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Table
of Statutes
This
is a non-exhaustive list of some of the main Irish statutes
affecting low-tax status and non-resident business. The statutes
are listed in alphabetical order – click on the statute
for a fuller description of the statute or the legal regime
it forms part of.
Capital Gains Tax Act 1975
Central Bank Acts 1942 to 1997
Central Bank Act 1989
Central Bank and Financial Services Authority
of Ireland Act 2003
Central Bank and Financial Services Authority
of Ireland Act 2004
Companies Acts 1963 to 1998
Companies (Amendment) (no.2) Act 1999
E-Commerce Bill 1999
EU Second Banking Directive 89/646/EEC
European Communities (Life Assurance) Framework Regulations
1994
European Communities (Non-Life Assurance) Framework Regulations
1994
Film Board Act 1980
Finance Act 1980
Finance Act 1996
Finance Act 1999
Investment Limited Partnerships
Act 1994
Limited Partnership Act 1907
Partnership Act 1890 (UK)
Stamp Act 1891 (UK)
Statutory Instrument No. 78 1989
Stock Exchange Act 1995
Taxes Consolidation Act 1997
Unit Trusts Act 1990
Completing
the reform of Ireland’s financial regulatory system as
recommended in the 1999 McDowell report, the Central Bank
and Financial Services Authority of Ireland Act 2003 was passed.
Another
Act had established the Irish Financial Services Regulatory
Authority earlier in 2003, and the new bill gave the Authority
a wide mandate to oversee the financial services sector, including
the protection of consumers.
The
bill provided for:
-
A statutory Financial Services Ombudsman to deal with
complaints against financial institutions;
-
Consumer and Industry Consultative Panels to advise the
Regulatory Authority;
-
New reporting and auditing obligations for financial institutions
as recommended in the Report of the Review Group on Auditing;
-
Power for the Regulatory Authority to impose sanctions
directly on financial institutions for failure to comply
with regulatory requirements, subject to a right of appeal
to the Irish Financial Services Appeals Tribunal;
-
A right of appeal to the Appeals Tribunal in relation
to certain supervisory decisions of the Authority;
-
New regulatory requirements for money transmission and
bureau de change businesses to combat money-laundering
and the financing of terrorism; and
- Miscellaneous
other amendments to financial services legislation
The
Central Bank and Financial Services Authority of Ireland Act
2004 Act created a statutory financial services ombudsman
for consumers. Consultative consumer and industry panels have
also been appointed where matters of policy and practice can
be discussed. In addition, this legislation created new enforcement
powers for the Financial Regulator including fining and public
censure powers.
In
September, 2004, the Department of Finance promoted further
legislation intended to complement the Central Bank and Financial
Services Authority of Ireland Acts 2003 and 2004, which had
established the new regulatory structure for the financial
services sector.
Among the goals of the legislation were to:
- Bring
together in a single, modern legal text all of the primary
legislation governing the regulation of the financial
services sector (apart from the legislation related to
company, tax etc issues).
- Provide
a legal framework for achieving the Government’s consumer
protection and financial stability objectives in a way
that does not impose a disproportionate burden on regulated
entities
- Facilitate
the international competitiveness of the financial services
sector
- Conform
to the principles set out in the Government’s Regulating
Better White Paper (Necessity, Effectiveness, Proportionality,
Transparency, Accountability, Consistency)
- Reflect,
in so far as possible, the single regulatory structure
which has been put in place with the establishment of
the Irish Financial Services Regulatory Authority and
the Financial Regulator’s principles-based approach to
regulation
-
Achieve a balance between the high-level principles appropriate
to primary legislation and the more detailed requirements
that should be laid down by the Financial Regulator using
its statutory powers
- Comply
with the State’s obligations under EU law.
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Insurance Law
(Captives)
Since
2003, insurance business in Ireland (including captive insurance)
is regulated by the Financial Services Regulatory Authority.
Following the 1994 implementation of the EU Insurance Framework
Directives through the European Communities (Life Assurance)
Framework Regulations 1994 and the European Communities (Non-Life
Assurance) Regulations 1994, there is a 'single passport'
regime in effect for EU insurance companies, and they can
commence business in Ireland, as elsewhere, subject to a notification
procedure and the annual filing of accounts with the Registrar
of Companies. The EU legislation lies alongside pre-existing
Irish insurance legislation, and the two need to be read together
to construct the regulatory regime for Irish insurance companies;
this task is not attempted here.
The
captive insurance sector in Ireland took root in the International
Financial Services Centre (IFSC) in Dublin, where substantial
tax advantages have traditionally been available to companies
who obtained certification from the Minister for Finance.
From 2003 the 10% IFSC regime was supplanted by the 12.5%
general corporation tax rate.
The
minimum paid-up capital required for a captive insurer is
EUR635,000, and the captive must conform with the normal body
of EU and Irish insurance legislation, including solvency
ratios.
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Banking
Law
The
previously mentioned Financial Services Regulatory Authority
regulates the banking industry under the Central
Bank and Financial Services Authority of Ireland Acts 2003
and 2004. Banks need licences from the
IFSRA, unless they are already authorised in an EU member
state under the Second Banking Directive 89/646/EEC, in which
case they have to comply with certain administrative and information
requirements. A non-EU bank will need to have an Irish subsidiary
in order to apply for a license.
