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The International Financial Services Centre (IFSC) is an area of central Dublin and part of the CBD established in the 1980s as an urban regeneration area and special economic zone (SEZ) on the derelict state-owned former port authority lands of the reclaimed North Wall and
George's Dock George's Dock was a dock, on the River Mersey, England, within the Port of Liverpool. It was connected to Canning Dock to the south and George's Basin to the north. History Construction of the dock began in 1762, and was known as North Dock ...
areas of the
Dublin Docklands Dublin Docklands ( ga, Ceantar Dugaí Átha Cliath) is an area of the city of Dublin, Ireland, on both sides of the River Liffey, roughly from Talbot Memorial Bridge eastwards to the 3Arena. It mainly falls within the city's D01 and D02 ...
. The term has become a
metonym Metonymy () is a figure of speech in which a concept is referred to by the name of something closely associated with that thing or concept. Etymology The words ''metonymy'' and ''metonym'' come from grc, μετωνυμία, 'a change of name' ...
for the Irish financial services industry as well as being used as an address and still being classified as an SEZ. It officially began in 1987 as an SEZ on an docklands site in central
Dublin Dublin (; , or ) is the capital and largest city of Ireland. On a bay at the mouth of the River Liffey, it is in the province of Leinster, bordered on the south by the Dublin Mountains, a part of the Wicklow Mountains range. At the 2016 ...
, with EU approval to apply a 10% corporate tax rate for "designated financial services activities". Before the expiry of this EU approval in 2005, the Irish Government legislated to effectively have a national flat rate by reducing the overall Irish corporate tax rate from 32% to 12.5% which was finally introduced in 2003. An additional primary goal of the IFSC was to assist the urban renewal and development programme of the North Wall area as a result of its dereliction following the advent of containerisation in the 1960s. Following a period of successful regeneration the Section 23 Relief and other schemes ceased accepting new entrants from 1999. The original 11-hectare IFSC site has gone through several expansions to become a area by 2018 which is now a major European financial centre. By merging with the Spencer Dock and Grand Canal Dock area, the IFSC is now considered to be an "International Services Centre", covering a broader range then being purely financial. The creation and development of the IFSC is considered to be an important part of Ireland's economic growth story.


Location

The original ''IFSC 1'' (development of the site from 1987 to 1997 under the Custom House Docks Development Authority "CHDDA") comprises the area between Memorial Road, Amiens Street, Lower Sheriff Street (including part of Crinan Strand), Guild Street, and the River Liffey along North Wall Quay and Custom House Quay. Adjacent districts include East Wall to the north and Spencer Dock to the east; the Custom House, Busáras and the city centre lie to the west along Store Street and
Abbey Street Abbey Street () is located on Dublin's Northside, running from the Customs House and Store Street in the east to Capel Street in the west. The street is served by two Luas light rail stops, one at the Jervis shopping centre and the other near ...
. Within the IFSC, the original development area lies west of Commons Street. East of Commons Street is the later ''IFSC 2'' expansion (development of an additional from 1997 to 2007 under the Dublin Docklands Development Authority (DDDA) which runs along North Wall Quay and Lower Mayor Street. It is an integrated development located in the centre of the city which incorporates office accommodation, educational institutions, housing, restaurants and shopping facilities including the Dublin Landings development. East of Guild Street down as far as the
Point Depot The Point Theatre (sometimes referred to as the Point Depot or simply as the Point) was a concert and events venue in Dublin, Ireland, that operated from 1988 to 2007, visited by in excess of 2 million people. It was located on the North Wall Qu ...
is the final part of the IFSC ( Docklands Strategic Development Zone, created by Dublin City Council ("DCC") on the dissolution of the DDDA in 2012), as an area containing the
Central Bank of Ireland The Central Bank of Ireland ( ga, Banc Ceannais na hÉireann) is Ireland's central bank, and as such part of the European System of Central Banks (ESCB). It is the country's financial services regulator for most categories of financial firms ...
as well the offices of
PwC PricewaterhouseCoopers is an international professional services brand of firms, operating as partnerships under the PwC brand. It is the second-largest professional services network in the world and is considered one of the Big Four accounti ...
,
Credit Suisse Credit Suisse Group AG is a global investment bank and financial services firm founded and based in Switzerland. Headquartered in Zürich, it maintains offices in all major financial centers around the world and is one of the nine global " ...
and numerous technology companies including
Yahoo Yahoo! (, styled yahoo''!'' in its logo) is an American web services provider. It is headquartered in Sunnyvale, California and operated by the namesake company Yahoo! Inc. (2017–present), Yahoo Inc., which is 90% owned by investment funds ma ...
and WeWork. This was further expanded by DCC in 2015 into a larger special economic zone ("SEZ") to include the full of North Lotts and Grand Canal Docks sites, taking in both financial and technology services companies. Only the area within the North Wall part of the original IFSC includes IFSC as part of a postal address.


