Taxes Consolidation Act 1997 section 747G

Tax treatment of relevant UCITS

Section 747G provides that a foreign UCITS or alternative investment fund (AIF) managed from Ireland is not liable to Irish tax solely because of that Irish management connection, and treats interests in such funds as material interests in offshore funds.

  • A UCITS formed in another EU Member State, or an AIF formed outside Ireland, is not chargeable to Irish tax on its relevant profits merely because it is managed by an Irish-authorised management company or AIFM (or through an Irish branch of an EEA-authorised AIFM).
  • This provision supports the EU management company passport regime, allowing foreign funds to be managed from Ireland without creating an Irish tax charge on the fund itself.
  • An interest held by an Irish-resident investor in a relevant UCITS or relevant AIF is treated as a material interest in an offshore fund, meaning the investor remains within the charge to Irish tax under the offshore funds regime.
  • The section was extended by Finance Act 2014 to cover alternative investment funds managed by an AIFM authorised by the Central Bank or operating through an Irish branch of an EEA-authorised AIFM.

Example

FundCo is a UCITS formed under Luxembourg law. It appoints MgtCo, a management company authorised by the Central Bank of Ireland under the Irish regulations implementing the UCITS Directives, to manage the fund. Under section 747G, FundCo is not chargeable to Irish tax on its relevant profits merely because MgtCo is authorised in Ireland. However, if Áine, an Irish-resident individual, holds units in FundCo, her interest is treated as a material interest in an offshore fund. She is therefore subject to Irish tax on any income or gains arising from that investment under the offshore funds rules.

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