Ireland remains the eurozone’s largest centre for financial special purpose vehicles (SPVs), ECB data shows, placing it far ahead of closest rival Luxembourg.
Such vehicles — many of which are shell companies set up to borrow or invest — had assets, chiefly loans and debt, of €391bn, which is greater than the Irish economy.
The data comes amid a debate about the country’s hosting of such conduits, pitting critics, who see a risk to the country’s reputation, against those who want to keep them to help attract business from London after Brexit.
The ECB data makes the sector in Ireland, as it stood at the end of June, two-thirds larger than in Luxembourg and bigger even than in Italy.
Special purpose vehicles are part of the Irish offering to financial firms looking to move from London ahead of Britain’s departure from the EU. This country already accounts for roughly a fifth of such activity in the eurozone and our dominance of the sector has held steady compared with earlier such surveys.
The growth in the number of such companies has prompted criticism from lawmakers, who fear they could damage the reputation of the country. Ireland hosted numerous such vehicles before the crash that were linked to banks hit in the turmoil.
James Stewart of Trinity College Dublin fears problems could unfold if the sponsor of a Section 110 company — the section of the 1997 Taxes Consolidation Act allowing foreign investors to acquire risky assets without having to pay tax on profits — runs into trouble. “What’s the benefit for Ireland?” he asked. “They pay minimal tax. They have no staff. They have high leverage.”
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