History

The concept of a low tax international financial service centre is attributed to Irish businessman Dermot Desmond and politician
Ruairi Quinn Ruairi Quinn (born 2 April 1946) is an Irish former Labour Party politician who served as Minister for Education and Skills from 2011 to 2014, Leader of the Labour Party from 1997 to 2002, Deputy Leader of the Labour Party from 1989 to 1997, ...
among others, whose ideas were later picked up by
Fianna Fáil Fianna Fáil (, ; meaning 'Soldiers of Destiny' or 'Warriors of Fál'), officially Fianna Fáil – The Republican Party ( ga, audio=ga-Fianna Fáil.ogg, Fianna Fáil – An Páirtí Poblachtánach), is a conservative and Christia ...
leader Charles Haughey and incorporated into his 1987 election manifesto (with contributions from AIB CEO Michael Buckley). Despite resistance from the Department of Finance (concerned about the impact on domestic tax revenues), Haughey overruled and got permission from the EU to create a special 10% tax incentive zone (the IFSC), in the 1987 Finance Act (Section 30). The CHDDA had earlier been created under the auspices of the
Garret FitzGerald Garret Desmond FitzGerald (9 February 192619 May 2011) was an Irish Fine Gael politician, economist and barrister who served twice as Taoiseach, serving from 1981 to 1982 and 1982 to 1987. He served as Leader of Fine Gael from 1977 to 1987, and ...
lead
Fine Gael Fine Gael (, ; English: "Family (or Tribe) of the Irish") is a liberal-conservative and Christian-democratic political party in Ireland. Fine Gael is currently the third-largest party in the Republic of Ireland in terms of members of Dáil É ...
- Labour minority government as a Special Purpose Agency (SPA) in November 1986. The physical manifestation of the IFSC began with the construction of three offices - The International Centre, IFSC House and La Touche House, all with distinctive green colouring. To operate in the IFSC and access the 10% tax rate, companies had to be approved by the Certification Advisory Committee (CAC), composed of representatives from the Irish Development Authority, the Department of Finance, the
Department of Enterprise, Trade and Employment The Department of Enterprise, Trade and Employment ( ga, An Roinn Fiontar, Trádála agus Fostaíochta) is a department of the Government of Ireland. It is led by the Minister for Enterprise, Trade and Employment who is assisted by two Minist ...
and the
Central Bank of Ireland The Central Bank of Ireland ( ga, Banc Ceannais na hÉireann) is Ireland's central bank, and as such part of the European System of Central Banks (ESCB). It is the country's financial services regulator for most categories of financial firms ...
. The next major event was the ''Irish Taxes and Consolidated Act, 1997 (TCA)'' which upgraded the legal and tax structures in the IFSC, and in particular created the " Irish section 110 SPV" and laid the foundations for the Double Irish, Single Malt and the
Capital Allowances for Intangible Assets The Double Irish arrangement was a base erosion and profit shifting (BEPS) corporate tax avoidance tool used mostly by United States multinationals since the late 1980s to avoid corporate taxation on non-U.S. profits. It was the largest ta ...
BEPS tools. In addition, the Dublin Docklands Development Authority was set up to oversee the expansion of the IFSC's site (most notable being the reclamation of the Grand Canal Basin site) The "dual structure" Irish corporate tax rate, came under pressure from the EC (due to competition rules), and it was agreed that it would expire in 2005. In advance of this deadline, the Irish Government in the 1998/1999 Finance Acts introduced a lower 12.5% corporate tax rate for the entire country which was fully introduced from 1 January 2003, and by 1 January 2006, all remaining IFSC companies (some held their old licenses) were on a 12.5% rate. The IFSC ceased to exist as a required legal entity. The next major event was the Irish financial crisis from 2008 to 2013. The IFSC was a major EU securitisation hub and the effect of billion euro
special purpose vehicles A special-purpose entity (SPE; or, in Europe and India, special-purpose vehicle/SPV; or, in some cases in each EU jurisdiction, FVC, financial vehicle corporation) is a legal entity (usually a limited company of some type or, sometimes, a limited ...
(or SPVs) collapsing added to the concern over Ireland's financial position. It did not help that these SPVs (and other IFSC type activities) produced a further distorted picture of Ireland's already precarious National Accounts statistics. The sudden drop in Dublin's ranking on the
Global Financial Centres Index The Global Financial Centres Index (GFCI) is a ranking of the competitiveness of financial centres based on over 29,000 financial centre assessments from an online questionnaire together with over 100 indices from organisations such as the World ...
("GFCI") from an all-time high of 10th in March 2009 (GFCI 5), to 23rd by September 2009 (GFCI 6), sparked a formal investigation. A tightening by the Irish regulator (after a period of lose regulation) which followed the Irish financial crisis led some financial institutions to move operations elsewhere (as well as others who were exited) and caused Dublin's
GFCI A residual-current device (RCD), residual-current circuit breaker (RCCB) or ground fault circuit interrupter (GFCI) is an electrical safety device that quickly breaks an electrical circuit with leakage current to ground. It is to protect equi ...
ranking as a financial services centre to drop further to 70th in 2014 (GFI 16). IFSC institutions cited the timeliness of decisions by the Central Bank of Ireland as having an impact on their operations. Since 2014 however, the IFSC has started to recover, rising to 31 in the 2016 GCFI 21 ranking. The IFSC Securitisation Sector produced a major domestic scandal when it was revealed in mid-2016 that US Distressed Debt funds (pejoratively called "vulture funds") had been using the Irish Section 110 SPV to avoid all Irish taxes on their Irish domestic investments. The Irish Government closed the "loopholes" but it was estimated that the loss in Irish tax revenues to the Irish exchequer runs to billions of euros (exceeding the value the securitisation sector ever delivered to Ireland). Discussed further in vulture fund Irish tax avoidance. The IFSC Securitisation Sector was further pressured when it was revealed in 2018 that Russian banks (some under EU and US sanctions) had also been using the Irish Section 110 SPV to funnel over €100bn through the IFSC. Further academic studies showed that the IFSC SPV sector was operating in an almost unregulated fashion where structures were more akin to brass plate companies. Other former
Central Bank of Ireland The Central Bank of Ireland ( ga, Banc Ceannais na hÉireann) is Ireland's central bank, and as such part of the European System of Central Banks (ESCB). It is the country's financial services regulator for most categories of financial firms ...
regulators also publicly highlighted their concerns. Discussed further in unregulated shadow banking.


