Setting Up a Foreign SPV for Property Ownership – A Practical Guide for Irish Investors

Introduction

Buying property abroad can be an attractive way to diversify a portfolio, generate rental income, or secure a future retirement home. For Irish expats and investors, however, the cross‑border legal and tax landscape can be daunting. One increasingly popular solution is to hold the overseas asset through a Special Purpose Vehicle (SPV) – a dedicated company that isolates the property from personal assets, streamlines tax reporting, and can improve financing terms.

This guide explains why an SPV may be the right structure, walks you through the key steps to set one up in a foreign jurisdiction, and compares the most common jurisdictions for Irish investors – Ireland, Malta, Cyprus and Luxembourg. You’ll also find practical tips on tax compliance, banking, and ongoing administration, all written with Irish‑expat investors in mind.

1. Why Use an SPV for Property Investment?

Benefit	How it helps the Irish investor
Limited liability	The SPV is a separate legal entity; creditors can only pursue the assets of the vehicle, not your personal wealth.
Tax transparency	Many jurisdictions treat SPVs as “tax‑neutral” – profits can be distributed to shareholders with minimal Irish tax leakage, especially under Ireland’s Section 110 regime.
Easier financing	Lenders often prefer a corporate borrower because cash‑flow forecasts, covenants and security documents are clearer.
Succession planning	Shares in the SPV can be transferred, gifted or bequeathed without the need to retitle the underlying property.
Asset segregation	If you own several overseas properties, each can sit in its own SPV, keeping risks compartmentalised.
VAT and withholding tax optimisation	Certain jurisdictions allow reclaim of VAT on acquisition costs and provide treaty‑based exemptions on interest or dividend withholding.

For Irish residents, the Irish tax rules treat foreign‑registered companies as non‑resident unless they are managed and controlled in Ireland. This means that, when the SPV is set up abroad, Irish income tax on rental profits is generally avoided, and Irish capital gains tax (CGT) only arises on the sale of the shares in the SPV, not on the property itself – a potentially lower‑tax route if you can qualify for the CGT exemption on disposals of qualifying shareholdings (currently €1 million per person).

2. Choosing the Right Jurisdiction

2.1 Ireland (on‑shore SPV)

Why it’s popular: English‑speaking common‑law system, EU member, extensive double‑tax treaty network, Section 110 tax regime (effectively tax‑neutral for qualifying assets). Minimum share capital is €1, incorporation can be completed in 5 business days.
Best for: Investors who want the comfort of an on‑shore EU jurisdiction and plan to raise finance from European lenders.
Key tax points:
- Section 110 allows interest on debt to be fully deductible, leaving the SPV with near‑zero taxable profit.
- Withholding tax on interest can be avoided under the “quoted Eurobond” exemption or treaty relief.
- ATAD‑I/II anti‑hybrid and interest‑limitation rules apply, so professional advice is essential.

2.2 Malta

Why it’s attractive: Robust financial‑services framework, EU member, favourable tax regime with a full imputation system and a 0 % effective tax rate on many SPV activities when profits are distributed as dividends to non‑resident shareholders.
Legal forms: Trusts, investment companies, limited liability companies, or commercial partnerships under the 2006 Securitisation Act. All must be registered with the Malta Financial Services Authority (MFSA) and appoint a local service agent.
Key tax points:
- Interest, issuance costs and administrative expenses are deductible.
- The “residual deduction” allows any remaining profit to be deducted, often leaving the SPV tax‑neutral.
- No withholding tax on dividends paid to non‑resident shareholders if the underlying income is taxed in Malta.

2.3 Cyprus

Why it’s chosen: Low corporate tax (12.5 %), extensive double‑tax treaty network, and a non‑domicile regime that exempts foreign‑source dividends and interest from Cyprus tax for qualifying individuals.
Legal forms: Private limited companies (Ltd) are the most common vehicle for property SPVs.
Key tax points:
- Interest on financing is fully deductible.
- Dividends paid to non‑resident shareholders are exempt under the treaty network, provided a Certificate of Tax Residence is obtained.
- No capital gains tax on disposals of immovable property located outside Cyprus.

2.4 Luxembourg

Why it’s used: Highly sophisticated legal infrastructure, strong investor protection, and the ability to issue SICAV‑SIF (investment funds) that can hold property assets.
Legal forms: Private limited liability companies (SARL) or specialised investment funds (SICAR) for larger portfolios.
Key tax points:
- Corporate tax rate 17 % plus municipal business tax (≈ 15 % effective).
- Participation exemption on dividends and capital gains from qualifying subsidiaries, meaning profits can be repatriated tax‑efficiently.
- Extensive treaty network reduces withholding tax on interest and royalties.

