Collective investment vehicles
Irish collective investment vehicles which the Central Bank of Ireland authorise and regulate are taxed under the 'gross roll-up' regime.
The investment undertaking is generally exempt from tax on the profits it earns on behalf of its unit holders. Instead, those profits roll up within the investment undertaking until a ‘chargeable event’ occurs. An exit tax is deducted by the investment undertaking when the chargeable event occurs.
Certain unit holders are exempt from the exit tax, subject to a declaration procedure.
There are two distinct parts to the taxation of offshore funds, depending on where the offshore fund is located:
- Offshore funds located in a place which has a double tax agreement. These include:
- European Union (EU)
- European Economic Area (EEA) State
- in an Organisation for Economic Co-operation and Development (OECD) Member State.
See the Offshore Funds Manual for information.
Exchange Traded Funds (ETFs)
An Exchange Traded Fund (ETF) is a type of investment undertaking. As ETF is traded on a stock exchange, exit tax cannot be deducted at source. The tax treatment applicable to income earned from an investment in an ETF depends on where it is domiciled.
Funds managed in Ireland
Section 747G TCA 1997 ensures that:
- A UCITS formed by an EU Member State, other than Ireland, will not be chargeable to tax in Ireland. This is by reason only of having a management company that is authorised under Irish law.
- An AIF formed under the laws of a jurisdiction, other than Ireland, will not be liable to tax. This is by reason only of having a manager that is authorised under Irish law.
It also ensures that:
- Irish resident investors in a ‘relevant UCITS’ will be treated as unit holders in an offshore fund and
- Irish resident investors in a ‘relevant AIF’ will be treated as unit holders in an offshore fund.
Regulated Investment Managers
In specific circumstances the return on investment earned by a regulated investment manager may be seen as trading income. Please refer to Tax and Duty Manual Part 02-01-02 for details on the specific scenarios.
Irish Real Estate Funds (IREFs)
IREFs are collective investment undertakings where 25% or more of the value of the assets are derived from the property.
Next: Common Contractual Funds (CCFs)