Having achieved authorisation from the Central Bank of Ireland at the end of 2020, IQ-EQ recently expanded its fund services division into Ireland. As you would expect, this was a strategic and carefully timed move on our part. So why Ireland, and why now? The merits of Ireland as a jurisdiction for funds are extensive and diverse – now more than ever before.
Ireland has grown to become the second biggest fund centre in Europe and third largest in the world, with over 1,000 international fund promoters choosing the country to domicile and/or service their funds. There is currently around 8,000 funds domiciled and 14,000 funds administered in Ireland. According to recent industry analysis by Irish Funds, assets under management in Irish domiciled investment funds is set to climb to over €5 trillion by 2025, up from €3.21 trillion at the end of 2020.
Part of the EU, Eurozone, OECD, FATF and IOSCO, Ireland is an internationally recognised jurisdiction and well established as a major hub for cross-border distribution; Irish funds are sold in 90 countries across Europe, the Americas, Asia-Pacific, the Middle East and Africa. With Brexit having finally taken effect on 1 January 2021, we’ve been seeing a marked increase in the number of fund managers and other businesses (that had previously used the UK as their European base) coming to Ireland for EU access. Indeed, Ireland is now the only native English-speaking jurisdiction in the EU, connecting other English-speaking countries with one of the largest markets in the world.
What’s more, it was around the same time that Ireland’s long-awaited Investment Limited Partnerships (Amendment) Act 2020 took effect, modernising the existing ILP legislation to accommodate national and EU-level changes introduced since the ILP first became available in 1994. The improved vehicle is particularly well suited to investments in real assets (e.g. real estate, infrastructure, private equity), making Ireland significantly more attractive to alternative fund managers.
Home to an Abundance of Professional Talent
Looking beyond Ireland’s rising prominence in the funds sphere, the country was recently ranked first in the world for attracting and retaining talent, and third for its motivated workforce (source: IMD World Talent Ranking 2019). With its favourable demographics and high-quality education system, Ireland has a plentiful supply of highly qualified people with excellent technical, language and customer service skills. According to recent OECD data, Ireland is first in the EU and fourth globally in terms of its proportion of 25- to 34-year-olds with a thirdlevel qualification.
The Irish investment funds industry already employs over 16,000 people across asset management, depositaries, administrators, professional advisors, transfer agents and other specialist firms – and this figure is expected to grow quickly to 20,000+.
A Centre of Regulatory Excellence
As well as its deep pool of professional talent, Ireland has an excellent reputation for robust and efficient regulation that facilitates market and product developments while protecting investor interests. Ireland does not operate a banking secrecy regime and the Irish regulatory framework for investment funds is founded on the principles of openness, transparency and investor protection, providing for independent, regulated administration and depositary functions.
Ireland makes an important contribution to developing international industry practices and leads the charge globally in compliance with internationally agreed tax standards – as evidenced by the fact Ireland volunteered for a peer review by its fellow G20 and OECD countries. Ireland was also one of the early adopters of the OECD’s Common Reporting Standard (CRS) and was the first international funds domicile to sign an intergovernmental agreement with the US in respect of the implementation of FATCA.
A Tax Efficient Jurisdiction
Last but not least, Ireland is highly attractive from a taxation perspective. It has the highest rating in the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes and has one of the world’s most extensive tax treaty networks, having signed Double Taxation Agreements with 74 countries worldwide.
Ireland also offers an array of tax benefits to the funds sector specifically. For example, Irish regulated funds are exempt from Irish tax on income and gains derived from their investments and are not subject to any Irish tax on their net asset value. There are no net asset, transfer or capital taxes on the issue, transfer or redemption of units owned by non-Irish resident investors. Depending on the tax status of an investor in their home jurisdiction, an Irish fund can be structured as a tax transparent vehicle, resulting in the retention of tax benefits (e.g. reduced withholding taxes) enjoyed by investors through direct ownership.
With all of the above in mind, it should be no surprise to see Ireland standing increasingly tall in the global funds space. Certainly, at IQ-EQ, it’s a jurisdiction that more and more of our clients and partners are asking for.