Asset Management

Asset Management update - September 2017

ESMA finalises MIFID II’s derivatives trading obligation

The European Securities and Markets Authority (ESMA) has issued its final draft Regulatory Technical Standard (RTS) implementing the trading obligation for derivatives under the Markets in Financial Instruments Regulation (MiFIR). ESMA’s draft RTS provides the implementing details for on-venue trading of interest rate swaps (IRS) and credit default swaps (CDS).

 

ESMA updates Q&A on MIFID II implementation

The European Securities and Markets Authority (ESMA) has published updated Questions and Answers (Q&As) regarding the implementation of the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).

The Q&As provide responses to questions posed by the general public and market participants in relation to the practical application of MiFID II and MiFIR on:

  • timing and procedure of notification for temporary opt-out under Article 36(5) MiFIR;
  • exemptions under Article 36(5) and Article 54(2) of MiFIR;
  • timing of application for transitional arrangements under Article 54(2) of MiFIR; and
  • limitation of access rights following exemption under Article 36(5) of MiFIR.

 

European commission publishes proposed reforms to foster CMU and financial integration

The European Commission published proposed reforms to foster Capital Markets Union and financial integration. The proposed reforms were accompanied by a Commission communication and an impact assessment. The key features include:

  • stronger coordination of supervision across the EU;
  • extended direct capital markets supervision by ESMA;
  • improved governance and funding of the ESA’s; and
  • the promotion of sustainable finance and FinTech.

 

IREF withholding tax – Revenue Guidance on the meaning of key term (‘PPIREF’)

The Irish Real Estate Funds (‘IREF’) withholding tax was introduced by Finance Act 2016 and applies to ‘chargeable events’ arising on or after 1 January 2017.

As previously noted, the rules in relation to IREF withholding tax are quite complicated and their implementation is proving quite challenging in a number of respects for impacted funds/investors/service providers.  Consultation between Revenue and the funds industry remains ongoing in relation to several aspects of the rules.

In this respect, Revenue have published Guidance in relation to what they consider to be a Personal Portfolio IREF (‘PPIREF’) – Find out more

PPIREF is a key concept in the IREF legislation and can affect an investor’s profile and potential tax liability significantly in two ways;

  1. Bringing certain investors, who might otherwise be exempt from IREF withholding tax, within scope and
  2. Dis-applying the exemption for holdings of Irish land of greater than 5 years from the IREF withholding tax, thereby bring any such gains within scope of withholding for impacted investors.

Effectively, the PPIREF rules will apply where an investor has the power to influence the selection of an asset and/or how the IREF business is carried out.  The Guidance outlines Revenue’s views on the workings of the legislation in various areas.  What is clear from the Guidance is that there is no actual requirement for an investor to select or influence asset selection/business of the IREF, the ability to do so will suffice in this context. 

The Guidance contains 17 worked examples which are quite helpful in interpreting the IREF rules from a practical perspective.  One situation that is likely to prove controversial (and which has been the subject of media discussion to date) relates to all of the partners in a limited partnership structure being connected with each other for the purposes of applying the PPIREF rules – this can result in all of the limited partners in an LP structure falling within the PPIREF rules where the general partner of the partnership is in the same corporate group as the investment manager/advisor of the IREF (even where such limited partners do not have the ability to select assets or influence the IREF business in any way).

Work remains ongoing on several other aspects related to the operation of IREF withholding tax and we will keep you updated on developments.

 

Asset Management 2020 conference slides

Our Asset Management conference featured a plenary session followed by a range of breakout sessions covering topics including: 

  • financial reporting update for funds and securitisation vehicles;
  • cyber regulation – negotiating the General Data Protection Regulation;
  • Brexit–the view from London;
  • taxing times - Irish and International tax developments;
  • UK tax update;
  • US asset management tax update; and
  • MiFID II – four-month warning.

Find out more