Ireland's positive taxation legislation has helped establish it as one of the leading securitization jurisdictions in Europe, say sources at Wilmington Trust, which set up shop in Dublin six months ago.

"Six months down the line business is still booming on the Dublin front," said Alan Geraghty, managing director of Wilmington Trust services in Ireland. "We understood that establishing a business physical presence would grow our business further," he said. "The changes in legislation have opened up huge business opportunities and Dublin has become one of the leading ABS jurisdictions in Europe - the volume of ABS listed on the Dublin Stock Exchange has nearly doubled."

The changes in legislation have led to huge opportunities, as more players seek the ease of setting up accountancy infrastructure via specific ABS legislation. Ireland's standard corporate tax regime has been: 12.5% for profits generated from Irish trades; 25% for other profits; and 20% for capital gains. These rates compare positively with those in other jurisdictions. The 12.5% rate is European Union-approved, and applies across the board to all types of trading activities conducted in Ireland. A new holding company regime that took effect early last year allows Irish resident companies enhanced foreign-tax credit relief on dividend income repatriated to Ireland. Onshore `pooling' of dividend income is now permitted in calculating foreign-tax credit relief. Securitizations are eligible for certain tax deductions under Irish legislation - such as exemptions from withholding taxes and stamp duty -that cut funding costs.

Section 110 of the Irish securitization legislation defines a qualifying asset as a financial asset or an interest in a financial asset. This includes shares, bonds, other securities, futures, options, swap derivatives and similar instruments. Invoices and all types of receivables, loans, leases, hire purchase contracts, acceptance credits, bills of exchange, commercial paper, promissory notes and all other kinds of negotiable instruments are also covered under the definition. This broad definition has facilitated the vast range of innovative transaction structures that are currently being done.

Geraghty pointed to an insurance event securitization deal that is due out this year. "We were involved in a very limited role in the deal," he said. "With respect to the magnitude of deals we can expect going forward, it is really difficult to speculate but Ireland's attractiveness is the suitability of the section 110 legislation for structuring these types of products." And market sources said there is currently work being done on a specific structure that would allow hedge funds to tap into the CMBS market by raising funds via a CMBS conduit structure.

A lot of these large real estate investment funds are looking to set up in Ireland. "Real estate is turning from an asset to an investment," said one market analyst. "The fund world is so broad and the amount of money is staggering. It's clearly developing into a major investor force and also major competing force with banks. A lot of these funds are unrated and have more flexibility in what they can do."

(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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