>]]
From the 1997 TCA to the Irish crisis in 2009, there is no known case of a Section 110 SPV being used to avoid Irish domestic taxes on Irish assets or businesses. They were confined to global finance as was intended.<ref>{{cite web|url=https://www.rte.ie/news/2008/0813/106896-sachsen/|title=German bank losses prompt IFSC raid|publisher=RTÉ News|date=13 August 2008}}</ref>  Per earlier ({{slink|#Creation}}), while Irish banks used Section 110 SPVs to raise global capital for Irish loan books, they never used Section 110 SPVs to avoid Irish taxes on their Irish activities (the Irish borrower paid interest to the Irish bank, and not into a Section 110 SPV).

The Irish financial media noted in 2016 that US distressed debt funds (known by the pejorative term–vulture funds) were filing Irish company CRO accounts with large profits on their Irish investments (made from 2012 onwards), but no Irish tax payments.<ref name="cardinal1">{{cite news|url=https://www.irishtimes.com/news/politics/oireachtas/loophole-lets-firms-earning-millions-pay-250-tax-d%C3%A1il-told-1.3145769|title=Loophole lets firms earning millions pay €250 tax, Dáil told|newspaper=Irish Times|date=6 July 2016}}</ref><ref name="sundaybp"/><ref name="l3">{{cite web|url=http://www.thejournal.ie/vulture-funds-2-3176030-Jan2017/|title=Vulture funds pay just €8,000 in tax on €10 billion of assets|publisher=thejournal.ie|date=8 January 2017}}</ref><ref name="sbp11">{{cite web|url=https://www.businesspost.ie/news/revealed-vulture-funds-paid-e20k-tax-assets-e20bn-375290|title=Revealed: How vulture funds paid €20k in tax on assets of €20bn|publisher=The Sunday Business Post|date=8 January 2017}}</ref><ref>{{cite news|url=https://www.irishtimes.com/business/financial-services/dublin-unit-of-us-hedge-fund-with-8bn-assets-pays-125-tax-1.2756124?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Ffinancial-services%2Fdublin-unit-of-us-hedge-fund-with-8bn-assets-pays-125-tax-1.2756124|title=Dublin unit of US hedge fund with $8bn assets pays $125 tax|newspaper=Irish Times|date=15 August 2016}}</ref><ref name="cerberus1">{{cite news|url=https://www.irishtimes.com/business/commercial-property/cerberus-paid-1-900-tax-on-77m-project-eagle-profits-1.2885720?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Fcommercial-property%2Fcerberus-paid-1-900-tax-on-77m-project-eagle-profits-1.2885720|title=Cerberus paid €1,900 tax on €77m Project Eagle profits|newspaper=Irish Times|date=29 November 2016}}</ref>  They could also see that the equity of these companies was "owned" by Irish-registered charities (children's charities in cases),<ref name="mars1">{{cite news|url=https://www.irishtimes.com/news/politics/oireachtas/vulture-funds-using-charities-to-avoid-paying-tax-says-donnelly-1.2722370?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fnews%2Fpolitics%2Foireachtas%2Fvulture-funds-using-charities-to-avoid-paying-tax-says-donnelly-1.2722370|title=Vulture funds using charities to avoid paying tax, says Donnelly|newspaper=Irish Times|date=14 July 2016}}</ref> some of which were operated by [[Finance:International Financial Services Centre|IFSC]]-based law firms.<ref>{{cite web|url=http://stephendonnelly.ie/why-would-a-so-called-vulture-fund-be-owned-by-a-childrens-charity/|title=Why would a Vulture Fund own a Children's Charity|publisher=Dáil Éireann|date=24 November 2016}}</ref><ref>{{cite web|url=https://www.businesspost.ie/opinion/stephen-kinsella-charity-status-for-vulture-funds-someone-shout-stop-326045|title=Kinsella: Charity status for vulture funds - someone shout stop!|publisher=Sunday Business Post|date=24 July 2016}}</ref>

