Overall, the report contains 42 specific recommendations, listed on pages 11-13 of the Report with a range of them relating to suggestions as to how funds industry benefits can be extended to the general population in a tax transparent and balanced manner, and how the investment funds framework can be developed in conjunction with capital markets aspirations at EU level, such as suggested in the Draghi report recently published by the new Commission in Brussels.

Background
Given the size of the funds and asset management sector in Ireland, and the changes taking place within the sector, the former Minister for Finance, Michael McGrath TD, announced a review to ensure that Ireland maintains its leading position in asset management and funds servicing; and that the framework for the sector is resilient, future-proofed, supportive of financial stability and a continued example of international best-practice.

The Terms of Reference for the review were published in April 2023. A public consultation ran from June to September 2023, culminating in 194 submissions, including 140 from individuals responding in a private capacity. An extended phase of stakeholder engagement followed the public consultation. In total, the Review Team met with over 100 firms and attended over 30 industry events. A progress report was issued in December 2023. The draft report was issued to Finance Minister Jack Chambers in summer 2024.

The Funds Sector
Ireland has developed a global centre of excellence for asset management and funds servicing, with key roles as a gateway into the EU for asset managers, and as a distribution centre for funds across the world.

Scale is important factor in distribution, and particularly in ETFs and MMFs. Over 70% of EU ETFs and 40% of MMFs are domiciled in Ireland.

It is worth noting that the EU Undertakings for collective investment in transferable securities - UCITs, including ETFs, are an EU export success and Ireland is a primary channel for that. UCITs is a global product and the standard bearer for a retail investment fund product.

Ireland’s funds industry was originally built on a strong offering of fund administration and fund servicing, but the business models of many large fund service providers have evolved. Firms based in Ireland increasingly operate across other financial services sub-sectors and support other parts of a firm’s global group or parent company. This creates a complex (and positive) ecosystem effect for firms based in Ireland. And while many talk of competition between capital cities for jobs, almost 50% of the sector’s employment in Ireland is in regional locations outside Dublin.

Ireland is well placed to grow in the funds and asset management sector but the emerging backdrop means that what has worked in the past will not necessarily work into the future. The report focusses on how we can continue to maintain, and grow, our leading role in public assets, including in active ETFs, and considers mechanisms to support growth in private assets. In doing so, we have to be cognisant of significant risks, including to business models, Ireland’s reputation and financial resilience.

Report structure
This report is structured by theme. The introductory chapter sets out the drivers of change within the funds and asset management industry globally, before explaining the factors that have contributed to the strong growth of the sector.

The report then discusses the products that have been particularly successful in Ireland, measures to maintain this success, and proposals made to the Review Team regarding potential fund structures. The following chapter discusses the regulatory and supervisory framework, including the approach taken by the Central Bank to authorisation and supervision. Technological developments, their impact on the sector and the Review Team’s recommendations in this regard are covered subsequently.

The three following chapters focus on addressing the three recommendations arising from the Commission on Taxation and Welfare (COTW):

- a chapter on retail investment, including recommendations to address barriers to retail investment and the COTW recommendation to review the tax regime for investment funds and life assurance products;

- a chapter on structured finance, which addresses the role of the section 110 tax regime; and

- a chapter on the role of investment in property, addressing the tax regime for Irish domiciled investment funds and the tax regime for REITs.

The report then moves on to address sustainable finance and engagement between industry and the Irish authorities and promotion of the industry. The last thematic chapter address skills and access to talent. The report concludes with a chapter on the Review process.