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Why U.S. managers are turning to Irish vehicles over the traditional “season and sell” model 

09 Oct 2025

By Karl Cowman, Client Relationship Director 

In the evolving landscape of private credit and direct lending, U.S. asset managers are increasingly turning to Irish fund vehicles to structure their investments more efficiently and strategically. This shift marks a departure from the long-favoured “season and sell” model, which, despite its historical popularity, has proven to be less robust – not only in terms of tax efficiency but also in operational agility, investor alignment and long-term scalability. 

The limitations of “season and sell”

The “season and sell” model involves U.S. entities holding loans for a short period, typically 30 to 90 days, before transferring them to offshore vehicles. This approach is intended to help reduce the impact of U.S. taxes on income earned from loan investments. However, it comes with significant drawbacks that extend beyond tax considerations: 

  • Return erosion: The seasoning delay means loans are transferred at fair market value, often reducing returns for offshore investors 
  • Hidden costs: Legal, audit and operational expenses can range from 5 to 35 basis points, and origination fees often add another 1–2% of the loan value 
  • Investor disparity: Offshore investors frequently earn significantly less than their U.S. counterparts due to non-visible leakage, with disparities reaching up to $5 million on a $100 million investment 
  • Operational complexity: The need to manage multiple entities and jurisdictions increases administrative burden and risk 
  • Regulatory uncertainty: The model’s reliance on timing and valuation introduces compliance challenges, particularly in a tightening regulatory environment. 

The rise of Irish treaty-based structures

Irish vehicles, particularly the Irish Collective Asset-management Vehicle (ICAV) and Section 110 companies, have emerged as powerful alternatives. These structures offer U.S. managers a more globally appealing, operationally streamlined and investor-friendly solution. 

Treaty benefits

The ICAV’s inclusion in the U.S.-Ireland double tax treaty means qualifying Irish funds are not subject to U.S. taxation on income, provided they meet specific criteria: 

  • Ownership test: At least 50% of the fund must be owned by U.S. residents or other “good persons” 
  • Base erosion test: Deductible payments to non-U.S. persons must not exceed 50% of gross income 

ICAVs, being statutorily exempt from Irish tax on profits, easily pass the base erosion test. Section 110 companies, meanwhile, use profit-participating notes to minimise Irish corporate tax liability, making them highly efficient for structured credit strategies. 

Irish treaty funds are also notably structured to avoid being deemed as having a U.S. permanent establishment, which would trigger U.S. tax obligations. This is achieved by ensuring fund managers act as independent agents, both legally and economically, under Inland Revenue Service (IRS) guidelines. 

Strategic advantages of Irish vehicles

Beyond tax efficiency, Irish fund structures offer a suite of strategic benefits that make them attractive to U.S. managers: 

  • Regulatory certainty: A streamlined 24-hour fund authorisation process accelerates time-to-market and reduces regulatory friction 
  • Global connectivity: Dublin’s direct flights to 19 U.S. cities enhance operational convenience and facilitate cross-border collaboration 
  • Investor alignment: Irish structures enable day-one loan origination without triggering U.S. tax, ensuring more equitable returns across investor bases 
  • Scalability: Ireland holds over €5 trillion in domiciled funds and this number is projected to grow significantly in the coming years, placing Ireland among Europe’s largest fund domiciles by 2030 
  • Reputational strength: Ireland’s reputation as a transparent, well-regulated jurisdiction enhances investor confidence and supports long-term fundraising 
  • Talent and infrastructure: A deep pool of fund administration, legal and compliance expertise supports complex strategies and rapid scaling. 

Addressing the pitfalls of traditional models

Unlike the “season and sell” model, Irish vehicles eliminate the need for seasoning delays, allowing for immediate loan origination and deployment. This not only improves returns but also reduces complexity, operational risk and hidden costs. Additionally, Irish structures offer greater parity between U.S. and non-U.S. investors, promoting a more inclusive and transparent investment environment. 

The key takeaway

As private credit continues its meteoric rise, U.S. managers are rethinking traditional fund structures. Irish vehicles backed by treaty benefits, regulatory agility, operational efficiency and investor alignment are proving to be a superior alternative to the “season and sell” model. For managers seeking global reach, robust compliance and optimised returns, Ireland is no longer just a gateway to Europe, it’s a strategic cornerstone for modern credit strategies. 

To find out more about IQ-EQ’s support for U.S. managers exploring Irish fund vehicles, please contact our expert team today. 

Working with IQ-EQ has been seamless – you and your team understand our business, advise us appropriately, and handle your side of our collective partnership so that we can focus on making good investment decisions. Evan Gibson SVP, Merchants Capital

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