The CRO filings showed these vulture funds were using [[Social:Orphan structure|orphaned]] Section 110 SPVs, structured by [[Finance:International Financial Services Centre|IFSC]]–based law firms (e.g. [[Finance:Matheson (law firm)|Matheson]], A&L Goodbody and Dillon Eustace and Mayson Hayes Curran),<ref name="law">{{cite news|url=https://www.irishtimes.com/business/commercial-property/how-do-vulture-funds-exploit-tax-loopholes-1.2832688?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Fcommercial-property%2Fhow-do-vulture-funds-exploit-tax-loopholes-1.2832688| title=How do vulture funds exploit tax loopholes?| newspaper=Irish Times|date=17 October 2016}}</ref><ref name="mhcxx">{{cite web|url=https://www.mhc.ie/uploads/Silver_Linings_Daragh_Bohan.pdf| title=Mason Hayes and Curran:Silver Linings from Ireland's Financial Clouds| publisher=Mason Hayes & Curran Law|date=May 2016}}</ref><ref name="lawyer">{{cite news|url=https://www.independent.ie/business/irish/only-lawyers-and-accountants-gain-from-irish-spvs-central-bank-35103770.html|title=Only lawyers and accountants gain from Irish 'SPVs' - Central Bank|newspaper=Irish Independent|date=5 October 2016}}</ref> who use Section 110 SPVs in securitisation work, to export untaxed income and capital gains earned on domestic Irish assets to offshore locations (via the PPN interest payments), such as the Cayman Islands.<ref name="ifsc">{{cite news|url=https://www.independent.ie/business/irish/vultures-minimise-their-tax-bills-as-state-now-appears-to-have-delivered-the-sale-of-the-century-34981270.html|title='Vultures' minimise their tax bills - as State now appears to have delivered the sale of the century|newspaper=Irish Independent|date=21 August 2016}}</ref><ref name="dmw">{{cite web|url=http://www.davidmcwilliams.ie/vulture-funds-rub-salt-into-the-carcass-of-this-country/|title=Vulture funds rub salt into the carcass of this country|publisher=David McWilliams Sunday Business Post|date=1 August 2016}}</ref><ref>{{cite web|url=https://emmaclancy.com/2016/07/30/how-do-vulture-funds-pay-practically-no-tax-in-ireland/|title=How do vulture funds manage to pay practically no tax in Ireland?|publisher=Emma Clancy|date=30 July 2016}}</ref><ref name="oak2"/>

Funds using the Section 110 SPVs included the largest names in distressed investing, including:
{{ordered list|type=lower-roman
| [[Company:Oaktree Capital Management|Oaktree Capital Management]], known through their Mars Capital (and others) Section 110 SPVs, and advised by IFSC law firm, [[Finance:Matheson (law firm)|Matheson]].<ref name="oak2">{{cite web|url=https://www.pecloserlook.org/wp-content/uploads/MarsCapital-FINAL.pdf|title=Oaktree, Mars Capital and Section 110|publisher=UNITE HERE|date=February 2017}}</ref><ref name="mars1"/><ref>{{cite news|url=https://www.ft.com/content/8d559d8c-f3a3-11e6-8758-6876151821a6|title='Aggressive' vulture funds swoop in on Irish property|newspaper=Financial Times|date=18 February 2017}}</ref><ref>{{cite web|url=https://www.dublininquirer.com/2016/07/26/andy-console-was-bad-corporate-tax-avoidance-is-far-worse/|title=ANDY: CONSOLE WAS BAD, CORPORATE TAX AVOIDANCE IS FAR WORSE|publisher=Dublin Inquirer|date=26 July 2016}}</ref><ref name="sundaybp">{{cite web|url=https://www.businesspost.ie/business/revealed-the-vulture-funds-that-paid-just-e250-in-tax-325970|title=REVEALED: the vulture funds that paid just €250 in tax|publisher=Sunday Business Post|date=24 July 2016}}</ref>
| Cerberus Capital Management, known through their Promonotoria series of Section 110 SPVs, and advised by IFSC law firm, A&L Goodbody.<ref name="cerberus1"/><ref name="cerberus2"/><ref name="ifsc"/><ref name="sbp11"/><ref name="gold3"/><ref name="sundaybp"/>
| [[Company:Apollo Global Management|Apollo Global Management]], known through their Tanager series of Section 110 SPVs, and advised by IFSC law firm, A&L Goodbody.<ref>{{cite news|url=https://www.thetimes.co.uk/article/apollos-vulture-clipped-by-tax-bill-vrfldsks5|title=Apollo's vulture clipped by tax bill|newspaper=Sunday Times|date=17 January 2017}}</ref><ref>{{cite news|url=https://www.independent.ie/business/personal-finance/property-mortgages/massive-blow-to-vulture-funds-as-home-repossessions-halted-due-to-arrears-miscalculations-36457385.html|title=Massive blow to vulture funds as arrears halted due to miscalculations|newspaper=Irish Independent|date=4 January 2018}}</ref>
| Lone Star Funds, known through their LSREF series of Section 110 SPVs, and advised by IFSC law firm, Dillon Eustace.<ref name="sbp11"/><ref>{{cite web|url=https://fora.ie/lone-star-ireland-2679978-Mar2016/|title=The vulture fund paying very little tax on its billion-euro Irish incomes|publisher=FORA|date=13 March 2016}}</ref><ref name="sundaybp"/>
| Carval Investors, known through a diverse series of Section 110 SPVs (including Stapleford, Vanguard), and advised by IFSC law firm, [[Finance:Matheson (law firm)|Matheson]].<ref name="sbp11"/><ref name="gold1"/><ref name="sundaybp"/>
| [[Company:Goldman Sachs|Goldman Sachs]], known through the "Irish named" Section 110 SPVs (Belthany, Kenmane, Liffey etc.), advised by IFSC law firm, [[Finance:Matheson (law firm)|Matheson]].<ref>{{cite news|url=https://www.nytimes.com/2016/12/10/business/dealbook/goldman-sachs-cerberus-lonestar-europe-mortgages.html|title=Wall Street is Europe's landlord and tenants are fighting back|newspaper=New York Times|date=10 December 2016}}</ref><ref name="gold1">{{cite news|url=https://www.independent.ie/irish-news/courts/vulture-funds-ramp-up-number-of-debt-chase-cases-tenfold-36096764.html|title=Vulture funds ramp up number of debt chase cases tenfold|newspaper=Irish Independent|date=4 September 2017}}</ref><ref name="gold3">{{cite web|url=https://www.dublininquirer.com/2016/03/16/andy-woes-vulture-funds-government-policies/|title=VULTURE FUNDS GORGE ON IRELAND BECAUSE THE GOVERNMENT LETS THEM|publisher=Dublin Inquirer|date=16 March 2016}}</ref><ref name="sundaybp"/>
}}

