Ireland’s Value Add for U.S. Managers
Whilst Luxembourg and Ireland have hotly competed in recent years, Ireland has pulled ahead, becoming a top choice for U.S. asset managers seeking European expansion. Recent figures published by the European Fund and Asset Management Association (EFAMA) show that Ireland saw the “vast majority” ($179 billion) of cross-border fund sales in 2023, outstripping Luxembourg across both traditional and alternative strategies. The same report also shows that Ireland and Luxembourg remain dominant in the private market funds space, with Ireland holding 19% of alternative funds versus Luxembourg’s 16%.
This is because Ireland offers distinct advantages over other jurisdictions. It is the only native English-speaking E.U. member country that offers full market access to European investors whilst benefiting from a common law system and a U.S.-aligned regulatory framework. This simplifies compliance and feels familiar to U.S. managers.
Ireland is a cost-efficient jurisdiction with competitive fees and provides a transparent regulatory environment. With a robust financial ecosystem of over 17,000 fund professionals specializing in fund administration, depositary, legal, and tax services, Ireland is recognised as a top-tier fund servicing destination.
Europe’s Fastest-Growing Fund Domicile
Ireland is the fastest-growing major European fund domicile, managing nearly 20% of all European fund assets. This is bolstered by the jewel in Ireland’s crown: Ireland’s ILP, reformed in 2021. The ILP offers several advantages for U.S. asset managers. Given its Alternative Investment Fund Managers Directive (AIFMD) compliant structure, tax transparency, and regulatory credibility, it is a strong alternative to Luxembourg’s Special Limited Partnership (SCSp) or Cayman funds for European and global investors:
- Tax Efficiency: tax-transparent, with no corporate, capital gains, or withholding tax for non-Irish investors, and benefits from Ireland’s extensive double tax treaty network for favorable tax treatment. The income, gains, and losses of an ILP are allocated to each limited partner (LP) based on their proportional ownership in the partnership.
- Competitive Alternative to Luxembourg’s SCSp: offers lower regulatory costs, faster approval times, and a common law legal system that aligns more closely with U.S. investors.
- Flexibility in Fund Structuring: offers an umbrella structure with segregated liability, flexible capital commitments for various fund types, and LP-friendly governance that allows advisory participation without compromising limited liability.
- Suitable for Multiple Alternative Strategies: It mirrors the structure of U.S. LPs and offers tax transparency, governance flexibility, a robust legal framework for asset holding and lending, long-term investment suitability, and adaptability for both liquid and illiquid strategies.
- Streamlined Regulatory Process: 24-hour approval for Qualifying Investor Alternative Investment Funds (QIAIFs) and no pre-approval requirements for general partners (GPs). The GP can be based outside Ireland and does not have to be a corporate entity.
The Growing Trend
According to ISS Market Intelligence, assets under management (AUM) by U.S. asset managers in Europe more than doubled in a decade, from $2.1 trillion in 2014 to $4.5 trillion as of September 2024. The numbers are clear. U.S. asset managers are increasingly turning to Europe to diversify their investor base and tap into the region’s deep pools of capital. And Ireland is increasingly the domicile of choice.
Contact Us
If you would like to gain deeper insights into this area and explore how it may impact your business, we invite you to connect with Paul Traynor, Partner and Head of Governance, Risk, and Compliance.
