Home Accountant Irish lawyers, accountants and service firms split €900m in SPV costs – The Irish Times

Irish lawyers, accountants and service firms split €900m in SPV costs – The Irish Times

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Irish lawyers, accountants, bankers and business services firms generated more than €900m in fees last year from debt collection special purpose vehicles (SPVs), an area of ​​the shadow banking center of Dublin which has recently attracted attention due to its use by Russians. businesses.

Ireland-based SPVs paid a total of €3.3 billion in financial and professional services fees last year, the Central Bank said on Wednesday. This equates to 0.32% of the approximately €1,030 billion in assets held in these vehicles. Some €913m of the fee was paid to Irish resident companies, of which €1.06m went to UK companies, he said.

Section 110 of the tax laws introduced in 1997 to incentivize companies to set up SPVs and make the state a global financing and fundraising hub has made the country one of the world’s largest locations for the activities of SPV. Most of the assets in SPVs were corporate loan pools, mortgages, and investment fund-linked financing vehicles.

While the vast majority of Irish SPV assets have little to do with the national economy, the sector is a significant cost driver for professional services firms.

Irish SPVs have been used by Russian-linked entities to raise around €135 billion in funding since 2005, James Stewart, assistant professor of finance at Trinity College Dublin, told the Oireachtas finance committee this week. last during a hearing focused on the use of these vehicles by Russians. entities in the past.

The Central Bank said in March that €35.5 billion in assets held in Ireland’s 33 Russia-linked SPVs at the end of last year was less than 4% of the total held in all Irish SPVs. Most of them are linked to entities that are now subject to EU sanctions stemming from either Russia’s invasion of Ukraine earlier this year or its 2014 annexation of Crimea. .

Vehicle assets linked to Russia are understood to make up the bulk of what the Central Bank referred to as “external financing” entities in Wednesday’s note. A table in the document indicates that these SPVs paid up to €20 million in fees last year.

Professor Stewart told the Finance Committee last week that there needed to be an EU-led effort to regulate SPVs in financial centers such as Dublin, given the often shadowy activities carried out by such companies.

He said the unregulated nature of SPVs, which are part of the so-called shadow banking world, pose incalculable risks to the wider international financial industry. He said the ultra-tax-efficient status of SPVs should be removed first.