[[Finance:Mezzanine capital|Mezzanine capital]] lenders were also using Section 110 SPVs to avoid taxes but in addition, by restructuring the [[Finance:Equity|equity]] of their clients into Section 110 "qualifying loans", they helped their Irish borrowers reduce Irish domestic [[Finance:Corporation tax in the Republic of Ireland|corporation tax]].  The State's Irish Strategic Investment Fund was a co-investor in these firms (e.g. BlueBay Capital, Cardinal Capital).<ref name="isif">{{cite news|url=https://www.irishtimes.com/business/economy/seen-heard-state-backed-funds-using-section-110-to-slash-tax-bill-1.3141025|title=State-backed funds using Section 110 to slash tax bill|newspaper=Irish Times|date=2 July 2017}}</ref><ref>{{cite news|url=https://www.independent.ie/business/cardinal-capital-warns-of-damage-by-new-s110-35038346.html | title = Cardinal Capital warns of damage by new S110 Rules|newspaper=Irish Times | date=11 September 2016}}</ref><ref name="cardinal1"/>

It emerged that the regulator of Section 110 SPVs, the [[Finance:Central Bank of Ireland|Central Bank of Ireland]], was paying rent to a US [[Finance:Vulture fund|vulture fund]] landlord, that had structured their investment to avoid all Irish taxes, and stamp duty, on the rent.<ref>{{cite news|url=https://www.irishtimes.com/news/ireland/irish-news/central-bank-landlord-a-vulture-fund-paying-no-irish-tax-says-sf-1.2771263|title=Central Bank landlord a vulture fund paying no Irish tax, says SF|newspaper=Irish Independent|date=28 August 2016}}</ref>

The Irish media uncovered that the National Asset Management Agency, presented to distressed debt funds in London on how to use Section 110 SPVs (and QIAIFs) to avoid Irish taxes on their Irish investments.<ref>{{cite web|url=https://www.mhc.ie/latest/events/london-banking-seminar-publications|title=MASON HAYES AND CURRAN: London Banking Seminar - Frank Daly Chairman of NAMA|publisher=Mason Hayes and Curran Law Firm|date=10 May 2016}}</ref><ref>{{cite web|url=https://www.businesspost.ie/news/revealed-nama-the-vultures-and-the-section-110-tax-dodge-330517|title=Revealed: Nama, the vultures and the Section 110 tax dodge|publisher=Sunday Business Post|date=11 September 2016}}</ref>

Public statements, Guideline Bulletins, and FOI Data, from the Irish Revenue, implied that Irish Revenue (a) knew these funds were using Section 110 SPVs<ref name="rte1"/> in the domestic Irish market, and (b) that Irish Revenue were prepared to issue rulings to amend their own anti-avoidance rules (esp. [[Finance:Withholding tax|withholding tax]] rules<ref name="times">{{cite news|url=https://www.irishtimes.com/business/financial-services/revenue-warns-firms-over-sale-of-loans-to-vulture-funds-1.2587382?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Ffinancial-services%2Frevenue-warns-firms-over-sale-of-loans-to-vulture-funds-1.2587382|title=Revenue warns firms over sale of loans to vulture funds|date=26 March 2016|newspaper=Irish Times}}</ref> and CG50 land certificates<ref>{{cite web|url=https://www.maplesandcalder.com/news/article/international-and-irish-tax-update-july-2016-1340/|title=International and Irish CG50 Tax Update July 2016|publisher=Maples and Calder|date=14 July 2016}}</ref>) to facilitate the tax avoidance.

{{Quote|This is a relatively new situation that has arisen and we are working to resolve it ... Up to recently, these loans would have normally been held by [Irish] banks and so that was no issue about deducting [Irish withholding tax] from interest.  But this has changed, so we're looking at coming up with a broad solution.  I would say that there is no need for panic as there is a long-established procedure in place in the legislation and the only issue is to establish whether the SPV a company is paying to is a Section 110 company.|author=Gerry Howard, Assistant Secretary Revenue Commissioners, 26 March 2016 (''Irish Times'')<ref name="times"/>|source=}}

