Prior to the enactment of the Finance Act 2010, Irish regulated funds were required to deduct exit tax when making a payment to an investor unless the funds were in possession of a declaration by the investor to the effect that the investor is either not resident or ordinarily resident in Ireland for tax purposes (non-resident declarations or "NRDs") or is an exempt Irish investor. However as the vast majority of Irish domiciled funds in the international funds sector are distributed solely to non-Irish residents, it was considered that those requirements presented a disproportionate administrative burden on industry. Consequently the Finance Act 2010 introduced new measures that permit the above exemption in respect of non-resident investors to apply where appropriate equivalent measures are put in place by the fund to ensure that the investor is not resident in Ireland.
As the requirement for Irish funds to include the NRD was seen as administratively burdensome, the application and introduction of the waiver is a welcome development and follows extensive engagement with the Department of Finance and Revenue Commissioners by the Irish Funds Industry Association Tax Working Group (of which David Lawless and Sean Murray are both members) and Transfer Agency Committee. Appropriate Equivalent Measures The Revenue Commissioners have now provided details of how to apply for the waiver and the relevant "equivalent measures" which are attached for your attention.
New & Existing Funds – Customary Measures
Under the "equivalent measures" a fund seeking the non-resident declaration waiver, while acknowledging that a fund may not prohibit Irish residents from subscribing, would undertake not to actively promote units/shares for sale in Ireland. If the fund were to receive an application from an investor who provides an Irish address or bank account for any purpose, the fund would be required to treat that investor as Irish resident for tax purposes unless the investor provides a signed non-resident declaration. Each fund applying the waiver must also include wording in the terms and conditions of its application form outlining the obligation of each investor to notify the fund if they become Irish resident. The fund would also agree to comply with all its obligations in accordance with the provisions and practices of Irish tax law, including its obligations in respect of identifying Irish resident investors.
Set out in the Appendix are...