Padhraic Mulpeter, Tax Consultant, Walkers (Ireland) LLP: Notwithstanding the very positive tax regime we currently have in place for Irish fund structures, there are a couple of areas where we would like to see some enhancements.

The Funds Sector 2030 report identified some areas for potential changes to the Irish tax regime. We have already seen some positive movement on this front with the introduction of a dividend participation regime in Finance Act 2024. The changes announced in the Budget to update and expand this exemption are welcome and should bring us more in line with other jurisdictions. Where possible, private equity managers typically want to establish the subsidiary holding companies in the same jurisdiction as the fund vehicle (i.e. an ILP). There is one notable gap in our taxation regime for this type of structure - the current lack of a dividend withholding exemption on Irish dividends paid to an ILP is undermining the attractiveness of the ILP regime and this was recognised in the Funds 2030 Report. We are hopeful that this gap will be addressed in Finance Bill 2025.

As a result of recent reforms to dividend taxation, dividends from qualifying non-resident subsidiaries to an Irish holding company are now generally exempt from tax (assuming the relevant conditions are satisfied). This is the case regardless of whether the subsidiary is trading (under Irish tax principles) or not. However, a sale of a non-trading subsidiary is potentially subject to Irish capital gains tax. This creates an incoherence which can lead to Ireland being discounted as a location for investment vehicles. Ireland compares unfavourably with other jurisdictions where there is an equality of treatment between dividend taxation and capital gains taxation. The existence of a trading requirement complicates the practical operation of the exemption as it requires an assessment in relation to trading status either at the subsidiary level or in respect of the combined position of the parent and its qualifying subsidiaries. We would like to see some changes made in Finance Act 2025 to rectify this inconsistent tax treatment.

These measures, if introduced, would further enhance Ireland's holding company regime and make Ireland a more attractive location for private asset investment.

This article appeared in the October 2025 edition of the Irish Tax Monitor.