With Brexit entering the final six month period before the March 2019 deadline, Maples and Calder in conjunction with AIMA discuss the key legal, regulatory and tax trends from an Irish perspective.
On 9 October 2018, HM Treasury published draft Statutory Instruments relating to UCITS and AIFs which are intended to come into effect should a no deal Brexit arise. The Collective Investment Schemes (Amendment) (EU Exit) Regulations 2018 will amend retained EU law relating to UCITS and The Alternative Investment Fund Management (Amendment) (EU Exit) Regulations 2018 will amend retained EU law in the context of AIFMD. For the purposes of this update, we have focused on the Statutory Instruments insofar as they relate to the marketing of UCITS and AIFs in the UK.
Download our Brexit Guide
On 29 March 2017, the UK government formally notified the European Council of the UK's intention to leave the EU, in accordance with the procedures under Article 50 of the Treaty of the European Union.
To find out more about how we can help you with your Brexit planning, download our dedicated Brexit Guide.
Our Brexit Team
The Maples group has assembled a multi-disciplinary team of experts to work with affected clients and their international advisers on the key legal, regulatory and tax issues, arising from Brexit.
We offer a range of these services from each of our global offices. As we anticipate a substantial impact on EU cross-border activity our multi-disciplinary team can work alongside your existing EU law advisers.
Our Irish team has a long track record in advising global clients on all aspects of carrying out business in the EU from Ireland. In a post-Brexit environment this experience is now being harnessed for contingency planning or for immediate restructuring. Our expertise can assist clients in planning their response to Brexit in the next phase of their EU related business. We can also assist non-EU clients looking to access alternative or additional business centres in the EU as their Brexit planning requires.
In addition, MaplesFS can assist with the establishment and operation of new entities in Ireland by providing management company services and specialised fiduciary and fund administration services.
Additional advice is provided by our regulatory team on the Irish interpretation of EU requirements including Solvency II, capital adequacy, remuneration rules and the EU Commission's Capital Markets Union initiative.
Our Irish experts work closely with our European and global offices to ensure that your business and transactions are structured for optimal efficiency, flexibility and performance.
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A Collaborative Approach
Many of our global clients (in particular, UK domiciled clients) are developing their plans for carrying on business in the EU as a result of Brexit.
While there may be long term benefits and new opportunities arising from the UK's decision to leave the EU, in the short-to-medium term many clients are facing important and challenging decisions. These relate to future uncertainty on EU rights and how to maintain (or if needed enhance) business models structured on existing European regulations and directives.
Since the UK referendum on EU membership we have been working, on a collaborative basis, with our clients and their international advisers to address a wide range of complex legal and regulatory Brexit-related issues. Recent examples include working with and alongside UK legal, regulatory and tax advisers to help global investment banks, financial institutions and investment managers develop their contingency plans or to establish new regulated entities in Ireland.
Timelines for the Implementation of Brexit
The Current Timeframe
March 2017 – December 2017
Advanced and detailed contingency plans should be in place.
Discussions on New Affiliates or Relocations
The Central Bank of Ireland should be approached to discuss the creation of new affiliates or relocations.
Formal Applications Begin
Work to begin on formal applications by Q3 or Q4 2017.
January 2018 - December 2018
Negotiations and "Equivalent" Rights
Watching brief on Brexit negotiations and possibility of "equivalent" rights being granted to UK.
Early Submission to the Local Regulator
For clients who are concerned about Brexit negotiations or need certainty on retaining EU permissions and passports, early submission to the local regulator should be made no later than Q1 2018.
January 2019 - March 2019
Authorisation of the new Irish Entity
Authorisation of the new Irish entity should have been granted by the end of Q4 2018.
Live Operation of the Irish Entity
This would leave 3+ months (depending on final negotiations) for live operation of the Irish entity prior to formal Brexit
To assist with Brexit planning, we have assembled a multi-disciplinary team of experts across our global offices to work with affected clients and their international advisers on the key legal, regulatory and tax issues arising.
Our Investment Funds group is independently ranked as the number one legal adviser in Ireland for funds, based on: (a) total number of funds advised; and, (b) number of new funds established.
