Country-specific updates: Ireland

Finance Bill 2022

The Irish Finance Bill 2022 (the Bill) was published on 18 October 2022 and the below is a summary of two of the key proposals from a VAT perspective.

The provision of qualifying management services to Irish regulated funds is exempt from VAT in Ireland. The Bill proposes the extension of the VAT exemption to the provision of qualifying management services to (a) UCITS which have been authorised in another Member State and (b) EU AIFs managed by an alternative investment fund manager which has been authorised in another Member State. The main impact of the proposed extension of the exemption will be on the VAT recovery position of Irish based service providers engaged in the provision of qualifying management services to such non-Irish EU established funds, as such Irish based service providers would traditionally have had an entitlement to VAT recovery in respect of such activities.

Ireland’s tax securitisation regime is governed by section 110 of the Taxes Consolidation Act 1997 and companies qualifying for the regime (Qualifying Companies) are generally entitled to an exemption from VAT in respect of the receipt of certain management services (e.g. corporate administration services). The Bill proposes the removal of the foregoing VAT exemption for Qualifying Companies that hold plant and machinery (which is one of the qualifying assets that can be held by Qualifying Companies). The proposed removal of the VAT exemption for certain management services may result in a VAT cost for those Qualifying Companies holding plant and machinery, unless their underlying activities give rise to an entitlement to VAT recovery (e.g. VATable or 0% rated leasing).

The Bill will now make its way through the legislative process (which may give rise to further amendments) prior to being enacted into law (expected to be late December 2022).