On 16 April 2018, Irish Revenue published guidance on the taxation treatment of Irish investment managers. It is increasingly common for Irish based investment managers to invest in the funds they manage. The guidance outlines a number of scenarios in which Irish Revenue considers the returns as trading income, subject to the lower 12.5% rate of taxation. It will be of particular interest given the increase in Irish based managers as a result of Brexit.

Scenario 1 is where the manager is required to co-invest alongside other investors. Frequently, this is to ensure there is mutuality of interests between the manager and investor or, put another way, to ensure the manager has "skin-in-the-game" . Scenario 2 is where the manager is required to provide seed capital in advance of investor subscriptions. Scenario 3 is where the manager acquires an investment to hedge its exposure to pay individual employees. Scenario 4 is where the manager reserves some capital to ensure it is available for investment in the future. This can occur where there is a delay in deploying capital.

These scenarios are not the only situations in which trading taxation treatment is available. They can be viewed as "safe-harbours". Revenue's guidance is limited to authorised investment managers, such as Alternative Investment Fund Managers (AIFMs) and MiFID regulated investment firms. However, as the taxation principles which support the guidance are not linked to regulatory status, they will be of interest to other investment advisors and non-regulated managers.

{ Return earned by regulated investment managers A new Tax and Duty Manual Part 02-01-02 has been published setting out the position regarding the taxation of returns earned by regulated investment managers.

https://www.revenue.ie/en/tax-professionals/ebrief/2018/no-0542018.aspx