Finance Bill 2012 - Investment Management

Author:Mr Sean Murray
Profession:Dillon Eustace


As an international fund domicile, Ireland ranks amongst the most flexible and advantageous in the onshore world. Despite the difficult current economic climate the Irish Funds Industry continues to go from strength to strength with the assets under management in Ireland of Irish domiciled investment funds having surpassed the Euro €1 trillion mark in 2011 and total assets under administration in Ireland of Euro €1.875 trillion.

The longstanding Government commitment and support to the industry (together with the input and co-operation from various stakeholders) has played a crucial role in the development and expansion of the industry. In this regard the reaffirmed commitment of the new Government to the industry, with particular emphasis on future employment creation in the industry, is extremely significant for both the continued growth and further success of the industry. The Minister for Finance made reference in his Budget speech in December 2011 to the importance of the financial services industry stating it was "one of the great export success stories of the last 20 years" and his intention to introduce changes to enhance the competitive position of the Financial Services industry including the investment management industry. Consequently, it is no surprise that the Finance Bill 2012 as initiated (the "Bill") contains a number of specific and general measures to support and enhance Ireland's reputation as a leading location for investment management.

Investment Management

One of the objectives of the UCITS IV Directive, which came into effect on 1 July 2011, is to enhance the ability of fund managers to rationalise their products and make them more cost effective. To this end, the Directive provides for the cross-border merger of investment funds and for new 'master-feeder' structures. Ireland was one of the first countries to adopt this new Directive and changes were introduced in Finance Act 2010 in order to give the Irish industry a 'first-mover' advantage.

Outbound Migration

Keeping with that "first mover" theme, the Bill contains new measures which provide that mergers (both inbound and outbound) involving Irish investment undertakings ("Irish funds") and foreign funds (located in an EU Member State, EEA or OECD country with which Ireland has entered into a double tax agreement) ("offshore funds") will not give rise to a charge to tax in respect of Irish resident investors. Instead the tax is deferred until such...

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