Financial services

Qualifying Fund Managers

The Bill introduces a new requirement for Qualifying Fund Managers (QFMs) to file an annual return online with Revenue within three months following the end of each year of assessment. This return must cover all Approved Retirement Funds administered by the QFM in that year of assessment.

This new obligation shall apply for the year of assessment 2026, with the first reporting commencing from 1 January 2027. The information required to be reported is set out in the Bill and broadly includes key details about each fund holder such as identity, residency, first acquisition date, asset and transaction data related to the fund, details of distributions made by the fund, and any other information the Revenue may require.

Gain on unit trusts

Under current law, where all the units in a unit trust, which is not an authorised unit trust scheme within the meaning of the Unit Trusts Act 1990, are held by capital gains tax exempt persons throughout a year of assessment, the gains accruing in that year to the unit trust are not chargeable to tax. This does not apply where exemption of the unit holder is by reason of residence or by virtue of the exemption afforded to unit holders of Exempt Unit Trusts (EUTs). 

The Bill amends the legislation to provide that the exemption will also not apply to unit holders which are Irish regulated investment undertakings.  It is understood that the scope of the exemptions available to most unit holders of such trusts will not be changed.

Deductibility of interest on certain loans

In a welcome move, the Bill amends a specific anti-avoidance provision in relation to the deductibility of interest in situations where certain assets are transferred and refinanced with related party debt within a group. This is a particularly welcome move in the context of businesses that, for bona fide commercial reasons, may be required to transfer leveraged assets intra-group, such as in the aviation finance, leasing and property sectors.

Under current rules, a deduction is generally denied for interest payable by a company on a loan from a connected person which is used to purchase assets from a connected company, subject to certain exclusions applying.

The Bill provides for an additional exclusion from the application of the anti-avoidance measures to interest arising on a loan advanced to an acquiring company from a connected lender where several conditions are met, including, but not limited to, the following: the connected seller was entitled to a corporation tax deduction for interest on a loan that it used to fund the acquisition of the asset prior to the transfer to the acquiring company; the connected lender is subject to tax on the interest income in Ireland, the EU or in a jurisdiction that has a tax treaty in place with Ireland; and it is reasonable to consider that the connected loan advanced to the acquiring company is made for bona fide commercial purposes.

Where this exclusion applies, the deductible interest for the acquirer is calculated by reference to the amount of interest arising on the connected party borrowings, provided the principal on such loan does not exceed the principal outstanding on the borrowings of the seller in respect of the asset concerned at the time immediately prior to the intra-group sale. 

If only part of the borrowings of the seller relate to the asset being acquired, the seller’s outstanding principal should be apportioned on a just and reasonable basis to determine the amount relevant to the asset at the time of acquisition. While this amendment is a positive step, it was hoped that this cap would not have been put in place given the bona fide requirement and the various other interest deductibility safeguards in existing law. 

The amendment applies to asset transfers occurring on or after 1 January 2024.

Bank levy

Current law provides for a bank levy on certain in scope financial institutions (AIB, EBS, PTSB and Bank of Ireland) for the years 2024 and 2025. In line with the minister’s announcement on Budget Day, the Bill extends the levy for a further year to 2026, applying a rate of 0.001025% for 2026 on the value of deposits held by each bank as of 31 December 2024.

This applies specifically to deposits classified as “eligible deposits” under the European Union (Deposit Guarantee Schemes) Regulations 2015. The levy’s intended scope and expected €200 million yield remain unchanged.

Crypto-Asset Reporting Framework

The Bill introduces new legislation to meet Ireland’s obligations to transpose into law Part I of the OECD’s International Standards for Automatic Exchange of Information in Tax Matters: Crypto-Asset Reporting Framework (CARF) which was published in 2023 and to facilitate its automatic exchange with other competent authorities.

CARF establishes reporting obligations for Reporting Crypto-Asset Service Providers and sets out rules for the exchange of information between tax authorities which closely align with the provisions set out in the EU’s Eighth Directive in Administrative Cooperation (DAC 8).

The provisions will apply for reporting periods commencing on or after 1 January 2026, with reporting required by 31 May of the following year.