Financial sectors

A 2015 Irish Government IFS 2020 Strategy Paper, lists the Irish financial services sector as comprising over 400 companies, employing over 35,000 people (one third outside Dublin), with over €3.2 trillion in funds under administration, providing €2bn in taxes and €2.3bn in wages and salaries. KMPG estimate the IFSC constitutes 7% of Irish GDP. The IFSC has now become one of Europe's most important centres for , and , and ultimately became the birthplace of and global leader in . Some of the largest offices in the IFSC are those of the major Irish accounting and law firms. They have become associated with the creation and development of international tax management tools, (such as the Double Irish, single malt, and
capital allowances for intangible assets The Double Irish arrangement was a base erosion and profit shifting (BEPS) corporate tax avoidance tool used mostly by United States multinationals since the late 1980s to avoid corporate taxation on non-U.S. profits. It was the largest ta ...
(CAIA)
BEPS Base erosion and profit shifting (BEPS) refers to corporate tax planning strategies used by multinationals to "shift" profits from higher-tax jurisdictions to lower-tax jurisdictions or no-tax locations where there is little or no economic a ...
tools; and Section 110 SPV, QIAIF and ICAV zero-tax legal structures), leading to concerns of Ireland as a tax haven. In 2017, a University of Amsterdam study estimated that the IFSC was one of the world's largest conduit OFCs for facilitating global corporate tax avoidance. In 2018, a Gabriel Zucman study estimated that Ireland had become the world's largest corporate tax haven by virtue of its use as a Conduit OFC. Some of the main sectors of financial services activity carried out in the IFSC are outlined below:


