Irish Funds Munich Seminar 28 November 2017 2 irishfunds.ie - - PowerPoint PPT Presentation

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Irish Funds Munich Seminar 28 November 2017 2 irishfunds.ie - - PowerPoint PPT Presentation

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Irish Funds Munich Seminar 28 November 2017 2 irishfunds.ie Premium Sponsors Breakfast Sponsors Welcome Address Kieran Fox Director of Business Development, Irish Funds 5 irishfunds.ie Who we are. industry association for all

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irishfunds.ie

28 November 2017

Irish Funds Munich Seminar

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Premium Sponsors

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Breakfast Sponsors

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irishfunds.ie

Director of Business Development, Irish Funds

Welcome Address

Kieran Fox

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irishfunds.ie

Who we are….

  • industry association for all aspects of regulated cross border

investment funds in Ireland

  • 125 member firms, located both in and outside Ireland
  • key link to the authorities & policy makers in Ireland and beyond
  • the industry’s representative in Europe and globally
  • a platform for collaboration, information sharing and driving
  • utcomes & improvement
  • A member of EFAMA and IIFA
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irishfunds.ie

Who we are….

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irishfunds.ie

Total Assets under Administration

  • split between Irish domiciled & Non-Irish funds

636 838 965 1,394 1,398 1,443 1,883 1,886 2,199 2,722 3,375 3,806 4,095 4,273 434 584 728 807 646 748 964 1,055 1,227 1,344 1,664 1,899 2,085 2,298 202 254 237 587 752 695 919 831 972 1,378 1,711 1,907 2,011 1,976

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Sep-17

EUR Billion

Total Domiciled and Non-Domiciled Assets Under Administration

Total Non Domiciled Total Domiciled

Source: Central Bank of Ireland

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irishfunds.ie

Irish Domiciled Assets

  • UCITS represent 75% of

Irish Domiciled Assets

  • 86 UCITS Man Cos
  • 160 AIFMs Registered or Authorised
  • 597 AIFMs operating in Ireland on

cross border basis

  • 377 ICAVs established

(since 18 March 2015)

Source: Central Bank of Ireland Nov 2017

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Ireland’s Relationship with European Investment Fund Landscape

  • €13 trillion in assets
  • €8 trillion UCITS
  • €5 trillion Alternative Investment Funds (AIFs)
  • €1 trillion of net inflows into UCITS over last 3 years
  • €463 billion net inflows into European funds 2016 (>30% of which went to

Irish domiciled funds)

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irishfunds.ie

Growth of Largest European Fund Domiciles

2012 2013 2014 2015 2016 Europe 113 123 142 158 178 Luxembourg 114 125 148 167 177 Ireland 116 127 157 180 198 France 109 110 114 121 129 Germany 113 124 140 153 166 UK 117 135 159 179 177

  • 50

100 150 200 250 % Growth 116 127 157 180 198

Source: EFAMA Statistics

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irishfunds.ie

Irish Funds: Passport to Europe & Beyond

UCITS funds & AIFMs benefit from an EU wide passport and can be sold in any other EEA member state without need for additional authorisation

Top 10 countries where Irish Funds registered for sale

  • 1. UK
  • 6. Austria
  • 2. Germany
  • 7. Luxembourg
  • 3. France
  • 8. Sweden
  • 4. Switzerland
  • 9. Italy
  • 5. Netherlands
  • 10. Spain

Global Distribution of Irish Funds: 70 countries

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irishfunds.ie

Irish Funds – Maximising Distribution

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irishfunds.ie

Irish Domiciled Funds – Net Sales

  • 100.0

200.0 Dec-13 Dec-14 Dec-15 Dec-16 YTD Sept 2017

Net Sales into Irish funds by type € Bn

Equity Funds Bond Funds Balanced Funds Money Market Funds AIF

Net sales for YTD Sept 2017 have already surpassed the total for 2016 (by >€88bn) – which itself was a record year

98,463 85,465 135,668 114,706 139,416 228,257 50,000 100,000 150,000 200,000 250,000

2012 2013 2014 2015 2016 YTD - Sept 2017

EUR Mn

Net Sales - Total Domiciled Funds

Net Sales - Total Domiciled Funds

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irishfunds.ie

Ireland 310 Rest of Europe 248

€ bn 56% 44%

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Net Sales into All European ETFs 2016 €Bn

Ireland Rest of Europe Bn

93%

7%

Bn

ETFs - An Irish Success

Ireland as a Domicile for European ETFs Total Assets

  • f European

ETFs - € Bn

Source: Irish Funds, June 2017

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irishfunds.ie

Looking Ahead - Technology

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irishfunds.ie

Looking Ahead – Brexit Three interdependent themes

Distribution Management Models (‘Delegation’) Growth OVER 2,000 IRISH FUNDS SOLD TO UK INVESTORS1 €613 bn2 IN IRISH FUND ASSETS MANAGED BY 170+ UK FIRMS IN IRELAND2 Continuity in UK investor access to EU/Irish funds Continuity in UK firm managemen t of Irish funds Increase Ireland’s growth trajectory as an international asset management centre

