A new corporate structure for Irish SICAVs that meets United States check-the-box taxation rules has been given the backing of the Minister for Finance which, in principle, will see the development of legislative proposals.
Government approval was earned as the proposals meet US check-the-box requirements, reduce the administrative costs on funds, and will further develop Ireland’s fund industry promoting employment and business opportunities.
Ken Owens, Chair of the Irish Funds Industry Association (IFIA), said, “This is excellent news and something the IFIA and the Department of Finance have been working on together for some time.
“Last week we met hundreds of American managers on our roadshow in the US and this news is of particular interest to them. This new structure will make Ireland even more attractive to managers all over the globe, but especially in the US.”
A key advantage of the SICAV is the provision of a corporate entity that can elect its classification under the US check-the-box taxation rules.
Investment funds in Ireland structured as corporates are usually incorporated as public limited companies ("plcs") under Part XIII of the Companies Act 1990. The IFIA says that while plcs continue to be “an extremely effective and popular structure”, it believes managers will benefit from the creation of a structure which is designed specifically for investment funds and which is not subject to rules which were designed for other forms of company.
What’s more, says the IFIA, a structure specifically suited to the funds industry will remove the need for compliance with various requirements under Irish company law which have no real purpose where investment vehicles are concerned. This will reduce administration and reduce costs.
The proposed legislation is expected to be enacted at the end of this year, ahead of the Alternative Investment Fund Managers Directive going live in July 2013.
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