3. Step‑by‑Step: Setting Up a Foreign SPV

Note: The exact steps vary by jurisdiction, but the outline below applies to most EU jurisdictions.

Step	Action	Practical Tips
1. Define the purpose	Decide whether the SPV will own a single property, a portfolio, or be used for a securitisation structure.	Keep the SPV’s objects narrow – “to acquire, manage and dispose of [address]” – to satisfy tax‑neutrality tests.
2. Choose the jurisdiction	Compare tax rates, treaty benefits, set‑up costs, and required local presence.	For Irish investors, Malta or Cyprus often give the best balance of cost and tax efficiency.
3. Appoint a local service provider	Most jurisdictions require a registered office, company secretary, and a “service agent”.	Use a reputable corporate service provider with experience in property SPVs – they can also help open bank accounts.
4. Draft incorporation documents	Articles of association (or trust deed) specifying the SPV’s limited purpose, share capital, and governance.	Include “orphan” provisions if you need bankruptcy remoteness – shares held by a trustee for charitable purposes.
5. Register the company	File the documents with the local Companies Registry (e.g., Companies House – Malta, CRO – Ireland).	Minimum share capital is usually €1 (Ireland) or €1,165 (Malta). Expect a 5‑10 day processing time.
6. Obtain tax identification	Register for a tax ID (e.g., VAT number, corporate tax number).	In Malta, apply for a Tax Identification Number (TIN) and optionally register for VAT if you expect to incur VAT on purchases.
7. Open a corporate bank account	Choose a bank that accepts non‑resident corporate clients and can handle foreign currency.	Prepare KYC documents: passport, proof of address, incorporation certificate, business plan, and reference letters.
8. Fund the SPV	Transfer equity capital and, if needed, arrange a mortgage or bridge loan.	Keep a clear paper trail – lenders often require a “purpose‑specific” loan agreement.
9. Acquire the property	Use the SPV as the legal buyer; ensure the purchase contract names the SPV correctly.	Verify local land registry requirements – some jurisdictions need a “beneficial owner” declaration.
10. Ongoing compliance	Annual returns, statutory accounts, tax filings, and, where applicable, audited financial statements.	Engage a local accountant familiar with property SPVs to avoid penalties and maintain treaty benefits.

4. Tax Implications for Irish Investors

4.1 Irish Tax on Foreign‑Registered SPVs

Irish Tax	How it applies	Mitigation
Income Tax on Rental Income	Generally not charged if the SPV is non‑resident and managed outside Ireland.	Ensure the SPV’s central management and control (CM&C) is abroad – board meetings, directors, and decision‑making must occur outside Ireland.
Dividend Withholding Tax (DWHT)	Charged on dividends paid by Irish companies to non‑resident shareholders (20 %).	Use a foreign SPV to receive rental profits; then distribute dividends from the SPV – Irish DWHT does not apply.
Capital Gains Tax (CGT)	CGT is due on the sale of Irish‑situated property, not on the sale of SPV shares (unless the SPV is resident).	Hold the property through a foreign SPV; CGT arises only on disposal of SPV shares, which may be exempt under the €1 million CGT exemption for qualifying share disposals.
Controlled Foreign Company (CFC) Rules	May attribute income of a low‑taxed foreign company to Irish shareholders if the effective tax rate is < 25 %.	Choose jurisdictions with a substantial economic activity (e.g., local directors, office) to satisfy “substance” tests and avoid CFC attribution.

4.2 Double Tax Treaty Benefits

All four jurisdictions covered (Ireland, Malta, Cyprus, Luxembourg) have extensive treaty networks with Ireland, the UK, the US, and many Asian economies. Key advantages:

Reduced withholding tax on interest and royalties (often 0 % or 5 %).
Elimination of double taxation on dividends – the treaty may allow a reduced Irish rate or full exemption.
Clear residency rules – helps establish the SPV’s non‑resident status for Irish tax purposes.

When selecting a jurisdiction, check the Treaty‑Based Withholding Tax (TBWT) rates for the target country where the property is located. For example, a Cyprus SPV receiving rental income from Spain benefits from Spain’s 19 % withholding tax on rental, reduced to 0 % under the Spain‑Cyprus treaty if the SPV is a resident of Cyprus and holds a valid certificate of residence.

