Welcome Stimulus for Financial Services Sector - Mazars - Ireland

The Taoiseach in launching the Government’s IFSC strategy 2011-2016, sets out plans for the future development of the IFSC with the goal of creating 10,000 jobs over the next 5 years.

The commitment to the 12.5% rate was reiterated. The sector’s resilience through the financial crisis was highlighted as was the 400% growth in employment in the sector, the €700 million contributed in payroll taxes, and the €1.4 billion contribution to the overall corporation tax take.

The more interesting aspects of the Taoiseach’s recent IFSC strategy document are summarised below:

• Enhancement to expatriate regime to attract highly skilled personnel;
• Development of Ireland as a centre of excellence in green finance and carbon management, as a hub for innovative services, and as a location for Islamic Finance activities;
• Prioritising links between industry and the education sector with a view to increasing the availability of skills and expertise;
• Engagement with the Department of Finance, the Central Bank and with Revenue in order to enhance the tax and regulatory framework ensuring responsiveness to industry changes and a credible and internationally respected regulatory regime;
• Availing of the opportunities for growth in the insurance and funds sectors offered by the implementation of Solvency II, the Reinsurance Directives, and the AIFMD and UCITS IV Directives.

Enhancement to expatriate regime
The role of personal tax rates in attracting key highly skilled personnel to work in Ireland was identified as critical in achieving the jobs creation target, against the background of intense international competition and the necessity to generate new business and generate local specialised knowledge. Changes to the current incentive regime will be considered in order to ensure Ireland’s attractiveness, which is likely to involve enhancement to Ireland’s existing expatriate regime in future Finance Acts.

Centre of excellence in green finance and carbon management, hub for innovative services and location for Islamic Finance activities
The Green IFSC initiative should lead to expansion of many of the existing IFSC sectors and the creation of new areas including carbon management, IP commercialisation, private equity investment and “Green Tech” fund management. Ireland’s position as a location where Information Communications Technology and financial services activity converge presents the opportunity to establish a hub for innovative services for finance including fraud and AML detection technology. Providing an environment conducive to carrying on Islamic Finance transactions is critical to attracting investment from the Middle East and Asia.

Prioritising links between industry and the education sector
A focus area is the provision of support to third level colleges to develop relevant commercial projects in financial services; and the development of closer working relationships between third and fourth level education and the financial services sector.

Availing of opportunities for growth in the insurance and funds sectors
Ireland’s implementation of the Solvency II and Reinsurance Directives presents the opportunity to establish Pan-European hub operations in Ireland, as it facilitates the replacement of existing multi subsidiary structures with a single head office which branches into Europe. This should serve to optimise capital and generate other risk, cost and administrative efficiencies. Ireland’s extensive Double Tax Treaty network is one of the major factors attracting ultimate parents of global insurance and reinsurance groups to Ireland.

The AIFMD and the UCITS IV Directives were highlighted as presenting both opportunities and threats, with the threat arising from business being excluded from EU markets and the opportunity lying in global players seeking to use Ireland as a European base for their international business.

A link to the Strategy document is available here. If you have any queries on the above please contact either Noel Cunningham or Nóirín Cahalane.