Ireland and Luxembourg are widely regarded as the two leading securitisation jurisdictions within the euro area. European Central Bank data for Q2 2026 recorded 1,805 Financial Vehicle Corporations in Luxembourg and 1,751 in Ireland, illustrating the scale and maturity of both markets. However, the relative size of each market does not determine the most appropriate jurisdiction for a particular transaction. That assessment depends on factors such as the nature of the underlying assets, investor expectations, legal requirements, tax considerations and the degree of flexibility required by the structure.
As EU Member States, both Ireland and Luxembourg operate within the framework established by the EU Securitisation Regulation (Regulation (EU) 2017/2402), which harmonises key requirements relating to risk retention, transparency, investor due diligence and, where applicable, simple, transparent and standardised securitisations. While the overarching regulatory framework is therefore largely consistent across both jurisdictions, their domestic regimes serve different purposes. Luxembourg’s securitisation market is underpinned by the Luxembourg Securitisation Law of 22 March 2004 (as amended), a dedicated statutory framework governing the establishment, financing and operation of securitisation undertakings.
Ireland, by contrast, does not have a standalone securitisation statute. Instead, its position as a leading securitisation domicile is driven by a combination of company law, the implementation of the EU securitisation framework and the tax regime available to qualifying companies under Section 110 of the Taxes Consolidation Act 1997 (the “TCA”). As a result, whilst both jurisdictions facilitate substantially similar securitisation outcomes, they do so through fundamentally different legal and structuring frameworks.
Luxembourg: A Dedicated Securitisation Framework with Enhanced Structuring Flexibility
Luxembourg securitisation undertakings established under the Law of 22 March 2004 on securitisation, as amended (the “Luxembourg Securitisation Law“), benefit from one of Europe’s most comprehensive and flexible securitisation frameworks. The regime is broader than the EU Securitisation Regulation and operates independently from it. A transaction may fall within the Luxembourg Securitisation Law without constituting a “securitisation” for the purposes of Regulation (EU) 2017/2402, whilst an EU securitisation within the scope of that Regulation may also be structured through a Luxembourg securitisation undertaking. The two regimes therefore serve different purposes and must be analysed separately.
The Luxembourg Securitisation Law accommodates both securitisation companies and securitisation funds and provides significant flexibility in respect of legal form, funding and asset management. This flexibility was further enhanced by the reforms introduced under the Law of 25 February 2022 (the “2022 Reform”), which represented the most significant modernisation of the regime since its introduction in 2004. Among other changes, the amendments expanded the range of legal forms available to securitisation undertakings to include, amongst others, the société en nom collectif (SNC), société en commandite simple (SCS), société en commandite spéciale (SCSp) and société par actions simplifiée (SAS).
The reforms also introduced greater flexibility around financing arrangements, broadened the range of financial instruments that may be issued and, importantly, provided an express statutory basis for the active management of debt portfolios in privately placed transactions. Collectively, these changes significantly expanded the structuring toolkit available to sponsors, originators and arrangers and reinforced Luxembourg’s position as one of Europe’s most versatile securitisation jurisdictions.
A Luxembourg securitisation undertaking may create one or more compartments. Subject to the constitutional and issuance documentation, the assets and liabilities of each compartment are segregated from those attributable to other compartments. This statutory segregation is particularly relevant to multi-issuance programmes because separate portfolios and funding arrangements can be established within a single undertaking while preserving compartment-level recourse.
The 2022 Reform also replaced references to the issuance of “securities” with the broader concept of “financial instruments”. It confirmed that a securitisation undertaking may obtain funding through the issuance of financial instruments and through borrowings, including funding whose repayment or return depends on the performance of the securitised assets. The changes addressed uncertainty around instruments governed by foreign law and expanded the range of funding techniques capable of being used within a Luxembourg structure.
Active and Passive Portfolio Management in Luxembourg
The distinction between active and passive management is central to the current Luxembourg analysis. Before the 2022 Reform, the Luxembourg framework was generally used on the basis that the securitised portfolio would be administered passively. The 2022 Reform introduced express statutory permission for a securitisation undertaking, or a third party acting for it, to actively manage a portfolio consisting of debt securities, loans, receivables or other debt financial instruments. That permission is subject to an important funding condition, that the financial instruments issued to finance the actively managed portfolio must not be offered to the public.
This amendment improved the statutory basis for using Luxembourg securitisation undertakings in actively managed debt strategies, including certain collateralised loan obligations (“CLO”) and collateralised debt obligations structures. It did not, however, create an unrestricted active-management regime. Under the law currently in force, the relevant portfolio must comprise the specified categories of debt assets and the prohibition on a public offer of the financing instruments must be respected.
On 8 June 2026, the Luxembourg Government submitted Bill of Law No. 8761 (the “June 2026 Bill”) to the Chamber of Deputies. The June 2026 Bill proposes a further material extension of the active-management regime by removing the requirement that an actively managed portfolio consist of debt assets. If enacted in its proposed form, a Luxembourg securitisation undertaking could actively manage other asset classes, including equity and mixed portfolios, provided its financing instruments are not offered to the public. The June 2026 Bill should not be described as law already in force. As at September 2026, the verified materials describe these measures as legislative proposals.
The June 2026 Bill would also introduce express statutory protection for certain forms of passive portfolio management. The proposed safe harbour is intended to clarify that operations undertaken in accordance with predetermined criteria at the time the securitisation undertaking acquires or assumes the relevant risks do not amount to active management. This distinction is technically important for static and rules-based transactions in which substitutions, disposals or other portfolio actions may occur without giving a manager general investment discretion.