This market leading position gives us a unique insight into market trends. It also means our funds lawyers have a deep understanding of current laws, regulations and directives to support innovative product development in the area of UCITS, AIFMD, MiFID and across the wider asset management and financial services area. We advise on all aspects of the establishment, structuring, authorisation and on-going distribution of investment funds and their management companies in Ireland. Our fund projects include mutual funds, liquid alternatives, hedge funds, real estate funds, private equity funds, managed account platform structuring and hybrid vehicles.
In a Brexit context, this experience has been an invaluable resource to UK clients looking for advice on the establishment of Irish affiliates and subsidiaries to maintain EU cross-border management and marketing passports.
Our UK and international clients are very familiar with the use of Irish funds (e.g. ICAVs, PLCs, unit trusts, partnerships and CCFs) and the rules of the Central Bank. In many cases we have already set up ‘self-managed funds’ and UCITS management companies or Irish AIFMs. We are seeing increased demand for these entities in Ireland along with a trend towards dual UCITS-AIFMD authorised entities (so-called "SuperManCos") with added MiFID permissions.
We also have experience in setting up stand-alone MiFID entities where the requirements of our clients go beyond the ancillary permissions allowed under UCITS and AIFMD.
Our services encompass the full range of MiFID2 and MiFIR planning, comparing Irish and non-Irish permissions, assisting with Central Bank of Ireland applications and key fact document completion as well as ongoing legal advice on authorisation of the entity.
Our Investment Funds partners are also extremely well represented on various industry bodies, including the Taoiseach's (prime minister's) Funds Committee; the Irish Funds Association and on UK based associations including the Alternative Investment Management Association (AIMA). We regularly engage and meet with the Central Bank to discuss their rules or client proposals, including in relation to their rules for Irish management companies (CP86) and the establishment of regulated entities in Ireland.
Our combination of cutting edge legal expertise and industry engagement allow us to serve our clients' needs and put us at the forefront of Brexit strategy and policy discussions in Ireland.
Commercial Litigation and Dispute Resolution
Our Commercial Litigation & Dispute Resolution group has market-leading experience in advising on, and acting in all manner of domestic and multi-jurisdictional disputes. The management of risk and the fast and effective resolution of disputes is a core part of our approach to litigation and dispute resolution. We focus as much on pre-dispute strategies designed to avoid disputes and mitigate risk as we do on litigation itself.
Ireland, as a common law jurisdiction, offers a neutral venue with an established, independent and reliable judicial system in which to resolve disputes. As an EU Member State, Ireland offers parties the certainties associated with the well-established conventions and regulations applicable to choice of law, jurisdiction, venue and enforcement in litigation within the EU, as well as beyond its borders. Ireland is a signatory of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 and the Washington Convention on the Settlement of Investment Disputes between States and Nationals of other States (ICSID) and has ratified the Washington Convention. Further, the Irish courts have traditionally shown deference to the choice of the contracting parties of arbitration as a means of resolving disputes.
In addition, Ireland's Commercial Division of the High Court has a reputation for resolving complex commercial litigation quickly and effectively.
Our team advises on and has expertise on a range of disciplines including the following:
- banking, financial markets, funds and securities litigation;
- contract disputes;
- commercial litigation;
- shareholder and corporate disputes;
- regulatory disputes and investigations;
- international and domestic arbitration;
- infrastructure and construction projects; and
- litigation associated with insolvency and restructuring processes.
As an international practice, we are used to developing multi-jurisdictional strategies and we work with and have excellent relationships with co-counsel in the leading jurisdictions around the world. We can and do leverage our local expertise with our international experience in delivering effective and cost-efficient solutions for our clients.
Regulatory and Compliance
Our Regulatory & Compliance group provides strategic regulatory advice aimed at pre-empting industry compliance deadlines, adapting to changes in the market or to prepare for regulatory inspections.
Due to the nature of the regulatory environment and the requests of entities relocating to Ireland as a result of Brexit, our team has expanded its existing capability to cater for clients across disciplines, including: investment funds, investment managers, prime brokers, fund service providers, payment institutions, investment banks and credit institutions, insurance (life and non-life) undertakings and credit unions.