Stephen Donnelly TD, called for a Dáil investigation and produced calculations<ref name="sd">{{cite web|url=http://stephendonnelly.ie/wp-content/uploads/2016/10/Closing-Down-Section-110-for-Vulture-Funds.pdf | title=WHY LETTING SECTION 110 SPVS OPERATE IN THE IRISH DOMESTIC ECONOMY WILL DAMAGE OUR TAX BASE AND OUR REPUTATION AS A 'LOW-TAX' ECONOMY | publisher=Stephen Donnelly (Dáil Submission)|date=September 2016}}</ref> based on the €80 billion of published loan balances sold by the National Asset Management Agency (or "NAMA") to the US funds for circa €40 billion. Donnelly estimated that the loss of Irish taxes over the next decade from these assets being taken out of the Irish tax system (i.e. [[Finance:Base erosion and profit shifting|base erosion and profit shifting]] effects), could reach €20 billion (or €2 billion per annum).<ref>{{cite web|url=https://www.businesspost.ie/news/speedy-probe-into-vulture-funds-tax-urged-326329|title=Speedy probe into vulture funds' tax urged|publisher=Sunday Business Post|date=25 July 2016}}</ref><ref name="sd2">{{cite news|url=https://www.independent.ie/business/stephen-donnelly-tax-avoidance-anomaly-means-pain-for-taxpayers-34906487.html|title=Tax avoidance could run to billions|newspaper=Irish Independent|date=24 July 2016}}</ref><ref name="cerberus2">{{cite news|url=https://www.independent.ie/opinion/analysis/eagles-potential-loss-bigger-than-190m-35076379.html|title=Project Eagle's potential loss bigger than £190m|newspaper=Irish Independent|date=25 September 2016}}</ref>  The Irish Times calculated the total economic contribution of Section 110 SPVs since their creation, would be vastly exceeded by these tax losses.<ref>{{cite news|url=https://www.irishtimes.com/business/financial-services/lawyers-and-accountants-share-in-100m-fees-from-spvs-in-ifsc-1.2816023?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Ffinancial-services%2Flawyers-and-accountants-share-in-100m-fees-from-spvs-in-ifsc-1.2816023|title=Lawyers and accountants share in €100m fees from SPVs in IFSC|newspaper=Irish Times|date=4 October 2016}}</ref>

The affair escalated into a major public scandal during 2016,<ref name="nnn">{{cite news|url=https://www.independent.ie/opinion/comment/how-did-the-government-shaft-mortgage-holders-and-taxpayers-in-one-fell-swoop-34870748.html|title=How did the Government shaft mortgage holders and taxpayers in one fell swoop?|newspaper=Irish Independent|date=10 July 2016}}</ref><ref name="nna">{{cite news|url=https://www.independent.ie/opinion/columnists/colette-browne/vulture-funds-are-feasting-taxfree-on-carcass-of-our-property-crash-35005936.html|title=Vulture funds are feasting tax-free on carcass of our property crash|newspaper=Irish Independent|date=30 August 2016}}</ref> and was covered as such in the international media,<ref name="l1">{{cite news|url=https://www.bbc.com/news/world-europe-37287182|title=Forget Apple: Ireland's other taxing issue|work=BBC News|date=6 September 2016}}</ref><ref name="l2">{{cite news|url=https://www.ft.com/content/619c9bde-74f3-11e6-bf48-b372cdb1043a|title=Ireland confronts another tax scandal closer to home|newspaper=Financial Times|date=11 September 2016}}</ref> and in several Irish RTÉ ''Prime Time Investigates'' programs.

The Irish Government claimed that the U.S. funds had discovered unknown but legitimate loopholes, which they moved to close in the 2016 Finance Act.  The Government budgeted €50 million in total additional taxes from the closure of these [[Social:Loophole|loophole]]s,<ref>{{cite news|url=https://www.irishtimes.com/business/michael-noonan-to-target-vulture-funds-with-50m-tax-bill-1.2821110?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Fmichael-noonan-to-target-vulture-funds-with-50m-tax-bill-1.2821110|title=Michael Noonan to target vulture funds with €50m tax bill|newspaper=Irish Times|date=11 October 2016}}</ref> however NAMA, a small investor in Section 110 SPVs, disclosed an immediate €158 million tax charge due to the Act.<ref>{{cite news|url=https://www.irishtimes.com/business/financial-services/nama-paid-158m-in-tax-after-section-110-loophole-closure-1.2959628?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Ffinancial-services%2Fnama-paid-158m-in-tax-after-section-110-loophole-closure-1.2959628|title=Nama paid €158m in tax after section 110 loophole closure|newspaper=Irish Times|date=1 February 2017}}</ref>  The slowness of the Government's response in closing these "perceived" loopholes, and the extensive list of exemptions (including a 5-year CGT exemption), and excluded parties to the Act, remains a source of dispute.<ref name="zza">{{cite news|url=https://www.irishtimes.com/business/noonan-s-efforts-to-tax-vulture-funds-seen-as-ineffective-1.2815341?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Fnoonan-s-efforts-to-tax-vulture-funds-seen-as-ineffective-1.2815341|title=Noonan's efforts to tax 'vulture' funds seen as ineffective|newspaper=Irish Times|date=3 October 2016}}</ref><ref name="zzb">{{cite web|url=http://www.thejournal.ie/vulture-funds-loophole-3009381-Oct2016/|title=Accounting firms are telling vulture funds how to get around tax loophole closure|publisher=thejournal.ie|date=5 October 2016}}</ref><ref name="sd3">{{cite web|url=http://www.thejournal.ie/section-110-loophole-closed-ireland-2-3021907-Oct2016/|title=Tax avoidance clampdown expected to take in €50 million 'should yield €500 million'|publisher=thejournal.ie|date=12 October 2016}}</ref><ref>{{cite web|url=http://stephendonnelly.ie/wp-content/uploads/2016/11/20161104-Commercial-Property-and-Finance-Bill-2017-Final1.pdf|title=Response to the 2016 Finance Bill|publisher=Stephen Donnelly|date=November 2016}}</ref><ref name="zzc">{{cite web|url=http://www.irishlegal.com/6630/master-of-the-high-court-says-vulture-funds-may-be-exploiting-another-tax-loophole/|title=Master of the High Court says vulture funds may be exploiting another tax loophole|publisher=Irish Legal News|date=July 2017}}</ref>