SOURCE: 1-Lipper IM Dec 2015 2-Monterrey Ireland Fund Report 2016

Current context Target outcome

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irishfunds.ie

International asset management centre

Growth

‘The Basics’

  • Predictability / efficiency of

regulatory process

  • 12.5% corporate tax rate
  • Common law system
  • Only English-speaking

country in the Eurozone

  • Less expensive than

Zurich, Paris & Luxembourg1

Asset Manager Activity Infra- structur e

Re-affirm Ireland’s attractiveness as an international asset management centre Opportunity Benefits Solution Provide UK managers with options to support the establishment of a physical presence in Ireland

NOTES: 1. Source PwC 2. http://www.iaim.ie/why-ireland (STEM = Science, Technology, Engineering & Mathematics) & http://www.hea.ie/sites/default/files/awards_- _all_undergraduate_by_level_and_field.xlsx 3. IFS 2020 Action Plan 2017 (http://finance.gov.ie) & IDA Ireland 4. MiFID firms, UCITS ManCos, Irish AIFMs & Non-Irish AIFMs

  • Space for 100K new employees by 2020,

100K new houses3

  • Leading global tech centre & fintech location
  • London-Dublin: Most flight options in Europe
  • 35K+ employed in international financial

services in Ireland, 14K in funds industry

  • 130K degree-level graduates across business,

law and STEM w/ 20K new grads p.a.2

  • 800+ investment firms active in Ireland4
  • Increased presence of front office activities
  • 18 of the top 20 global AMs have Irish funds
  • €4trn total AuA, €300bn managed from Ireland2
  • AM counterparties already in transit from UK
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Moderator: Panellists:

irishfunds.ie

Product Discussion including ETFs, Private Equity, Real Assets

Aoife O’Connor, PwC Kieran Fox, Irish Funds Holger Schmid, Baader Bank Paul Heffernan, HSBC

Panel Discussion

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irishfunds.ie

Partner, Dechert

Ireland as a Domicile – Comparative Aspects

Mark Browne

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irishfunds.ie

Ireland and Luxembourg

  • Range of Legal Vehicles
  • Fund Structures
  • Cost
  • Timing
  • Client preference
  • Tax
  • Size

Ireland: Comparative Aspects

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Ireland and Luxembourg

  • Accessibility
  • Accessibility of Regulator
  • Transparency and certainty
  • Staffing
  • Expertise

Ireland: Comparative Aspects

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irishfunds.ie

Ireland and Cayman

  • Liability standard
  • Directors liability
  • Voting Rights
  • Liquidity
  • Independence
  • Investor preference

Ireland: Comparative Aspects

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International Primary Markets, Irish Stock Exchange

Listing investment funds- update from the Irish Stock Exchange

John Collins

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The Irish Stock Exchange: The European Gateway Exchange

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The Irish Stock Exchange: A Full Service Stock Exchange

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The Irish Stock Exchange: A Global Leading International Business

Source: World Federation of Exchanges September 2017

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The Irish Stock Exchange: Enabling Global Issuers to Access Investors

Source: Irish Stock Exchange September 2017

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The Irish Stock Exchange: Providing Issuer Choice

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Our Fund Markets: Why Choose the Irish Stock Exchange?

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Irish Stock Exchange Fund Statistics

ISE Funds Manager Locations 1,448 Funds and sub- funds listed 5,221 Securites listed in total 219 ETFs 78% Irish funds & Sub- funds 22% Offshore funds & sub- funds

4% 40% 24% 6% 2% 23%

Ireland UK USA Switzerland Channel Islands Other

Source: Irish Stock Exchange September 2017

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Irish Stock Exchange Fund Statistics Cont.

Domicile

  • f funds

78% 8% 5% 3% 2% 4%

Ireland Cayman Islands Jersey Bermuda Guernsey Other

Source: Irish Stock Exchange September 2017

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Managers with Irish Stock Exchange Listed Funds

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Our Fund Markets

Source: World Federation of Exchanges (WFE)

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3 P’s for listing funds on the Irish Stock Exchange

Process Price Pragmatism

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Moderator: Panellists:

irishfunds.ie

Substance and Regulation in Ireland

Ross Thomson, FundRock Kate Clarke, KPMG Stephan Grimm, LIS Adrian Mulryan, Arthur Cox

Panel Discussion

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irishfunds.ie

Partner, Dechert

Fund Structuring Options in Ireland for German investors – German Investment Act 2018