Our team has extensive experience in dealing with regulatory and compliance matters in the following areas: application and authorisation, enforcement mitigation, thematic, general and lightning inspections and AML/CTF/FS services.
The team combines a deep understanding of Irish requirements, with in house compliance experience of other jurisdictions including the UK, allowing us to adapt existing compliance frameworks efficiently to an Irish context.
Additional advice is provided on the Irish interpretation of EU requirements, including: Solvency II, EMIR, SFTR, capital adequacy, remuneration rules and other areas stemming from the EU Commission's Capital Markets Union initiative.
Our team works closely with our Investment Funds, Banking and Finance, Corporate and Commercial and other groups to provide a unified regulatory service to clients establishing entities in Ireland.
Banking and Finance
Our Banking & Finance group offers expert advice across the full range of general banking, structured finance and aviation finance sectors.
Our Banking team regularly acts on cross-border financing transactions, particularly those with a funds-based element. Our team has also acted in a broad range of banking regulatory matters, including applications for a banking licence in Ireland, change of control procedures and advice on regulatory capital. We have in-depth knowledge of regulatory systems and culture, having acted both on the regulatory and industry sides in the past. We are also active in advising major players in the alternative financing market.
The Structured Finance team advises on a wide range of capital markets and structured finance products and related issues which involve the use of Irish companies. Common transactions on which the team advises include: CLOs, RMBS and other securitisation structures, fund-linked structured products, repackaging and debt issuance programmes. We also advise on regulatory issues impacting on structured finance vehicles including those in relation to the Prospectus Directive, Market Abuse Regulation, Transparency Directive, AIFMD, EMIR, MiFID and risk retention requirements for securitisations under the Capital Requirements Regulation (including funded originator structures and risk retention financing structures). Many of these structures may be replicated in the UK regulatory framework which will require migration in a post-Brexit environment. Similarly, certain aspects of current structures with UK-based elements or service providers may continue to require EU compliance following Brexit. Our Structured Finance team is highly experienced in all aspects of EU regulatory compliance, which commonly impacts structured finance transactions. Our partners are also heavily involved in the Irish Debt Securities Association ("IDSA"), an industry group which engages proactively with Irish government departments and public bodies in relation to the implementation of regulation and policy which may impact the structured finance industry.
Ireland has long been regarded as a leading jurisdiction for aviation finance and leasing, and our specialised Aviation Finance team across our firm is well positioned to advise on the laws of the Cayman Islands, Ireland and the British Virgin Islands. Although unlikely that aircraft leasing will be affected as much as other financial services industries after Brexit, there are still important considerations for the aircraft leasing industry. As leasing is a non-regulated activity, lessors do not need EU regulatory market access to operate, however, those lessors with leasing platforms in the UK may now look to further develop existing or new lessor bases in Ireland in light of Brexit uncertainties.
In addition to aircraft leasing and finance structure requirements, our Dublin-based team can also assist with regulatory matters should certain airlines consider restructuring operations and look to Ireland as a gateway to ensuring continued access to the EU Single Aviation Market and EU negotiated agreements with third countries (e.g. the EU-US open skies agreement).
Corporate and Commercial
Our leading, full service Corporate & Commercial group represents many international and indigenous clients in relation to their corporate and commercial requirements in an Irish law context. We leverage local knowledge with a global perspective to assist sophisticated clients in establishing green-field operations in Ireland, in acquiring Irish targets or in using Ireland as part of a global corporate structure.
As an open economy with an extensive range of international tax treaties and a pro-business environment, Ireland attracts undertakings from around the world. These businesses see value and opportunity in Ireland's offering and incorporate both trading subsidiaries and group holding companies in the jurisdiction.
Our Corporate & Commercial group in Dublin addresses all aspects of establishing and maintaining Irish companies and Irish commercial and business law matters. The practice provides clients with practical, timely and innovative solutions to handle complex transactions and arrangements. We have advised on some of the largest cross border transactions involving Ireland and routinely advise international businesses who establish in Ireland for the first time.
In the context of Brexit our range of services include:
- company formation and branch establishment;
- mergers and acquisitions;
- securities law and equity capital markets;
- equity financing and shareholder arrangements;
- group re-organisation;
- employment law and employee incentives;
- intellectual property protection, licensing and IP transfers;
- commercial contracts and outsourcing;
- privacy, data and other regulatory matters;
- partnerships and joint ventures; and
- competition law.