Irish Revenue attempted no prosecution for the acknowledged tax-avoidance.  Funds could leave Section 110 SPVs in place and continue to earn tax-free gains, as long as they did not foreclose.  If they foreclosed, they had a period in which to sell the assets, and hence the 5–year CGT exemption.  They could also transfer their Section 110 assets into a more confidential QIAIF (and later, an LQIAIF), also using the 5–year CGT exemption to avoid incurring taxes while restructuring.<ref name="kpmg1">{{cite web|url=https://www.kpmg.ie/financeact2016/assets/finance-bill-2016-taxing-times-221116.pdf|title=KPMG Finance Bill 2016 Taxing Times|publisher=KPMG|date=November 2016}}</ref><ref name="fry1">{{cite web|url=https://www.williamfry.com/newsandinsights/news-article/2016/09/08/changes-to-section-110-regime-relating-to-irish-spvs-holding-irish-property-assets|title=Changes to Section 110 Regime Relating to Irish SPVs Holding Irish Property Assets|publisher=William Fry Solicitors|date=8 September 2016}}</ref><ref name="fry2">{{cite web|url=https://www.mccannfitzgerald.com/uploads/7387-Finance_Bill_2016_-_Changes_to_section_110_of_the_Taxes_Consolidation_Act_1997.pdf|title=Changes to Section 110 of the Taxes and Consolidation Act of 1997|publisher=McCann Fitzgerald|date=September 2016}}</ref>

The limited response of the Irish Government led some Irish commentators to wonder if the vulture funds had their support (i.e. there was no [[Social:Loophole|loophole]] just a "blind eye").<ref name="noo1">{{cite web|url=https://www.businesspost.ie/news/what-did-noonan-know-about-vultures-tax-326690|title=What did Noonan know about vultures' tax?|publisher=Sunday Business Post|date=31 July 2016}}</ref><ref name="noonan">{{cite news|url=https://www.independent.ie/business/personal-finance/noonan-is-accused-of-rolling-out-the-red-carpet-for-vulture-funds-31069286.html|title=Noonan is accused of 'rolling out the red carpet for vulture funds'|newspaper=Irish Independent|date=16 March 2015}}</ref><ref>{{cite news|url=https://www.irishexaminer.com/ireland/row-as-noonan-is-accused-of-being-a-vulture-fund-lover-400118.html|title=Row as Noonan is accused of being a 'vulture-fund lover'|newspaper=Irish Examiner|date=18 May 2016}}</ref><ref>{{cite web|url=https://www.rte.ie/news/business/2017/0331/864214-david-murphy-noonan-ill-advised-on-fund-meeting/|title=Public Accounts Committee Noonan ill-advised on fund meeting|publisher=RTÉ News|date=3 April 2017}}</ref><ref>{{cite news|url=https://www.irishtimes.com/news/ireland/irish-news/us-vulture-funds-lobbied-government-over-proposed-tax-changes-1.2945025|title=US vulture funds lobbied Government over proposed tax changes|newspaper=Irish Times|date=21 January 2017}}</ref>

In June 2018, the Central Bank of Ireland reported that €55 billion in Irish assets, owned by U.S. distressed debt funds, equivalent to 25% of Irish [[Finance:Modified gross national income|GNI*]], moved out of Section 110 SPVs.<ref>{{cite news|url= https://www.irishtimes.com/business/economy/tax-free-funds-once-favoured-by-vultures-fall-55bn-1.3546101|title=Tax-free funds once favoured by 'vultures' fall €55bn: Regulator attributes decline to the decision of funds to exit their so-called 'section 110 status'|newspaper=Irish Times|date=28 June 2018}}</ref>  This figure exceeded Stephen Donnelly's 2016 estimate of €40 billion in Irish distressed asset values hiding in Section 110 SPVs (representing €80 billion in loan balances). The [[Finance:Central Bank of Ireland|Central Bank of Ireland]] had begun a process to upgrade the tax-free [[Social:Qualifying investor alternative investment fund (QIAIF)#L-QIAIF rationale|L–QIAIF]] regime in November 2016 (just after Minister Noonan closed the "perceived" Section 110 loopholes).<ref>{{cite web|url=https://www.matheson.com/news-and-insights/article/enhancements-to-irish-loan-originating-funds-regime-announced|title=CENTRAL BANK OF IRELAND: Enhancements to the L-QIAIF regime announced|publisher=[[Finance:Matheson (law firm)|Matheson (law firm)]]|date=29 November 2016}}</ref><ref name="arthurcox1"/> In February 2018, the Central Bank relaunched the historically little-used L-QIAIF, with the same tax-free features as the Section 110 SPV, but with the distinction that L-QIAIFs do not have to file public CRO accounts.<ref name="dillon1"/> The L–QIAIF is now the main vehicle for U.S. distressed debt funds shielding against Irish tax on their Irish assets.<ref name="wf"/>

