www.pwc.ie/assetmanagement
Ireland: A location of real
substance to establish an
Alternative Investment
Fund Manager
Setting up an Alternative
Investment Fund Manager
in Ireland
August 2014
2
Ireland
Table of Contents
Introduction1
Why Ireland? Companies are attracted to Ireland for
a variety of reasons
2
Why Ireland? Ease of doing business
3
Ireland is consistently recognised as one of the
best places in the world to do business. 4
Ireland: The Centre of Excellence for Alternative Investments
5
Ireland: Voted Favourite Fund Domicile
6
What can my Irish AIFM do?
7
Establishing an AIFM in Ireland
8
Central Bank of Ireland’s requirements for authorising an AIFM
9
How PwC can help?
10
Ireland… take a closer look
11
Who should I contact?
12
Establishing an AIFM in Ireland
3
Introduction
The Alternative Investment Fund Managers Directive (“AIFMD”) was transposed into Irish Law by
Statutory Instrument (S.I.257) on July 2013. The AIFMD introduced a new passport system for the
managing and marketing of alternative investment funds (“AIF”). The “AIFMD Passport” gives
Alternative Investment Fund managers (AIFMs) established in one country in the European Union
(“EU”) the ability to market EU-AIFs to professional investors across the EU. However, the AIFMD
introduces different rules for non-EU AIFMs and non-EU AIFs which mean that the passport will
not be available for non-EU AIFs and non-EU AIFMs until 2015 at the earliest.
22 July 2014, marked the end of the 1 year transition period provided under the AIFMD. The
transition period allowed certain AIFMs a year to seek the necessary authorisations under the
AIFMD. AIFMD also allowed certain Non-European Economic Area (EEA) AIFMs to market AIFs in
Europe without being subject to the requirements of the AIFMD.
The Scene in Ireland
Three different AIFM models have emerged in Ireland over the period leading up to the end of the transition period.
1
Establish a stand-alone
Alternative Investment
Fund Management entity
in Ireland;
2
Appoint a third party
Alternative Investment
Fund Manager; or
3
Seek authorisation for the
Alternative Investment Fund
to become the AIFM, i.e. the
so-called self-managed
AIFM model.
Every particular structure should be considered based on the individual facts and circumstances. This paper looks at
why Ireland might be a good location for the establishment of an AIFM, what’s involved in setting one up and how PwC
can help.
As at 22 July 2014 there were 64 AIFMs authorised by the Central Bank of Ireland. Of these, 50 were externally
managed AIFMs established as either stand-alone AIFMs or third party AIFMs offering themselves as AIFMs for third
party AIFs.
1
Ireland
Why Ireland?
Companies are attracted to Ireland
for a variety of reasons:
With over 1,150 international companies here, Ireland is one of the
most favoured global locations for investment. In recent years, Ireland
has seen a broadening of its investor base with a growing number of
global companies now operating in Ireland.
Despite prolonged economic challenges within the Eurozone, Ireland
has gained increasing international recognition for its export-led
recovery. This publication is designed to introduce you to the potential
benefits Ireland can bring as the location for your AIFM in Europe.
Talent
Our predominantly young work force is capable,
adaptable, mobile and committed to achievement.
The median population age is 35, the lowest in the
EU.
Education
Ireland leads in the skills race with a higher
percentage of 3rd level Graduates than the UK, US
and OECD averages. According to an Economist
Intelligence Unit (EIU) benchmarking
competitiveness report, Dublin ranks as the best
city in the world for human capital.
Track Record
Over 1,150 multinational companies have already
chosen Ireland as their strategic European base.
European Market
Companies located in Ireland benefit from
barrier-free access to over 500 million consumers
in Europe, one of the largest markets in the world
(c22% of global GDP).
Tax
Ireland is committed to maintaining an open,
transparent, stable and competitive tax regime.
Ireland’s corporate tax rate is 12.5%. Irish tax
legislation is set to be “AIFMD ready” for Irish
AIFM’s managing non-Irish resident AIF’s in the
context of permanent establishment and indirect
tax issues. Ireland also has a competitive tax relief
regime for employees seconded to Ireland.
English Speaking
English is the universal spoken language. The
Country is a highly developed multi-cultural
community and a leading member of the
Eurozone.