Amidst uncertainty as to whether there will be a ‘hard’ or ‘soft’ Brexit, Ireland is particularly attractive to businesses currently based in the UK, seeking a modern open economy with access to the EU.
Ireland has a sophisticated and attractive tax regime providing certainty and clarity to the many international investors and thousands of employees who currently reside here. Leading global companies, financial institutions, alternative investment funds and family offices have all chosen Ireland as a base of operations, as well as a jurisdiction for investment and management vehicles.
Ireland offers a 12.5% corporation tax rate on trading income, over 70 comprehensive double tax treaties, including with the UK, US and China and a clear and transparent VAT regime. As a member of the EU, Ireland retains the benefit and protection of the many EU directives relating to taxation, including the Mergers Directive and the Parent Subsidiary Directive. Ireland is at the forefront of the OECD BEPS project, ensuring that its tax regime is stable, reputable and compliant with international standards.
Ireland's tax system has the key features to be an ideal base for senior foreign executives in multinationals and financial institutions. The Irish rules regarding residence and domicile are similar to, yet far simpler than, many other jurisdictions, including the UK. A non-domiciled Irish tax resident individual is generally subject to tax on income from Irish sources only with non-Irish income only taxed on a remittance basis.
Ireland also offers a number of specific measures designed to facilitate internationally mobile staff including the Special Assignee Relief Programme (SARP), reducing income tax exposure for inbound assignees to Ireland and the Foreign Earnings Deduction (FED) which is relevant to staff who undertake significant activities outside Ireland.
Our Commercial Property group offers advice on all aspects of Irish real estate and construction law. The Irish real estate market has undergone significant restructuring in recent years to become a truly international market. Our team, with its local expertise, has been at the forefront in this transition, advising both domestic and international financial institutions and leading international investors on the acquisition, management and leasing of Irish real estate.
The Commercial Property group works closely with our market leading Investment Funds, Banking and Finance and Tax groups, collaborating efficiently and seamlessly to complete the most complex of real estate transactions within strict deadlines. These services have been in demand for entities establishing operations prior to Brexit and we are seeing increased demand for Irish property and office space as a result of new entities establishing in Ireland post-Brexit.
We have extensive experience advising international private equity and institutional investors on all property law aspects involved in the acquisition and management of Irish real estate assets. The team also specialise in commercial landlord and tenant law and regularly advises blue chip international entities on letting office space in the Dublin market.
We are committed to delivering the highest quality service and advice on:
- acquisition and management of Irish real estate assets;
- commercial landlord and tenant to include in particular office lettings of all sizes;
- investment acquisition and disposals (both commercial and residential projects);
- real estate funds;
- real estate finance; and
- construction law.
Our Employment group advises domestic and international companies and senior executives on all aspects of Irish employment law, including drafting employment contracts and policies; governance procedures for board level senior executives; outsourcings under the transfer of undertakings regulations; disciplinary and grievance procedures; and enforcing post-termination restrictive covenants.
We also specialise in corporate immigration, advising on employment permit applications and appeals. In the context of Brexit, this advice can cover hiring new staff in Ireland, relocation of existing employees or contracting with local secondees. We have represented our clients before the employment tribunals and civil courts in Ireland and have in-house advocacy capabilities.
The Maples group regularly produces client updates in relation to Brexit, serving to notify clients and professional contacts of the latest developments and to outline the impacts on various sectors. These updates are available below and through our news feed, however you may also subscribe to our mailings if you would like to receive these updates as they happen.
- 14 Jul 2016 - International and Irish Tax Update - July 2016
- 30 Jun 2016 - Setting up a Manco in Ireland – Key Considerations
Brexit guide (686 kB)
Central Bank Brexit FAQs (629 kB)
Irish Funds Trends 2012-2016 (1.1 MB)
ESMA Issues Brexit Focused Opinion (132 kB)
Super Manco Brexit Memo (1.3 MB)
Setting up a Manco in Ireland (1.3 MB)
- 16 Mar 2017 - Ireland’s Regulatory & Legal Environment