In March 2019, the UN Special Rapporter on housing, Leilani Farha, formally wrote to the Irish Government on behalf of the UN, regarding its concerns regarding "preferential tax laws" for foreign investment funds on Irish assets which were compromising the human rights of tenants in Ireland.<ref name="un">{{cite news|url=https://www.thejournal.ie/un-ireland-vultures-funds-tax-4563403-Mar2019/|title=UN says Ireland applies 'preferential tax laws' to vultures funds and it 'cannot continue'|newspaper=TheJournal.ie|author=Christina Finn|date=27 March 2019|accessdate=29 March 2019|quote=A UN SPECIAL Rapporteur on housing has sent a letter to the Irish government noting that they have facilitated housing financing through “preferential tax laws and weak tenant protections among other measures”.}}</ref>  In April 2019, Irish technology entrepreneur Paddy Cosgrave launched a Facebook campaign to highlight abuses of Section 110 SPVs, as well as QIAIFs and L-QIAIFs, stating: "The L-QIAIF runs the risk of being a weapon of mass destruction".<ref>{{cite news|url=https://www.thetimes.co.uk/article/paddy-cosgrave-a-weird-press-conference-and-1-000-cash-in-brown-envelopes-7vj8tgtg9|title=Paddy Cosgrave, a weird press conference and €1,000 cash in brown envelopes|newspaper=The Sunday Times|author=Gavin Daly|date=21 April 2019|accessdate=26 April 2019}}</ref><ref name="WPaidan.regan"/>

===Unregulated shadow banking===
[[File:Uncovering Offshore Financial Centers Figure 3 Network of ownership flows between countries.jpg|thumb|[[Finance:Conduit and Sink OFCs|Uncovering OFC Networks]]. Section 110 SPVs have helped make Ireland the fifth largest global conduit OFC, and one of the largest EU–28 corporate tax havens.]]
Research by Trinity College Dublin Professor Jim Stewart and Cillian Doyle show Section 110 SPVs are effectively unregulated and attract little oversight by the Irish Revenue or [[Finance:Central Bank of Ireland|Central Bank]]. Even post the 2016 Finance Act ({{slink|#Vulture fund tax avoidance}}), the data asked for could not be used to assess the provenance of an Irish Section 110 SPV, or its source of funds.

Their research in particular noted the following:<ref name="jim1">{{cite web|url=https://www.tasc.ie/download/pdf/seminar_on_section_110_12th_jan_2017.pdf|title='Section 110' Companies: A Success story for Ireland|publisher=Professor Jim Stewart Cillian Doyle| date=12 January 2017}}</ref>
{{ordered list|type=lower-roman
|Irish professional firms market Section 110 SPVs as "unregulated", "tax-free vehicles", "not subject to [financial] services regulation".
| The PPN interest deduction as an expense is a unique concession in any tax legislation (not available in ordinary company taxation).
| There is no Section 110 SPV approval process, and notification information is so basic it could not be used to test suitability.
| Irish Revenue has conducted no investigations or audits into any Irish Section 110 SPVs (since creation in 1997).
| The Irish Revenue and [[Finance:Central Bank of Ireland|Central Bank of Ireland]] barely meet to discuss Irish Section 110 SPVs (despite being joint regulators).
| The data the [[Finance:Central Bank of Ireland|Central Bank of Ireland]] collect on SPVs is limited (and contained inaccuracies and mistakes vs. ECB statistics).
}}
Further research by Stewart and Doyle shows Russian firms funneled €100bn into Irish Section 110 SPVs since 2007. Some of these Russian firms appeared unsuitable from a number of perspectives (i.e. criminal or sanctioned activities). Many SPVs resembled a [[Social:Brass plate company|brass plate]] type set up - a situation the Irish Government has stated that it is adverse to.<ref>{{cite news|url=https://www.independent.ie/business/irish/we-dont-want-brass-plate-firms-that-come-for-tax-advantages-35240975.html|title='We don't want brass plate firms that come for tax advantages'|newspaper=Irish Independent| date=24 November 2016}}</ref>

