Ronan Reilly, Managing Director – Ireland, shares his views on Ireland being a fund domicile of choice.
Ronan was recently quoted in Real Deals on his expert opinion. Real Deals publishes the most important European private equity news, alongside deep analysis and comprehensive deal coverage. You can read the article here.
Why is Ireland fast becoming a fund domicile of choice?
Over 900 global managers have asset structures and operations in Ireland with 17 of the top 20 asset managers choosing to domicile in the jurisdiction, amounting to almost $5.2 trillion in assets under management. The major benefit of Ireland as a fund domicile of choice is the full funds product coverage across UCITS, AIFs, ETFs and private equity. It also offers full access and passporting capabilities to the EU, which is essential for fund distribution. Additionally, the country has an excellent network of double taxation treaties, including those with the US and EU countries, and offers full compliance with OECD tax guidelines.
The revised Investment Limited Partnership (ILP) Act means that Ireland can now offer alternative investment managers a structure that their investor based is familiar with. Many private fund managers have been reluctant to move away from the Limited Partnership. Recent changes made to the Irish Act means the new ILP offers a workable solution for private equity, real estate, infrastructure and debt managers whose preference has been for a Limited Partnership over domiciliation of the fund.
What are the benefits for funds choosing to administer in the country?
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. Ireland offers a regulated funds environment with scalable umbrella fund solutions. The Irish Central Bank offers a fast-track fund launch platform for alternative investment funds and the new ILP Act will facilitate greater access for private equity fund structures.
There is also a very large talent pool of professionals available in Ireland which strengthens its appeal when compared with other jurisdictions that struggle with finding qualified professionals.
Are outside factors such as Brexit leading to this uptick in interest?
Yes, as a direct result of Brexit the UK has effectively become a ‘third country’ which has an impact on the sales and distribution of funds into mainland Europe. Other issues include the benchmark interest rate (LIBOR) changes which will cause an impact in due course, as well as GDPR, data sharing and data access. These are just some of the issues forcing UK-based asset managers and businesses to consider the re-domiciliation of fund structures to Ireland.
UK-based fund managers wanting to be in the EU or needing an EU series of authorisation to continue to conduct business and provide investment services and solutions to their clients are looking at alternative jurisdictions. With Ireland being in close proximity to the UK, easy access to the US, and being an English-speaking jurisdiction with a similar Common Law regime, it is a relatively straight-forward decision to choose Ireland. This is further supported by a recent statement from the Institute of Banking (IOB) who stated that Brexit has led to new entrants into the Irish market, particularly new fund management companies. By comparison Luxembourg operates under Civil Law, does not have English as a first language, is not in close proximity to the UK and does not offer the same level of beneficial tax exemptions as Ireland.
If you have any questions in relation to this article please contact Ronan directly.