The proposed amendments go beyond portfolio management. The June 2026 Bill would broaden the available financing methods to encompass any form of financing or other financial commitment; permit direct or indirect investments between compartments of the same securitisation undertaking, subject to documentary authorisation and restrictions on circular investment; clarify the granting of guarantees and security interests, refine the statutory subordination rules and align the securitisation framework with Luxembourg’s revised insolvency legislation. These measures remain proposals unless and until the legislative process is completed.
Ireland: Common Law Foundations and the Section 110 Framework
Irish securitisation vehicles are commonly incorporated as Designated Activity Companies (“DAC“) under the Companies Act 2014, as amended. A DAC has an objects clause defining the activities it is authorised to undertake and is widely used for debt issuance, asset holding and secured financing transactions.
Unlike Luxembourg, Ireland does not have a standalone securitisation law. Instead, its success as a securitisation domicile has developed through the combination of a well-established common law legal system, a sophisticated professional services ecosystem and the flexibility of the Section 110 framework. Over the past two decades, this has enabled Ireland to become one of Europe’s leading locations for asset-backed securities, CLOs, structured credit transactions, aviation finance structures and other capital markets vehicles.
Ireland’s common law system remains an important differentiator. For many U.S. and U.K. sponsors, arrangers and investors, the familiarity of common law concepts, established judicial precedent and documentation standards derived from English-law market practice can reduce legal complexity and execution risk. This has contributed significantly to Ireland’s popularity for internationally originated transactions, particularly those involving U.S. and U.K. assets or investor bases.
Where the conditions set out in Section 110 of the TCA are met, an Irish company can notify the Irish Revenue Commissioners of its intentions to qualify as a Section 110 vehicle. Section 110 of the TCA is a taxation provision rather than a dedicated securitisation law. A qualifying company must, among other conditions, be resident in Ireland, acquire, hold, manage or create qualifying assets, carry on the relevant business in Ireland and limit its activities to matters ancillary to that business. The market value of its qualifying assets must be at least €10 million on the first day on which the assets are acquired, held or created, and the company must submit the prescribed notification to the Irish Revenue Commissioners within the required timeframe.
A qualifying Section 110 company is subject to Irish corporation tax at the rate of 25% on its taxable profits. The regime does not operate through a tax exemption. Instead, it contains detailed rules governing the calculation of taxable profits, including the treatment of funding costs and other deductible expenses. When properly structured, a Section 110 company can provide an efficient framework for securitisation and structured finance transactions. However, deductibility of profit-participating interest and certain other financing costs remains subject to a range of statutory conditions, restrictions and anti-avoidance provisions which must be analysed on a transaction-specific basis.
Guidance from the Irish Revenue Commissioners also addresses transfer pricing, arm’s-length requirements, profit-participating notes and various anti-avoidance provisions. Accordingly, Section 110 status should not be viewed as producing a particular tax outcome automatically. Eligibility, deductibility, withholding tax, anti-hybrid, interest limitation and transfer-pricing considerations must all be assessed in the context of the relevant structure.
From a market perspective, Ireland supports a broad spectrum of asset classes, including residential and commercial mortgages, auto loans, consumer receivables, corporate loans, trade receivables, aircraft lease receivables, shipping assets and non-performing loans. The jurisdiction benefits from a concentration of collateral managers, service providers, legal advisers and transaction counterparties with extensive experience in structured credit transactions. This concentration of expertise, combined with a large population of securitisation vehicles and a mature listing and servicing infrastructure, continues to make Ireland one of the leading European jurisdictions for repeat issuance programmes and large-scale capital markets transactions.
The Practical Jurisdictional Analysis
The choice between Ireland and Luxembourg should not be reduced to a general comparison between certainty and flexibility. Both jurisdictions offer established legal and professional-services environments, but their frameworks address structuring questions in a different way.
Luxembourg may be particularly relevant where the transaction requires statutory compartmentalisation, a choice between corporate and fund structures, partnership options, bespoke financing instruments or active management under the conditions permitted by the Luxembourg Securitisation Law. If enacted, the proposed reforms under the June 2026 Bill would materially broaden that proposition by extending active management to non-debt assets and expressly accommodating defined passive-management operations.
Ireland may be particularly relevant where the transaction is intended to use the established DAC structure and Section 110 of the TCA, requires a common law corporate environment, or follows an existing Irish issuance, CLO or asset-finance platform.
Conclusion
Ireland and Luxembourg should be viewed as complementary structuring jurisdictions rather than directly interchangeable products. Luxembourg provides a dedicated securitisation law with statutory compartmentalisation, broad vehicle and financing options and an express, but currently conditional, active-management regime. Ireland provides an established issuer model centred on the DAC and the tax treatment available to qualifying companies under Section 110 of the TCA.
For any individual transaction, the analysis should begin with the portfolio, the degree of manager discretion, the funding instruments, the proposed investor base, the availability of a public or private placement, the required security and insolvency analysis, the tax profile and the ongoing reporting model. The appropriate jurisdiction is the one whose legal, regulatory, tax and operational framework most closely supports those transaction-specific requirements.
This briefing is intended as a high-level comparison only and does not constitute legal, tax, regulatory or accounting advice. Transaction-specific advice should be obtained from the relevant professional advisers.
