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Press release

Minister Chambers publishes Funds Review Report

The Minister for Finance, Jack Chambers T.D., has today (Tuesday) published the Report of the Funds Sector 2030 (Review).

The terms of reference for the Review were published in April 2023 and a multi-disciplinary team was then established and tasked with completing the Review by the Summer of 2024.

In order to ensure that Ireland maintains its leading position in asset management and funds servicing, the Review team was tasked with an examination Ireland’s funds sector framework to ensure it is up-to-date, taking account of the significant developments in recent years to support the long term growth in the sector here. The Review also fulfils the recommendation from the Commission on Taxation and Welfare which called for:

  • an examination of the taxation regime for funds, life assurance policies and other related investment products, with the goal of simplification and harmonisation where possible;
  • an examination of the regimes for Real Estate Investment Trusts (REITs) the Irish Real Estate Funds (IREFs) and their role in the property sector, including how they support housing policy objectives; and
  • an examination of the use and scope of the Section 110 regime.

Alongside the Review, a history of the funds sector in Ireland has been completed by the Institute of Banking (IOB), and has been published along with the Review.

The Review Team has concluded that Ireland is well placed to grow in the funds and asset management sector, but that the emerging backdrop means that what has worked for Ireland in the past will not necessarily work into the future. The Review Team has developed a set of recommendations to address the most material issues and, critically, to put in place measures that will help us to navigate the further changes that are coming in a controlled way.

Commenting on today’s publication Minister Chambers said:

“The story of the funds industry over the last five years has been one of growth, with 22% growth in direct employment over the last five years, it’s important to recognise where we have been successful. However, it is even more important to understand where we need to move to, to be successful in the future, that was a key task for this Review.”

“The regionalisation of the sector is a key feature of the funds industry here. There are people living in Donegal, Cork, Limerick, Kilkenny and Kerry working in the sector because of firms who have established their Irish operations there.

People no longer have to move to Dublin or abroad to pursue a career in the funds sector. And for those who have worked in funds abroad, gaining experience and expertise, Ireland now offers them attractive careers to return to.”

“The fact that the review was commissioned and undertaken is a sign of the importance we see in the funds and asset management sector.

The review has had a positive impact, leading to a period of deeper thought, not just on today’s priorities, but the future outlook and how the sector interacts with Government, with regulators and with its customers. I would like to thank everyone who responded to the consultation, including many individual taxpayers, and those who engaged in further discussions with the Review Team subsequently.

I would also like to that the Institute of Banking for producing a thorough and engaging history of the sector which I am pleased to publish alongside the Review today.”

ENDS

Note to Editors:

Key recommendations of the Review:

  • Fund Structures: The principal focus of our policy work will be to enhance our leading role in public markets - ETFs and MMFs - and at the same time to undertake targeted measures to enhance our role in private assets, primarily through regulated structures.
  • Retail Investment: The review team has made recommendations to better align the tax on investment funds and life assurance products with that of direct equities by removing deemed disposal and aligning the rate of tax to 33%. These are big changes, which could help many cohorts of society in saving and investing for major life events or for retirement. The roadmap to simplification is not straightforward and could take a few years to implement, if agreed by the next Government. There are recommendations for a mapping of the savings and investment landscape, an annual forum on savings and investment and surveys of retail investors, to better inform the policy work of the Department.
  • The IREF and REIT Regimes: The Review Team has recommended replacing the IREF regime with an entity –level tax to enable greater certainty and stability over the taxation of rental income arising in Ireland for both industry and the authorities. It would also allow consideration of tax fairness between entities using the IREF and those that do not, in its design. If such an entity level tax is introduced it must be stable to allow for long-term investment decisions to be made and the options for such a tax must be carefully considered. No substantive amendments are proposed to the REIT regime. The Review Team has also proposed a review of the tax and regulatory treatment of Exempt Unit Trusts, and their role in the property markets.
  • Structured Finance: the review has not recommended any substantive change to the section 110 regime at the present time, but has made a significant number of recommendations to address potential risk including enhanced transparency.
  • Promotion and Engagement:
  • The review recommends enhancements to the structures used for cooperation between Government and industry including an annual roundtable with the sector, chaired by the Minister for Finance, and greater senior official involvement from the Department of Finance at the funds and asset management steering group.

Funds Sector 2030: A Framework for Open, Resilient & Developing Markets