Of particular note in this research was:<ref name="jim2">{{cite web|url=https://www.tasc.ie/download/pdf/ireland_global_finance_and_the_russian_connection.pdf|title=Ireland, Global Finance and the Russian Connection|publisher=Professor Jim Stewart Cillian Doyle| date=27 February 2018}}</ref>
{{ordered list|type=lower-roman
| Some of these Russian firms are the subject of EU/US Sanctions and some had raised capital via Irish Section SPVs post-sanctions.
| Other Russian firms were tied to the Russian Banking/Shadow Banking sector (which is linked to prohibited / money laundering activities).<ref>{{cite news|url=https://www.independent.ie/business/world/azerbaijans-biggest-bank-raised-900m-via-irish-spvs-before-default-35844498.html|title=Azerbaijan's biggest bank raised $900m via Irish SPVs before default|newspaper=Irish Independent|date=20 June 2017}}</ref><ref>{{cite news|url=https://www.independent.ie/business/irish/russian-bank-collapse-shines-light-into-shadowy-corners-of-irish-finance-34482531.html|title=Russian bank collapse shines light into shadowy corners of Irish finance|newspaper=Irish Independent|date=25 February 2016}}</ref>
| The [[Finance:Central Bank of Ireland|Central Bank of Ireland]] collects no data on the source of financing to the Irish SPVs (critical for money laundering / criminal activities oversight). 
| Domicile of Irish Section 110 SPVs is cosmetic, with a handful of local Irish Corporate services Firms (CSP) "managing" thousands of Irish SPVs.
| Governance of Irish Section 110 SPVs is also cosmetic, with local Directors in these CSPs acting as Directors for hundreds of SPVs.<ref name="imf"/>
}}
Stewart and Doyle's academic papers on Irish Section 110 SPVs highlight the combination of an anonymous (via [[Social:Orphan structure|orphaning]]), and tax-free (via the Profit Participation Notes), OECD–whitelisted wrapper, in an effectively unregulated environment, has coincided with Ireland's position as the world's 4th largest [[Finance:Offshore financial centre#Shadow banking|Shadow Banking OFC]].<ref name="rus1">{{cite journal|title="The measurement and regulation of shadow banking in Ireland", JFRC Vol. 25 Issue: 4, pp.396-412|journal=Journal of Financial Regulation and Compliance|volume=25|issue=4|pages=396–412|date=February 2017|doi=10.1108/JFRC-02-2017-0019|last1=Stewart|first1=Jim|last2=Doyle|first2=Cillian}}</ref><ref name="rus2">{{cite web|url=https://www.businesspost.ie/news/russian-firms-funnelled-e100bn-dublin-410840|title=How Russian Firms Funnelled €100bn through Dublin|publisher=The Sunday Business Post|date=4 March 2018}}</ref><ref>{{cite news|url=https://www.irishtimes.com/business/media-and-marketing/more-than-100bn-in-russian-money-funnelled-though-dublin-1.3414480|title=More than €100bn in Russian Money funneled through Dublin|newspaper=The Irish Times|date=4 March 2018}}</ref><ref name="rus3">{{cite news|url=https://www.irishtimes.com/business/financial-services/a-third-of-ireland-s-shadow-banking-subject-to-little-or-no-oversight-1.3077931?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Ffinancial-services%2Fa-third-of-ireland-s-shadow-banking-subject-to-little-or-no-oversight-1.3077931|title=A third of Ireland's shadow banking subject to little or no oversight|newspaper=The Irish Times|date=10 May 2017}}</ref><ref>{{cite news|url=https://www.irishtimes.com/business/financial-services/ireland-is-world-s-fourth-largest-shadow-banking-hub-1.3077914?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Ffinancial-services%2Fireland-is-world-s-fourth-largest-shadow-banking-hub-1.3077914|title=Ireland is world's fourth-largest shadow banking hub|newspaper=The Irish Times|date=10 May 2017}}</ref> Doyle identified certain Russian banks that were using these vehicles to create fictitious assets and hide losses on their balance sheet. Through an examination of one recently collapsed bank, MDM, the techniques used to create this scheme and the effects on the bank's balance sheet were explored.<ref>{{Cite news|url=https://www.counterpunch.org/2018/11/13/fictitious-assets-hidden-losses-and-the-collapse-of-mdm-bank/|title=Fictitious Assets, Hidden Losses and the Collapse of MDM Bank|work=www.counterpunch.org|access-date=2018-11-17|language=en-us}}</ref>