Technology
Significant State investment in R&D helps ensure
Ireland stays at the forefront of technological
innovation.
Establishing an AIFM in Ireland
2
Why Ireland?
Ease of Doing Business
Doing business in Ireland couldn’t be simpler and getting started is
both quick and straightforward. The following is a brief
introduction to some of the key things you need to consider when
starting a business in Ireland.
Corporate registrations.
Once the optimal corporate structure for the Irish investment is
decided, the appropriate legal form for the Irish entity can be
chosen. The most commonly used options are:
• Place of business
• Branch
• Private limited company (minimum share capital normally €2)
Once the entity is registered, registration for all taxes (corporate,
payroll taxes and VAT), can be done by submitting one form to the
Irish Tax Authorities.
Hiring people
One of the most critical factors for any company investing in a
new country is the ability to recruit employees with the right
education, skills and experience. Ireland is renowned for the
breadth and depth of its people talent and for attracting fresh
talent from the EU and internationally.
Mobile labour:
As Ireland is a member of the EU there is free movement of labour
within the EEA. This provides access to multiple languages and
other skills, whilst retaining the benefits of an Irish base.
Employees from countries outside the EEA require an
employment permit and, in some cases, a visa.
3
Ireland
Visa and immigration:
The Irish Immigrant Investor Programme was introduced in 2012
in order to stimulate investment into Ireland from successful
business professionals. It enables non-EEA nationals to apply for
residency in Ireland if they commit to an approved investment in
the country. Typically they receive residency for five years, which
is reviewable after two years. Also, through the Naturalisation
programme, a foreign national living in Ireland may apply to
become an Irish citizen (Irish passport) if they have satisfied the 5
year residency requirements (terms and conditions apply).
Payroll taxes:
The only payroll tax borne by employers in Ireland is Pay Related
Social Insurance (PRSI) – maximum rate is 10.75%. This must be
returned to the Irish Tax Authorities along with employee
withholding taxes as they fall due. Full details of employer
obligations, payroll taxes and personal tax rates are provided in
our Tax Facts publication. www.pwc.ie/tax-facts
Ireland is consistently
recognised as one of the best
places in the world to do
business
st
1
in the World for countries
for business in Forbes
rankings
1st
globally for
education1
1st
in the World in IBM’s
foreign direct investment
(FDI) value indicator
1
in the World for inward
investment by quality
and value
st
1st
for hedge fund
administration4
1st
globally for
availability of skilled
labour2
1st
for ease of doing
business amongst EU
International Fund
Centres5
1
globally for flexibility
and adaptability of
workforce2
1st
in EU for investor
protection3
st
(1) Global Innovation Index 2012
(2) 2014 IMD World Competitiveness Year Book
(3) Doing Business Report 2014
(4) Irish Funds Industry Association
(5) Doing Business 2014
Ireland has currently the
freest economy in the
whole of the euro-zone
Dublin ranked 1st for
human capital
(Source: The Economist Intelligence Unit
Limited Survey 2013)
(Source: The Heritage Foundation 2014 Index
of Economic Freedom)
71% of global investment
managers surveyed chose Ireland
as a Top 3 European domicile.
This is over 25% more than its
closest rivals.
(Source: Economist Intelligence Unit Survey
on Choosing a European Fund Domicile,
2014 of Economic Freedom)
Establishing
Establishing
an AIFM in
anIreland
AIFM in Ireland
44
Ireland:
The Centre of Excellence for
Alternative Investments
Ireland has a worldwide reputation as a significant centre for international
banking, funds and insurance. The country’s international financial services
sector has witnessed dramatic growth and phenomenal success in recent years.
Half of the World’s top 50 Banks have operations in Ireland. Over 500
International financial Services companies operate within Dublin’s International
Financial Services Centre (“IFSC”) and a number also have operations in other
locations around the country.
The Funds
Industry
in Ireland
Ireland was the first jurisdiction in Europe to offer a
regulated Alternative Investment Fund structure and
offers a range of ready-made solutions to managers
seeking to implement AIFMD. Today, over 40% of
global hedge fund assets are serviced in Ireland,
making it the largest hedge fund administration
centre in the world and Europe’s leading hedge fund
domicile.
