Why is Ireland so popular for the funds industry?

By Caitlyn Buchanan. 4 April 2017

 

The Irish funds industry has earned an excellent reputation around the globe as a location for strong and efficient regulation, that encourages market and product developments, while protecting the interests of its investors. Ireland has developed as a strong knowledge economy, focused on services and high-tech industries; it is highly dependent on trade and international investment. Ireland has embraced this position and works to maintain a funds industry that is attractive to both national and international investors.

Experience & Expertise

For a quarter of a century Ireland has been a leader of internationally distributed investment funds. Due to its open, transparent and well-regulated environment, Ireland is ideal for International investors and fund managers alike. There are a large range of fund types available, an efficient tax structure, and strong emphasis on investor protection. These factors have been strategically placed for the continued nourishment of the progressive and innovative business culture.
Ireland is a proficient centre for investing, with over 14,000 professionals working exclusively in funds servicing. They offer innovative solutions from traditional ‘long only’ to complex alternative strategies for all fund types enabling investors to optimise their returns with a highly customisable portfolio. Fund types range a variety of services including transfer agency, custody, legal, tax and audit services, stock exchange listing, compliance, consultancy services and fund administration. Fund administration activities are carried out in support of the collective investment scheme, whether the scheme is a traditional mutual fund, a hedge fund, private equity fund, pension fund, unit trust or something in between.

Regulation 

Ireland was the first regulated jurisdiction to implement an investment fund regulatory framework. This has made the industry flexible and adaptive to national regulatory developments as well as larger scale EU regulation. This foresight has resulted in what is arguably the most developed regulatory, product and fund servicing infrastructure in the world. Effectively bringing investors and entrepreneurs together has enabled clients to bring innovative products to market quicker than ever before.
With an unrivalled track record, the Irish funds industry remains a leader for product innovation, actively seeking opportunities and solutions. The strong importance of technology has been recognised, allowing Ireland to stay on top of changing regulatory, reporting and efficiency requirements. The investment industry’s automation rate is an impressive 89.1% resulting in extremely efficient cross-border processing of fund units and shares.

Tax Benefits

Ireland’s tax environment for investment funds is refreshingly efficient, clear and consistent. Income and gains on internationally invested funds are generally exempt from Irish tax. This applies to both resident and non-resident investors. Additionally, there are no withholding taxes on income distributions or redemption payments made from an Irish Fund to a non-Irish resident investor, on the condition that there are no Irish assets held by a fund.
In most situations, foreign investors can retain the tax status of their home jurisdiction. For example, an investor with a tax-exempt pension fund can retain the benefits when invested in an Irish fund that is structured as a tax transparent fund. Ireland also has an extensive network of double taxation treaties with nearly sixty countries, allowing for favourable tax refunds.

UCITS in Ireland

Tax Efficiency Undertakings for Collective Investment in Transferable Securities (UCITS) are investment funds are regulated at a EU level. For UCITS opportunities, the obvious European domicile of choice is Ireland. It is an established UCITS domicile with global reach and are second to none in terms of regulatory, tax, depositary and client servicing. With over 25 years of experience, Ireland continues to lead on UCITS developments. The next round of update to the UCITS are being worked out by the EU and Ireland is always positioned to lead any new policies. When it comes to UCITS practices Ireland’s low corporate tax rate of 12.5% for management companies is most advantageous. 

How to Set-up a Funds Company in Ireland

Fund management companies can be set up as a Private Limited Company by Shares (LTD). All businesses that offer financial services must be registered with the Financial Regulator, the Central Bank of Ireland. The Central Bank regulates more than 10,000 firms in Ireland and abroad. It is this regulatory body’s job to ensure financial stability, market integrity and investor protection.

When it comes to international funds, investing in Ireland is the obvious choice. For more information on any of the information covered in this article, please do not hesitate to contact the experts at Company Bureau on +353 1 6461625 or e-mail formations@companybureau.ie.