Revenue Note for Guidance

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Revenue Note for Guidance

CHAPTER 5

Relevant UCITS

Overview

This Chapter was first inserted into Part 27 by section 31(1)(c), Finance Act 2010 and focused solely on the tax treatment applicable to a relevant UCITS. The Chapter was replaced in its entirety by section 30, Finance Act 2014 and now sets out the tax treatment applicable to —

  • A relevant UCITS (as before); and
  • A relevant AIF (as a consequence of the transposition into Irish law, in mid-2013, of the Alternative Investment Fund Managers Directive).

747G Tax treatment of a relevant UCITS or a relevant AIF

Summary

The provisions of this Chapter originally facilitated the management, from within Ireland, of foreign funds, under the EU management company passport regime provided for under EU Directive 2009/65/EC, which deals with Undertakings for Collective Investment in Transferable Securities (also known as the UCITS IV Directive).

The legislation transposing the UCITS IV Directive into Irish law provides that a UCITS formed under the laws of one Member State may be managed by a management company regulated under the laws of another Member State. This section, in turn, provides that —

  • a UCITS formed under the law of a Member State – other than Ireland – will not be liable to tax in Ireland by reason only of having a management company that is authorised under Irish law; and
  • Irish resident unit holders in a relevant UCITS are to be treated as unit holders in an offshore fund.

Section 30, Finance Act 2014 extends this tax treatment to a non-Irish-resident Alternative Investment Fund (AIF) where such an AIF is managed either by an AIF Manager (AIFM) authorised by the Central Bank, or, through a branch or agency of an AIFM authorised in an EEA state.

Details

(1) Subsection includes the following definitions:—

“AIF” is defined as an alternative investment fund within the meaning of the relevant AIFM Directives;

“AIFM” is defined as alternative investment fund manager;

“alternative investment fund manager” is defined as a person whose regular business is managing one, or more than one, AIF;

“management company” in relation to a relevant UCITS is defined as a management company within the meaning of Directive 2009/65/EC;

“relevant AIF” is defined as an AIF which is formed under the laws of a jurisdiction other than the State and which is not a domestic UCITS;

“relevant AIFM Directives” is defined as Directive 2011/61/EU and any directive amending that directive;

“relevant UCITS Directives” is defined as Directive 2009/65/EC and any amending directives;

“relevant profits” is defined as the profits that would be relevant profits within the meaning of section 739B if the relevant UCITS or the relevant AIF were an investment undertaking as defined in that section;

“relevant UCITS” is defined as an undertaking for collective investment in transferable securities—

  • to which Directive 2009/65/EC applies,
  • that is formed under the laws of a Member State other than Ireland, and is not a domestic UCITS.

(2) A relevant UCITS or a relevant AIF is not chargeable to tax in Ireland in respect of its relevant profits.

(3) An Irish-resident unit holder who invests in a relevant UCITS or a relevant AIF continues to be within the charge to Irish tax on income and gains from investments in such funds and is deemed to be a unit holder in an offshore fund.

Relevant Date: Finance Act 2021