Fund administration and domiciling

The original proposal for the IFSC was that it would become a location for high-margin activities such as
investment management Investment management is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified investment goals for the benefit of investors. Investors may be instit ...
,
banking A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...
and securities trading given its low tax rate and proximity to the major centres of London and Paris. However, ultimately few of these companies established offices which offered these services or relocated to Dublin in the following years and while the level of material employment has grown significantly relative to its former size, it is still well below many of the larger European financial centres in overall terms such as Frankfurt, London or Paris. Many of the notable fund and investment managers are dealing mostly with domestic businesses e.g. - Irish Life and
Bank of Ireland Bank of Ireland Group plc ( ga, Banc na hÉireann) is a commercial bank operation in Ireland and one of the traditional Big Four Irish banks. Historically the premier banking organisation in Ireland, the Bank occupies a unique position in Iris ...
and many of the examples mentioned in the media outlets relate to fund domiciling, custody, treasury and more recently trading rather than investment management and investment banking. Classic fund administration (i.e. fund accounting, fund administration, fund custody and transfer agency) is the largest employer in IFSC making up almost a third of IFSC jobs and totaling almost 9,274 jobs at the last reliable study. The four largest global fund administration and custody providers all have major offices in the IFSC State Street,
Bank of New York Mellon The Bank of New York Mellon Corporation, commonly known as BNY Mellon, is an American investment banking services holding company headquartered in New York City. BNY Mellon was formed from the merger of The Bank of New York and the Mellon Finan ...
,
Citibank Citibank, N. A. (N. A. stands for " National Association") is the primary U.S. banking subsidiary of financial services multinational Citigroup. Citibank was founded in 1812 as the City Bank of New York, and later became First National City ...
and Northern Trust, as well as internal fund administration departments from major global investment banks such as JPMorgan,
Goldman Sachs Goldman Sachs () is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in Lower Manhattan, with regional headquarters in London, Warsaw, Bangalore, Ho ...
and
Bank of America The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank ...
. Fund domiciling (and distribution) is where specialist law firms, and specialist administration departments of investment firms (i.e. BlackRock,
Citibank Citibank, N. A. (N. A. stands for " National Association") is the primary U.S. banking subsidiary of financial services multinational Citigroup. Citibank was founded in 1812 as the City Bank of New York, and later became First National City ...
,
Deutsche Bank Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York St ...
), provide legal (i.e. creating fund prospectus, fund listing documents etc.) and other professional services (i.e. fund trustees, fund audit etc.) to Irish domiciled, and often Irish listed, fund structures in various Irish legal fund "wrappers" (incl. UCITs, QIAIFs, MMFs and AIFs). The IFSC is one of the largest and fastest growing locations for UCITS in Europe. The trade body for the IFSC fund administration and domiciling sector is the Irish Funds (Industry) Association (previously Dublin Funds Industry Association, or "DIMA").


Securitisation

The introduction of the Irish Section 110 SPV in 1997, described by
PwC PricewaterhouseCoopers is an international professional services brand of firms, operating as partnerships under the PwC brand. It is the second-largest professional services network in the world and is considered one of the Big Four accounti ...
as the "heart of the Irish structured finance regime", enabled the IFSC become the largest provider of SPVs in the EU securitisation market, and has made Ireland the 4th largest
shadow banking The shadow banking system is a term for the collection of non-bank financial intermediaries (NBFIs) that provide services similar to traditional commercial banks but outside normal banking regulations. Examples of NBFIs include hedge funds, i ...
centre in the world. While Irish securitisation SPVs pay no effective Irish corporate taxes (SPVs are deliberately structured in this way), they are estimated to contribute over €100m annually to the Irish Economy from fees paid to local Irish professional services firms (legal, accounting and
corporate services Corporate services or business services are activities which combine or consolidate certain enterprise-wide needed support services, provided based on specialized knowledge, best practices, and technology to serve internal (and sometimes external) ...
providers) who create and administer the SPVs. The sector was involved in a major domestic tax scandal in 2017. Sometimes the securitisation sector is merged with the fund administration sector when "total funds administered" data is quoted for the IFSC (or IFS sector). The trade body for the IFSC Securitisation sector is the Irish Debt Securities Association (IDSA), which was founded by IFSC law firm, Matheson.


