Irish Investment Fund Tax Registration and Filing Obligations – Are you compliant?
Irish regulated investment funds (“Investment Undertakings”) benefit from Ireland’s very favourable funds tax regime. This regime effectively provides that no Irish tax is levied on the profits or gains of Investment Undertakings and non-Irish residents are not taxed in Ireland on a sale of units or distributions from the fund.
However, notwithstanding that Investment Undertakings may not be subject to any charge to tax in Ireland, it is important to note that tax filing requirements still arise for such funds and it is important to consider these filing requirements and compliance obligations when establishing the fund as failure to comply can lead to interest and penalties. The filing requirements and the related services offered by Maples are described below.
1. Registration for Tax
- must register for investment undertaking tax; and
- may also be required to register for:
(a) Pay As You Earn (“PAYE” – Irish payroll taxes); and
(b) Value Added Tax (“VAT”).
Investment Undertaking Tax
Every Investment Undertaking is required to register for investment undertaking tax within 30 days of commencing business (i.e. within 30 days of authorisation of the Investment Undertaking by the Central Bank of Ireland). This involves filing a registration form with the Irish Revenue Commissioners (“Irish Revenue”). Once the Investment Undertaking has been registered, it will receive a tax reference number.
Where a corporate Investment Undertaking is making payments of directors fees (whether those directors are Irish resident or not) Irish payroll taxes will generally need to be operated on those fees (unless a Revenue "exclusion order" applies). Irish directorship fees are automatically subject to Irish payroll taxes and the Investment Undertaking will need to register with Irish Revenue for PAYE in order to operate the correct withholding.
Where the directors of the Investment Undertaking are partners in Irish law firms or accounting firms, an exclusion order providing that no PAYE need be withheld may be sought from Irish Revenue, on the basis that the partnership will account for the income tax. However, before such an order can be obtained, Irish Revenue require the Investment Undertaking to register for PAYE.
Where an Investment Undertaking is receiving taxable services from abroad (such as legal or audit services), the Investment Undertaking will be required to self-account for Irish VAT on those services on the reverse charge basis. In these circumstances, the Investment Undertaking will need to register for VAT in Ireland.
Maples and Calder can assist in arranging for the relevant registrations in respect of your Irish investment funds. The Tax Group has broad experience and expertise in advising on all Irish tax matters relating to investment funds. Working closely with our colleagues in the Funds Group and our compliance team in MaplesFS, we can provide these tax services in an efficient and seamless manner.
2. Ongoing Compliance Obligations
Investment Undertaking Tax
An Investment Undertaking is required to make semi-annual returns and payments of investment undertaking tax (if any) on an ongoing basis. As set out above, broadly, investment undertaking tax will only be payable if the Investment Undertaking has non-exempt Irish resident or ordinarily resident investors, or the appropriate declaration procedures have not been complied with. If no investment undertaking tax is required to be paid, the Investment Undertaking is still required to make a nil return. Returns can only be made electronically, so the responsible party will need to register with Revenue's online system (ROS) in order to process the returns or appoint a service provider to file the returns on their behalf. The MaplesFS tax compliance team can provide these services.
The return periods are 1 January to 30 June and 1 July to 31 December. Returns (and payments of investment undertaking tax, where applicable) are required to be made within 30 days of each latter date.
Where an Investment Undertaking pays fees to its directors, it is required to make the relevant deductions of PAYE (together with social insurance contributions (PRSI) and the universal social charge, where appropriate) in respect of those payments. The Investment Undertaking must remit the tax deducted by them under the PAYE system together with Form P30 to Irish Revenue within 14 days of the end of each month. Where payment is not made on time, interest accrues at a rate of 0.0274% per day.
As noted, where a director of an Investment Undertaking is a partner (who is a solicitor or accountant) of a legal or accounting firm and an exclusion order has been agreed with Irish Revenue, PAYE returns must still be filed, albeit the returns will show a nil payment obligation in respect of payroll taxes.
Irish Revenue published a briefing in relation to PAYE on directorship fees in December 2011 so this is an area of tax that is under scrutiny and care needs to be taken to comply with all relevant obligations in order to avoid any penalties or interest arising.
Where an Investment Undertaking is required to operate Irish VAT on taxable services received from abroad, the general rule is that VAT must be paid and a VAT return filed by the 19th day of the month following each two monthly taxable period (i.e. January/February and so on). However, where the VAT liability falls under certain thresholds, there may be an option to apply to the Irish Revenue to submit returns on a less frequent basis. Our Tax Group would be delighted to discuss these options and the extent to which any VAT costs of the fund may be recovered to the benefit of the fund.
3. Maples Group Tax Services
Maples and Calder Tax
Investment Undertakings should take tax advice as early as possible in the establishment process in order to avoid any delays in registration or penalties for late tax filings. The Tax Group in Maples and Calder can provide the following advices and services:
- Advising on the application of the Irish tax regime to investment funds and their investors;
- Drafting or reviewing the tax disclosure language contained in the relevant prospectus;
- Advising on the VAT status and VAT recoverability entitlement of Irish investment funds and assisting on VAT recovery;
- Registering the fund for the appropriate taxes in Ireland;
- Advising in relation to ongoing Irish tax compliance and tax filing obligations; and
- Cross border structuring and advising in relation to access to Ireland's double tax treaty network.
Our affiliate business MaplesFS is an independent global provider of specialised fiduciary, accounting and administration services. MaplesFS offers a wide range of expertise in accounting, company management, corporate, fiduciary, trust and fund administration. This close working relationship offers clients the maximum convenience and efficiency in establishing and administering companies, funds and investments.
Our colleagues in MaplesFS provide tax compliance services to Investment Undertakings including preparation of investment undertaking tax, PAYE and VAT returns and liaising with Irish Revenue for and on behalf of the relevant investment fund.