Basel Group

Corporate & Special Purpose Structures

Special Purpose Vehicles (SPV’s) or Special Purpose Entities (SPE’s) are usually established solely for a particular purpose, transaction or series of transactions rather than for the benefit of a person, charity or a corporation. The purpose can be virtually anything but SPV’s are most often created for the sole purpose of acquiring certain assets or derivative exposures and issuing liabilities that are thereby linked solely to those assets or exposures.

SPV’s are most often limited liability companies or limited partnerships but, more and more, special purpose trusts are used and Jersey has specific legislation catering for "purpose" trusts.

Special Purpose Structures have also been used in numerous varieties of commercial transactions including securitisations, ship and aircraft financing and employee share ownership plans.

The purpose of locating these legal entities offshore is often to take advantage of fiscal neutrality when ownership of the main client operating subsidiaries is multi-national and Jersey, Switzerland, Mauritius and the British Virgin Islands all provide just that. ┬áIn addition to reducing tax, SPV’s can also remove assets or liabilities from balance sheets, transfer risk and (in securitisations) allow the effective sale of future cash flows.