The ex. Deputy Governor of the [[Finance:Central Bank of Ireland|Central Bank of Ireland]] said the risks of Section 110 SPV abuse are not appreciated by the Irish Government.<ref name="gov">{{cite news|url=https://www.irishtimes.com/business/financial-services/former-regulator-says-irish-politicians-mindless-over-ifsc-russian-risks-1.3414779?mode=sample&auth-failed=1&pw-origin=https%3A%2F%2Fwww.irishtimes.com%2Fbusiness%2Ffinancial-services%2Fformer-regulator-says-irish-politicians-mindless-over-ifsc-russian-risks-1.3414779|title=Former Regulator says Irish politicians mindless of IFSC risks|newspaper=The Irish Times|date=5 March 2018}}</ref><ref>{{cite news|url=https://www.irishtimes.com/business/financial-services/irish-spvs-more-a-worry-for-other-countries-than-state-academic-1.2935869|title=Irish SPVs more a worry for other countries than State | newspaper=The Irish Times|date=13 January 2017}}</ref>  The IMF noted the same [[Social:Brass plate company|brass plate]] type regulation of Irish Section 110 SPVs.<ref name="imf">{{cite news|url=https://www.irishtimes.com/business/financial-services/imf-queries-lawyers-and-bankers-on-hundreds-of-ifsc-boards-1.2811754|title=IMF queries lawyers and bankers on hundreds of IFSC boards|newspaper=The Irish Times|date=30 September 2016}}</ref>  This was picked up by Oxfam who has listed Ireland as a top [[Finance:Corporate tax haven|corporate tax haven]].<ref>{{cite web|url=https://www.rte.ie/news/business/2017/1128/923415-oxfam-ireland-report/|title=Ireland could be potential tax haven under EU rules - Oxfam | publisher=RTÉ News|date=28 November 2017}}</ref><ref>{{cite web|url=https://www.oxfamireland.org/sites/default/files/upload/pdfs/mantras-myths-final.pdf|title=MANTRAS AND MYTHS: A true picture of the corporate tax system in Ireland|publisher=RTÉ News|date=February 2017}}</ref><ref>{{cite news|url=https://www.independent.ie/business/irish/strong-evidence-ireland-is-facilitating-tax-avoidance-for-major-banks-oxfam-35568307.html|title='Strong evidence' Ireland is facilitating tax avoidance for major banks - Oxfam | newspaper=Irish Independent|date=27 March 2017}}</ref>  It has coincided with G20 economy, Brazil, blacklisting [[Finance:Ireland as a tax haven|Ireland as a tax haven]].<ref>{{cite web|url=https://www.pwc.com/us/en/tax-services/publications/insights/brazil-adds-ireland-to-tax-haven-list.html |title=Brazil Adds Ireland to Tax Haven List| publisher=PWC Ireland | date=September 2016}}</ref><ref>{{cite web|url=https://www.flightglobal.com/news/articles/analysis-brazils-tax-haven-verdict-on-ireland-has-431305/|title=Brazil's Tax Haven Verdict on Ireland|publisher=Flight Global|date=November 2016}}</ref>

A 2017 seminal academic paper published in ''Nature'' on global offshore financial centres (OFCs) ("Uncovering Offshore Financial Centers: Conduits and Sinks in the Global Corporate Ownership Network") lists Ireland as one of five key global '''[[Finance:Conduit and Sink OFCs|Conduit OFCs]]''' (with the Netherlands, UK, Singapore and Switzerland). The five Conduit-OFCs are the links to 24 [[Finance:Conduit and Sink OFCs|Sink OFCs]], which comprise the key offshore centres (i.e. the Cayman Islands).  The Conduit-OFCs are the hubs which provide the regulatory reputation and the legal and taxation wappers (i.e. Section 110 SPVs) for money to get into, and out of, the Sink OFCs.<ref name="nature">{{cite journal|url= |title=Uncovering Offshore Financial Centers: Conduits and Sinks in the Global Corporate Ownership Network|journal=Scientific Reports|date=13 March 2017|bibcode=2017NatSR...7.6246G|last1=Garcia-Bernardo|first1=Javier|last2=Fichtner|first2=Jan|last3=Takes|first3=Frank W.|last4=Heemskerk|first4=Eelke M.|volume=7|issue=1|page=6246|doi=10.1038/s41598-017-06322-9|pmid=28740120|pmc=5524793|arxiv=1703.03016}}</ref>

==See also==
*Economy of the Republic of Ireland
*[[Finance:Corporation tax in the Republic of Ireland|Corporation tax in the Republic of Ireland]]
*[[Finance:International Financial Services Centre|International Financial Services Centre]]
*[[Social:Qualifying investor alternative investment fund (QIAIF)|Qualifying investor alternative investment fund (QIAIF)]] 
*[[Finance:Conduit and Sink OFCs|Conduit and Sink OFCs]]
*[[Finance:Matheson (law firm)|Matheson (law firm)]]
*[[Finance:Ireland as a tax haven|Ireland as a tax haven]]

==External links==
* [http://www.idsa.ie Irish Debt Securities Association], the lobby group set up by the Dubin tax-law firms that create Section 110 SPVs
* [https://www.revenue.ie/en/companies-and-charities/financial-services/qualifying-companies-section-110-taxes-consolidation-act-1997.aspx Irish Revenue Qualifying companies (Section 110 Taxes Consolidation Act (TCA) 1997)]
* [https://www.centralbank.ie/statistics/statistical-reporting-requirements/special-purpose-vehicles Irish Central Bank Special Purpose Vehicles]
* [https://www.tcd.ie/research/profiles/?profile=jstewart Professor James Charles Stewart Adjunct Professor, School Office - Business, Trinity College Dublin], leading academic research into Section 110 SPVs

==References==
{{reflist}}

{{structured finance}}

[[Category:Offshore finance]]
[[Category:Legal entities]]
[[Category:Types of business entity]]
[[Category:Tax avoidance]]
[[Category:Money laundering]]
[[Category:Corporate tax avoidance]]

{{Sourceattribution|Irish Section 110 Special Purpose Vehicle (SPV)|1}}