The term Special Purpose Vehicle (SPV) is one of common use when planning a business’ strategy and its corporate structure. Knowledge about them is, however, rather niche, making them an excellent subject for our blog.
What is an SPV and what makes it special?
In spite of the name, SPVs have no relation to something like a Jet ski or a quad bike; instead the term reefers to a subsidiary company created with the aim of isolating, and thus controlling, financial risk. An SPV is called such because it is a mean to a very specific and defined objective, but a mean that does not risk affecting a parent company’s operations. Commonly SPVs are used in the context of structured finance and fund management to conduct high-risk or specialized projects without jeopardizing the rest of the organization.
It should now be clear that proper SPV management is important, as it directly correlates to asset protection, investor appeal, and regulatory compliance. As a reminder, we at Nordic GEM are available to assist you in managing your SPVs across the Nordics, ensuring your compliance, transparency, as well as the tax optimization of your corporate structure.
In the context of funds, especially private equity and venture capital, SPVs allow multiple investors to pool their funds into a single entity, which can then be coordinated into target investments. The participating investors benefit from isolation of risks, securitization of assets, as well as enabling companies to keep certain assets and liabilities off their main balance sheet, which can help maintain a more favourable financial position.
How is an SPV managed? The Swedish Case
Despite it sounding obvious, the management of SPVs has to comply with local corporate and tax laws. In Sweden this mean Swedish law, but it does not stop there:
SPVs are powerful resources in corporate structures, as they provide both flexibility and risk mitigation. However, they come with a few strings attached, as they require their own governance, tax management, and compliance routines. We at Nordic GEM are already assisting some of our clients with their SPVs, managing their entities with local expertise, rich experience, and certified competence.
- Reporting and Regulatory Compliance: SPVs in Sweden may have obligations under FATCA (Foreign Account Tax Compliance Act) or CRS (Common Reporting Standard) for funds with foreign investors, on top of their responsibilities to Skatteverket (Swedish Tax Authority).
- Sweden’s involvement in the EU means that SPVs used in cross-border transactions must also comply with EU-level regulations, including Anti-Money Laundering (AML) directives and DAC6 (which requires disclosure of cross-border tax arrangements).
- Finansinspektionen (Swedish Financial Supervisory Authority), depending on the nature of the SPV and the underlying assets, may require stricter regulatory approval or oversight.
SPVs are powerful resources in corporate structures, as they provide both flexibility and risk mitigation. However, they come with a few strings attached, as they require their own governance, tax management, and compliance routines. We at Nordic GEM are already assisting some of our clients with their SPVs, managing their entities with local expertise, rich experience, and certified competence.
If your business or fund is considering establishing an SPV in either Denmark, Finland, Norway or Sweden, partnering with experts who understand the complexities of local regulations and corporate governance, such as Nordic GEM, is crucial to ensure success. So please be sure to contact us to see what we can do to help.
