Page 432 - Invited Paper Session (IPS) - Volume 2

IPS307 Tjeerd Jellema et al.
countries. The difference between total S12O debt securities liabilities and SPV
liabilities may be attributable to the existence of captive financial institutions
(S127) that issue debt securities on behalf of related corporations, so-called
conduits.

5. Conclusion
The work by the BOPCOM TF in providing a working definition of SPEs will
benefit the comparability of external sector statistics. The working definition
will benefit European and worldwide compilers in harmonizing their reporting
on SPEs and allowing a consistent labelling of SPEs across Europe. The
BOPCOM definition stops short of considering the case when entities are not
directly or indirectly foreign controlled, pointing at the need to
complementing the BOPCOM definition from the national accounts side.
The presence of SPEs can be circumstantially evidenced through assessing
whether an infrastructure exists in a given country to support a significant SPE
population. A clear entry point is knowledge of particular legal provisions in a
specific jurisdiction that sets SPEs apart from regular corporations. At a first
glance, the presence of legal and financial service sector with an employment
share over the European average seems a good indicator, as would be the
openness to investment abroad to large international legal, accounting and
consulting firms. In a few SPE concentrating countries, low headline corporate
tax rates would seem a locational factor as well.
In SPE concentrating countries, the impact on the national international
investment position is large, and clearly motivates the separate accurate
reporting of SPEs, as SPE related flows and positions would dominate the
‘regular’ flows. Moreover, it is clearly established that SPEs in the European
context are relevant not only in FDI, but also with regards to other functional
categories, notably portfolio investment, may have non-financial assets and
can be found as non-financial corporations (S11) as well as financial
corporations, in particular other financial intermediaries (S125), captive
financial institutions (S127) and insurance corporations (S128).

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