Hans Stamm

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Overview of Different German Fund Taxation Regimes

German Investment Tax Reform 2018: Impact on Non-German Investment Funds and their German Investors

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26 October 2017

Alternative Investment Funds (AIF)

Undertakings for Collective Investment in Transferable Securities (UCITS)

Partnerships

Semi-transparent fund taxation regime for institutional investors

(Mutual) Investment Funds “Investmentfonds”

Intransparent fund taxation regime for private and institutional investors

Specialized Investment Funds “Spezial-Investmentfonds”

Special Vehicles Fully tax transparent taxation regime

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German Taxation at Fund Level at a Glance

German Investment Tax Reform 2018: Impact on Non-German Investment Funds and their German Investors

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26 October 2017

Partnerships (Mutual) Investment Funds “Investmentfonds” Specialized Investment Funds “Spezial-Investmentfonds”

  • Investment funds are

subject to German taxation with:

  • German dividends and

dividend compensation payments

  • German real estate

income (including capital gains)

  • Other German-source

income (e.g. hybrid debt and German trade or business)

  • Pro-rata tax exemptions

available for tax exempt investors

  • Other income is still tax

exempt at fund level

  • Tax rate 15 % (plus

solidarity surcharge)

  • Treaty benefits may be
  • btained at fund level
  • Specialized Investment

Funds are generally subject to the same German taxation regime

  • Exceptions:
  • The fund may opt for a

transparent taxation of German-source income

  • Domestic dividends will

then be allocated directly to the investors

  • The fund must then levy

German withholding tax

  • n domestic real estate

income

  • A final tax burden at fund

level can be avoided under the transparency

  • ption
  • Partnership companies

are treated as fully tax transparent entities

  • Income of the fund is

allocated to the investors for tax purposes

  • Funds may be subject to

German trade tax when

  • perating a German trade
  • r business
  • Tax transparent fund

status also for treaty purposes

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Overview of Different Taxation Levels

German Investment Tax Reform 2018: Impact on Non-German Investment Funds and their German Investors

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New taxation regime German Shares

Investor

Debt German Real Estate

Investment Fund 15 % WHT 15.825 % CIT

  • Partial tax exemptions for

Equity Funds, Mixed Funds and Real Estate Funds? OR

  • Partial Tax Transparency
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Investment Requirements for Different Types of Investment Funds – Change of Management Regulations of Funds as of 01.01.2018

German Investment Tax Reform 2018: Impact on Non-German Investment Funds and their German Investors

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Foreign Real Estate Funds ≥ 51 % investments in Equity Funds ≥ 51 % investments in Real Estate Funds ≥ 51 % investments in Listed shares of corporations 51 %* of the value of investments in Equity Funds 25 %* of the value of investments in Mixed Funds REITS Unlisted shares of non-tax exempt corporations Real estate assets Interests in Real Estate Companies Non-German real estate assets Interests in Foreign Real Estate Companies Indirect Investments via partnership companies Mixed Funds ≥ 25 % investments in 51 %* of the value of investments in Real Estate Funds

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Practical To Do’s for Irish Funds

  • Concerning all Funds wishing to obtain the tax transparent special fund status
  • Review/update of current investment guidelines
  • Application for “Special Fund Status”
  • Benefit: tax benefits for certain German investors (especially corporate investors in funds with equity

exposure) i.e. use of “transparency option”

  • Deadline: self declaration (ideally still in 2017), latest application until 30 June 2018
  • Concerning all Funds/Share Classes which are open only for German tax exempt investors or

similar non-German resident investors

  • Application for respective Fund Status
  • Benefit: (withholding) tax benefits for German tax exempt investors
  • Deadline: self declaration (ideally still in 2017), latest application until 30 June 2018

German Investment Tax Reform 2018: Impact on Non-German Investment Funds and their German Investors

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Practical To Do’s for Irish Funds

  • Concerning all Investment Funds with German sourced income which is subject to

withholding tax (e.g. dividends, interest income from profit participating instruments)

  • Application for “Investment Fund Status Certificate”
  • Benefit: ex-ante reduction of withholding tax on fund level from 26.375 % to 15 %
  • Deadline: asap (ideally still in 2017)
  • Concerning all Investment Funds with German investors which may either qualify as equity

fund (≥ 51 %), mixed fund (≥ 25 %) or real estate fund (≥ 51 %)

  • Application for respective Fund Status
  • Benefit: significant partial tax exemptions for German investors
  • Deadline: self-declaration (ideally still in 2017), official application until end of 2018

German Investment Tax Reform 2018: Impact on Non-German Investment Funds and their German Investors

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Managing Director, BAI

BAI Update and Closing Remarks

Frank Dornseifer

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irishfunds.ie

28 November 2017

Irish Funds Munich Seminar