Ireland’s track record as a regulated and
internationally recognised jurisdiction, with
unrivalled expertise and experience in alternative
investments, offers a compelling set of advantages for
fund managers considering where to seek
authorisation as an Alternative Investment Fund
Manager. Ireland is the global leader for the servicing
of AIFs. 41% of global and 63% of European hedge
fund assets are serviced in Ireland.
Ireland has unrivalled expertise in servicing complex
funds. Irish service providers have developed market
driven alternative investment product solutions
tailored to the needs of Alternative Investment Fund
Managers. The regulatory system has a huge amount
of experience in working with the alternative
investment funds industry.
Promoters from all over the world use
Ireland as a Gateway to Europe
5
Ireland
Ireland was the first European jurisdiction to be
“AIFMD ready”, the first European jurisdiction to
accept applications for authorisation as an AIFM and
the first European jurisdiction to grant an AIFM
authorisation. Ireland stands ready to be your
gateway to Europe and the world.
Ireland:
Voted Favorite Fund Domicile
In a recently conducted survey of 200 global asset managers, which
was conducted independently by the Economist Intelligence Unit on
behalf of the Irish law firm, Matheson, respondents were asked for
their views on the leading European investment fund domiciles, and
the most important factors which guide a domicile decision. The
survey also explored their reaction to the application of the AIFMD,
and the scale of expected growth in UCITS and alternative
investment funds in the coming years.
Best overall
If you were to consider starting afresh with
your fund ranges, which of the following
European domiciles do you think offers the
best regulatory conditions, legal and tax
framework and business conditions?
Please select the top three
80
71%
70
60
50
45% 45%
71%
of 200 global asset managers
would choose Ireland as one of
their top-3 European domiciles.
73%
of managers ranked Ireland as a
top-3 jurisdiction in terms of its
legal and tax framework for
investment funds.
72%
40
of managers ranked Ireland as a
top-3 domicile as regards
business conditions for
domiciling funds.
33%
30
27%
23%
20
20%
14%
10
8%
6%
67%
of respondents ranked Ireland
as a top-3 domicile as regards
regulatory conditions.
76%
of US managers rank Ireland as
a top-3 domicile in terms of the
best regulatory conditions for
domiciling funds in Europe.
6%
0
Note: Percentages in the composite are averages of responses to questions below.
Source: The Economist Intelligence Unit.
The full survey report is available from
www.matheson.com/eiu-report
Establishing an AIFM in Ireland
6
What can my Irish AIFM do?
1
3
5
Manage EU domiciled AIFs (funds other than
UCITS) and market those AIFs to
Professional Investors in the EU using AIFMD
marketing passport.
Distribute non-EU AIFs in the EU under each
member states’ private placement regimes
until 2018* subject to certain conditions.
Manage Undertakings for Collective
Investments in Transferable Securities
(“UCITS”) in any EU member state.
2
4
6
Non-core services comprising
7
a. Investment advice;
b. Safekeeping and administration in
relation to shares or units of collective
investment undertakings; and
c. Reception and transmission of orders in
relation to financial instruments.
8
Manage non-EU domiciled AIFs which are
not marketed in the EU subject to certain
conditions.
Subject to a favourable opinion from the
European Securities and Markets Authority
(ESMA) the AIFM may market non-EU AIFs in
the EU under the European Passport from
2015* (subject to certain conditions).
Provide individual portfolio management
services.
Additionally the AIFM may perform the
following additional functions in the course
of the collective management of an AIF:
a. Administration:
b. Marketing;
c. Activities related to the assets of
alternative investment funds.
* Subject to ESMA’s prior analysis and approval
7
Ireland
Establishing an
AIFM in Ireland
Incorporate the
Company
and establish
registered address
Appoint legal
advisors and
auditors
Appoint the
Directors and
officers of the
Company
Apply for
authorisation
to the Central
Bank of Ireland
Establishing an AIFM in Ireland
8
Central Bank of Ireland’s
requirements for authorising
an AIFM
1
Completion of AIFM
application form
3
Details of minimum capital and
financial projections for 3 years
5
Information on the AIFM’s
remuneration policies and
practices
7
Confirmation of capital with
supporting bank statement
9
Ireland
2
Submission of Programme of Activity (‘PoA’).
The PoA should address how the investment
management functions will be performed by
the AIFM, what individuals are responsible and
how decisions are made and approved.
4
Details of the ownership
structure of the AIFM.