5. Practical Considerations Beyond Tax

5.1 Financing

Lender Preference: Many European banks prefer a corporate borrower with a registered office and local directors. An on‑shore Irish SPV often secures better loan‑to‑value (LTV) ratios (up to 70 %) than a purely personal loan.
Interest Deductibility: Ensure the financing structure complies with the jurisdiction’s interest limitation rules (e.g., Ireland’s ATAD‑II caps interest deduction at 30 % of EBITDA).

5.2 Insurance and Risk Management

Purchase property insurance in the name of the SPV.
Consider directors’ and officers’ liability insurance for any local directors you appoint.

5.3 Accounting Standards

Most EU jurisdictions require IFRS for listed companies but allow local GAAP for private SPVs.
Choose an accountant who can prepare consolidated accounts if you own multiple SPVs, simplifying Irish reporting.

5.4 Succession and Exit Strategies

Share Transfer: Selling the SPV’s shares is often quicker and cheaper than transferring the underlying property, especially when the property is located in a jurisdiction with high stamp duty.
Liquidation vs. Sale: Liquidating the SPV after the property is sold can generate a clean cash distribution, but may trigger Irish CGT on the liquidation proceeds if the SPV is deemed Irish‑resident.

6. Common Pitfalls and How to Avoid Them

Pitfall	Consequence	Prevention
Insufficient substance	CFC rules may attribute income to you; lenders may refuse financing.	Appoint at least one local director, maintain a local office, and keep minutes of board meetings in the jurisdiction.
Improper KYC documentation	Bank account opening delays or closure.	Provide full corporate documents, proof of beneficial ownership, and a clear business plan.
Mixing personal and SPV expenses	Tax authority may deem the SPV a “shadow” company, losing tax benefits.	Keep separate bank accounts, accounting records, and contracts for all SPV activities.
Ignoring local property law	Invalid title, unexpected stamp duty, or restrictions on foreign ownership.	Engage a local solicitor for conveyancing and confirm any foreign ownership caps (e.g., some EU countries limit non‑EU investors).
Failing to file annual returns	Penalties, loss of good standing, and potential forced dissolution.	Set up a calendar reminder; use a corporate service provider to file on your behalf.

7. Real‑World Example: Irish Investor Buying a Holiday Villa in Spain via a Maltese SPV

Set‑up: The investor engages a Maltese corporate service provider to incorporate a limited liability company (LLC) called Mediterranean Villa Holdings Ltd, with €1 share capital, a local director, and a registered office in Valletta.
Tax ID: The LLC registers for a Maltese TIN and applies for a certificate of tax residence.
Banking: Opens a Euro‑denominated corporate account with a Maltese bank, providing KYC documents and a business plan outlining the intended purchase of a holiday villa in Costa Brava.
Financing: Secures a €300 k mortgage from a Spanish bank, which issues the loan to Mediterranean Villa Holdings Ltd directly.
Acquisition: The purchase contract names the Maltese LLC as the buyer; the Spanish notary records the transfer in the Registro de la Propiedad.
Tax Flow: Rental income is received in Malta, where the LLC deducts financing costs and administrative expenses, leaving near‑zero taxable profit. Dividends are then paid to the Irish investor, who benefits from the Malta‑Ireland treaty (0 % withholding tax) and the Irish CGT exemption on the share disposal (if sold after 12 months and under €1 million).
Compliance: The LLC files annual returns and audited accounts in Malta; the investor files a Form 11 in Ireland, declaring the foreign shareholding but no rental income.

This structure illustrates how the combination of a low‑tax jurisdiction, treaty benefits, and corporate isolation can make an overseas property investment both tax‑efficient and legally robust.

Conclusion

For Irish expats and investors, a foreign Special Purpose Vehicle offers a powerful toolkit to own overseas property while protecting personal assets, optimising tax, and simplifying financing. The choice of jurisdiction – whether the familiar on‑shore environment of Ireland, the tax‑friendly regimes of Malta or Cyprus, or the sophisticated fund structures of Luxembourg – should be guided by the size of the investment, the target market’s treaty network, and the need for substance.

By following the step‑by‑step process outlined above, securing professional advice, and maintaining diligent compliance, you can turn an overseas property purchase into a clean, efficient, and future‑proof investment.

Ready to set up your SPV? Contact a corporate service provider with experience in Irish‑expat property investments and start building your international portfolio today.