As
from 2003, the Irish Financial Services Regulatory Authority
took over bank regulation from the Central Bank, although
the change was more apparent than real, since the new Regulator
brought together many of the responsibilities previously held
by the Central Bank (which continues to form a part of the
Authority), the Department of Enterprise, Trade and Employment,
the Office of the Director of Consumer Affairs and the Registrar
of Friendly Societies.
In
practice, most banks chose to operate out of the International
Financial Services Centre because of the substantial tax advantages
that were available; however these depended on the issue of
a certificate by the Minister for Finance. The Central Bank's
guidelines for issue of a license were as follows:
- The applicant
has an acceptable legal form;
- The corporate
structure of the group of which the applicant is part,
or its relationship with other undertakings under common
control, is clear and transparent and is not such as may
result in the bank being unable to effectively exercise
its supervisory responsibilities;
- The applicant
has clearly-defined and adequately-researched objectives
and proposed operations which are consistent with the
safety of depositors' funds, prudent banking practices
and fair trading in banking;
- The applicant
will be independent of dominant personal and commercial
interest;
- There will
be cohesion, continuity and consistency in the manner
in which the business of the credit institution is directed
by its owners;
- The beneficial
ownership of the credit institution is such as will ensure
a capacity to provide such new capital for the credit
institution as may be required in future;
- There is
a willingness and a capacity on the part of the credit
institution to comply with the Bank's licensing and provision
requirements on a continuous basis
New applications in 1999 (the last year for them) were limited
under the Irish Government's agreement with the EU and the
10% tax rate applied only until the end of 2002. From the
beginning of 2003 the EU-agreed rate of 12.5% applied generally
to Irish companies.
The
Central Bank applies various other reporting and prudential
rules to all banks, although these are considerably moderated
as regards EU banks qualifying under the Second Banking Directive.
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Investment
Funds Law (and Stock Exchange)
Until
2003, the Central Bank of Ireland supervised investment funds
under the following laws (and its own regulations):
- Statutory
Instrument No. 78 1989 (UCITS Regulations);
- Companies
Act 1990;
- Unit Trusts
Act 1990;
- Investment
Limited Partnerships Act 1994.
Since
2003, the The
Financial Services Regulatory Authority regulates the investment
fund industry under the Central Bank and Financial
Services Authority of Ireland Acts 2003 and 2004.
Investment
funds can take various forms; the most commonly used are investment
companies, unit trusts, limited partnerships, or limited duration
companies (see Forms of Company for basic information on formation,
etc).
Funds
of funds are permitted except for UCITS vehicles, but must
not place more than 20% of net assets in the units of any
one other scheme, which must itself offer a level of protection
equivalent to that available in Ireland, and must itself not
invest in units of other funds of funds; umbrella funds are
permitted for all types of investment fund. These rules are
somewhat relaxed for funds which are marketed only to professional
investors, known as 'Qualifying Investors',
who must invest a specified amount, and have a net
worth (or discretionary investments if a corporation) above
a designated amount. Such limited-investor
funds are known as 'QIF' (Qualified Investor Funds).
Funds
need to have a presence in Ireland, depending on their constitution:
UCITS must have their registered office and their head office
in Ireland; funds based on limited partnerships must also
have a registered office and a principal place of business
in Ireland; unit trusts have to use an Irish-incorporated
management company (there are some requirements for its solidity,
and it must have at least two Irish-resident directors); investment
companies with variable capital must be Irish-incorporated.
All
funds must have a trustee (who must be separate from the manager
in the case of a unit trust); the trustee must either be a
bank with an Irish license and a designated minimum share
capital, or must be wholly-owned by such a bank or an equivalently
solid financial institution.
All
funds must publish a prospectus, which must be approved by
the Central Bank. Annual and half-yearly reports must be sent
to shareholders and to the Central Bank. Shareholders' meetings
must be held in Ireland; and there must be regular directors'
meetings, which should preferably be in Ireland.
The
Irish Stock Exchange: Listing of Funds
More
than 4,200 funds and sub-funds are listed on the Irish Stock
Exchange (ISE) (as at November 2006), of which about half
are domiciled in Ireland, mostly in the International Financial
Services Centre in Dublin (see Offshore
Legal and Tax Regimes). The recent success of the ISE
in attracting funds is partly due to its flexible and rapid
procedures; it has a specialised department to deal with the
listing of offshore funds.
Listing
does not depend on the underlying form of a fund; both open-ended
and closed-ended funds are admitted, and they can be structured
as investment companies, unit trusts, limited partnerships
or limited duration companies. Listing rules accommodate equity,
bond, derivative, venture capital and property funds; funds
issuing debt securities may be listed subject to a number
of prudential conditions.
The
ISE will list funds for professional investors (meaning a
minimum initial investment from any domicile; funds for retail
investors must be domiciled in a jurisdiction the ISE considers
'regulated'; currently that means EU member states, Guernsey,
Jersey, the Isle of Man, Hong Kong or Bermuda.
The
listing process takes approximately four to six weeks. To
list on the Irish Stock Exchange, an EU fund must pay a listing
fee of EUR1,900 plus a similar amount in annual fees. Non-EU
funds must pay EUR1,980 to list.
There
needs to be a sponsoring broker who will handle the listing
process. There are sets of rules governing listing particulars,
directors, investment managers, custodial arrangements. financial
disclosure, investment policies and continuing obligations.
A streamlined listing process was recently introduced with
the co-operation of the Central Bank whereby new open-ended
funds which combine their offering documents and listing particulars
are exempted from many of the procedural steps and requirements
of the usual process.
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