Setting up a Special Purpose Vehicle (SPV) in 2023
Since 2003, Healy Consultants Group assists our Clients structure and set up Special Purpose Vehicles (SPV). An SPV is often set up by a parent company to fulfil a specific, short-term goal, for example to handle a one-off project, thus minimising any financial risk to the parent company.
What is an SPV?
- An SPV is used to isolate or securitise assets and keep them off a parent company’s balance sheet, thus sheltering the parent company from financial risk if a venture fails.
- An SPV can have its own assets, liabilities and equity, and maintain its own balance sheet.
- An SPV can be set up as either i) a limited liability company ii) a limited partnership or iii) a trust. An LLC is the most common form of SPV.
Best uses of an SPV
- If a company project carries significant risk, by creating a SPV the risks are legally ring fenced and shared by the investors.
- An SPV is commonly set up to securitise loans or receivables.
- Certain assets, such as power and water plants, require multiple permits or licenses to operate, but these are generally non-transferable. An SPV can own and consolidate assets and the entity can be sold as a self-contained package.
- An SPV is formed to finance a project with no additional debt burden to the parent company. Investors do not invest directly in the parent company. For example, the financing of huge infrastructure projects.
- Some SPV are used to hold properties during sales to avoid paying stamp duty. An SPV which holds properties is subject to capital gains tax, not stamp duty.
Accounting & tax considerations
- SPVs pay corporate income tax. As such, global low tax jurisdictions such as Ireland are preferred.
- SPVs generally do not need a financial services licence. For example in Australia, SPVs do not need an Australia Financial Services licence if they serve wholesale clients.
- Just like any company, SPVs must complete i) annual tax filings ii) annual returns and sometimes iii) a statutory audit, depending on the jurisdiction.
Preferred jurisdiction to set up SPVHealy Consultants Group’s recommended solution is an Ireland SPV, because:
- An Irish tax-resident SPV which acquires or holds qualified assets with a market value of at least €10 million is tax neutral.
- SPVs are Value Added Tax (VAT)-exempt in Ireland.
- Ireland has double tax treaties with 74 countries.
- The Irish economy is open, with a pro-business legal infrastructure.
- On average, it takes between two to four weeks to set up an Irish SPV.
- An Irish SPV is required to file annual audited accounts prepared in accordance with GAAP or IFRS guidelines.
Our feesHealy Consultants is happy to assist our Clients set up an Irish SPV. Our fee to set up a basic SPV is €8,355. However, fees may differ depending on the SPV’s structure and assets.
ConclusionIf you need Healy Consultants Group’s help to set up a SPV, email us and complete this questionnaire. Within six hours, our staff will e-mail reply to you.