6
Organisation chart and details of
board of directors
8
Statement of responsibility from
the board of directors
How PwC can help?
PwC has in-depth experience working closely with many top global
clients who have chosen to invest and establish a presence in Ireland.
We have been there to support our clients with tailored solutions
from initial set-up considerations through to building a long term
presence in Ireland.
We can help guide you along each step of the process in establishing
your presence in Ireland. We have outlined below how we can help:
Designing and implementing the
optimal corporate structure
(incl corporate and indirect taxes)
Structuring of
executive and
employee reward
and retention
structures
Development of HR
policies and assistance
with international
mobility
Executive
recruitment
services
Assistance in
selection of IT
systems
PwC
Company
formation
services
Annual financial
statement audit
Development of policies
and processes and
production of the
“Programme of Activity
Document”
Transfer
Pricing Services
Assistance with Central
Bank of application
process and financial
projections
Tax compliance services
(Corporate tax, income/
employee taxes and VAT)
Establishing an AIFM in Ireland
10
Ireland…
take a closer look
Government system: Republic, parliamentary
democracy and a stable political environment.
Ireland is a member of the European Union (EU)
and is also a member of most major international
organisations. It retains a neutral stance on military
matters.
Education: 81% of Irish students complete secondlevel education and approximately 60% go on to
higher education. This continued commitment and
investment in education has helped to develop a
knowledgeable and innovative workforce in Ireland.
Music: Ireland has a vibrant and international
music scene with many successful music artists
including Thin Lizzy, The Pogues, Rory Gallagher,
Bob Geldof, Riverdance, Van Morrison, U2 and The
Cranberries.
Climate: Average daily temperatures
of 14-16C in summer 4-7C in winter
Film: In the past 20 years, the Irish film industry
has grown enormously, producing a new generation
of film directors and writers including Ken Loach,
Jim Sheridan and Neil Jordan and actors such as
Colin Farrell, Gabriel Byrne, Brendan Gleeson, and
Saoirse Ronan. Ireland has also played host to a
number of international productions including
Braveheart, Saving Private Ryan and Harry Potter.
Infrastructure: Ireland has invested heavily in a
well-developed infrastructure with world class
support services – from banking and trade finance
to efficient transport logistics and roads. This
investment has led to Ireland having some of the
safest roads in Europe and was recently recognised
for the EU Road Safety award in 2010.
Time difference: GMT + 0.00 (Daylight
saving +1hr). Ireland is 5 hours ahead of
US east coast and 8 hours behind
Beijing and Hong Kong)
Culture: Ireland is a diverse and multi-cultured
society. Extensive immigration has helped Ireland
become a melting pot for skills, experience and
creativity. In PwC Ireland alone there are
approximately 40 different nationalities and nearly
10% of our staff are foreign nationals.
Literature: For such a small country, Ireland has
contributed considerably to the world of poetry and
literature, from James Joyce and Samuel Beckett to
Bram Stoker and Oscar Wilde, Irish talent has made
a significant contribution to classical and modern
writing.
Location: The island of Ireland is
situated in the north west of
Europe and lies approximately
20km west of Great Britain
35%
11
Ireland
Sport: Sport in Ireland is extremely popular.
Ireland has a number of world class golfers
including Padraig Harrington, Darren Clarke, Rory
McIlroy and Graeme McDowell and competes well
in rugby and soccer on a world and European stage.
Travel: Over 1800 flights a week leave from the 3
main airports to the UK, Europe, US, Canada and
Middle East.
Who should I contact?
We would be delighted to meet with you to discuss
how we can effectively manage the process of using
Ireland for your AIFM.
Contact details for our team of experts dedicated to
helping you and covering our main practice areas
are provided below.
Just give us a call.
PwC Contacts:
Ken Owens
+353 1 792 8542
[email protected]
Dervla McCormack
+353 1 792 8520
[email protected]
Marie Coady
+353 1 792 6810
[email protected]
Pat Convery
+353 1 792 8687
[email protected]
Sarah Murphy
+353 1 792 8890
[email protected]
Fiona Lehane
+353 1 792 8657
[email protected]
Andrew O’Callaghan
+353 1 792 6247
[email protected]
For more information further details can be obtained on the PwC website:
www.pwc.ie/assetmanagement
Establishing an AIFM in Ireland
12
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