An Irish Section 110 Special Purpose Vehicle (SPV) or Section 110 company as they are commonly known are tax resident companies, which qualify under Section 110 of the Irish Taxes Consolidation Act 1997. This status allows these SPV’s/limited companies to qualify for ‘tax neutrality’ or in short, pay no taxes, duty or any tariffs on their income.

Section 110 was a piece of legislation enacted in 1997. It was created in order to assist the International Financial Service Centers (IFSC) legal and accounting firms compete for the right to administrate global securitization deals. This means that it was made to entice large scale foreign investment in Irish banks, businesses and bonds with the promise of tax exemption on all their profits. By 2017, it had become the largest structured finance vehicle in the EU securitization sphere.

In June 2016, Irish media started to report that Section 110 was being used by Vulture Funds. This was used for All of which were within deals that were structured by the IFSC itself, with the intention of avoiding tax payments on €80 billion worth of Irish domestic investments. The y also noted that the equity/shares of these companies were ‘owned’ and registered with Irish charities. In some cases this included even registered children charities. This was done to further avoid any tax payments by vulture funds.

Despite the scale of the avoidance, the Irish revenue ordered no investigation into the events or prosecutions to those responsible. Everything was legal and above board. It was just a legal loophole for these hedge funds to operate within.

The abuses were only discovered as Section 110 companies need to be registered with the Irish Companies Registration Office (CRO). Yet in 2018 the Irish financial sector upgraded their Qualifying Investor Alternative Investment Fund or QIAIF. This was a piece of regulatory legislation set up in 2013 that outlined the five tax-free legal structures for holding assets. With the new update, SPV’s no longer had to register with CRO. So in theory, they can operate under the books, without ever having to show their face to the public.

Academic research from the period 2016-2018 has shown that these Section 110 companies operate largely unregulated with little to no supervision by the Irish Central Bank. In fact, some prohibited Russian Banks, known for money laundering among other crimes, are using Section 110 status in Ireland. Section 110 is essentially a route for corporate powers and financial firms to globally operate within a tax haven.