Banking

Some of the world's largest banks have offices in the IFSC. Their focus is mainly on administration support for
securitisation Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and selling ...
and structured finance activities, aircraft leasing activities, or conducting in-house corporate treasury and fund administration functions for their parent. There are few examples of foreign banks conducting higher margin
asset management Asset management is a systematic approach to the governance and realization of value from the things that a group or entity is responsible for, over their whole life cycles. It may apply both to tangible assets (physical objects such as buildings ...
,
investment banking Investment banking pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Traditionally associated with ...
or
corporate finance Corporate finance is the area of finance that deals with the sources of funding, the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to all ...
from their IFSC platform (instead usually favouring their bases in London, Paris, Frankfurt or Luxembourg in Europe). The trade body for the IFSC and non-IFSC banking sector is the Irish Banking Federation.


Insurance

The main insurance activities cover
life insurance Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the dea ...
, general insurance,
reinsurance Reinsurance is insurance that an insurance company purchases from another insurance company to insulate itself (at least in part) from the risk of a major claims event. With reinsurance, the company passes on ("cedes") some part of its own ins ...
and captive insurance. There is little insurance risk originated or underwritten in the IFSC and London remains the primary global base for these activities. The only remaining listed Irish insurance company is FBD Holdings which is one of the smaller players in the Irish insurance market. The IFSC occasionally provides an accounting and administration service for products sold on a pan-EU basis through the parent's main channels. The IFSC has a niche strength as a top location in the relatively small Captive Insurance market. The trade body for the IFSC Insurance sector is the Dublin International Insurance & Management Association (DIMA).


Aircraft leasing

The IFSC is the largest aircraft leasing hub in the world with 14 of the top 15 aircraft lessors headquartered in Ireland (including AerCap,
GECAS GECAS (GE Capital Aviation Services) was an Irish–American commercial aviation financing and leasing company. AerCap acquired the company from GE Capital on November 1, 2021. GECAS was the largest commercial airline leasing/financing company in ...
, SMBC and Avolon) and circa 50% of the world's fleet of leased aircraft is managed through IFSC companies. Unlike some other IFSC sectors, the Aircraft Leasing sector includes high margin activities such as origination and financing as well as accounting and administration. While the sector employs around 5,000 people (1,700 directly) (versus Fund Administration at almost 10,000 jobs), and pays less than €40m in Irish corporate tax it is estimated to provide over €500m annually to the Irish Economy (from salaries and fees) making it one of the most valuable sectors in the IFSC. In May 2019, figures from the Department of Finance showed that since 2012, the net assets of the aircraft leasing industry in Ireland was close to zero (€141 billion in Irish domiciled aircraft assets offset by €141 billion in offshore financing); and that the aircraft leasing industry paid only €54 million in Irish corporation tax in 2018. The average salary of employees in the aircraft leasing sector is estimate to be in the region of €165,000. The closest related trade body for the IFSC Aircraft Leasing sector is the Irish Aviation Authority (IAA) (not exclusively IFSC focused). Aircraft Leasing Ireland (ALI) also represents the sector and is a constituent part of Financial Services Ireland (FSI) and ultimately of
Ibec Ibec is an Irish business representative lobbying organisation and human resources services provider According to the Standards in Public Office Commission register it is the organisation that is doing "the most lobbying" in Ireland. Ibec i ...
.


Corporate treasury

The corporate treasury sector primarily consists of small IFSC subsidiaries of large non-financial multi-national services organisations (e.g. Pfizer, Xerox), which serve as a hub for in-house treasury functions (i.e. cash pooling, fx hedging), for their global parent and sometimes serving as shared services centres serving multiple locations and functions (providing administration and bookkeeping functions). The level of Irish corporation tax paid by these hubs is close to €200m per annum, making it more valuable to the Irish Economy than the higher-profile IFSC Securitisation sector.


Payments processing

This is a more diverse sector that covers classic payments companies (US credit card processing companies like Visa and MasterCard), internet and fintech payments companies (i.e. PayPal, Stripe), and other niche payment processors (i.e.
Fexco Fexco is an Ireland-based financial services and financial technology company focusing on bureau de change and payment card services. Its head office is located in Killorglin, County Kerry. As of 2019, Fexco reports it has more than 2,500 staf ...
, TransferMate, Realex Payments, Prepaid Financial Services). The attraction is Ireland's beneficial tax regime for contract manufacturing (previously developed for the pharmaceutical sector in Ireland) which makes Ireland a low / zero tax centre for handling payments. The closest trade body for the IFSC Payments sector is the Fintech Payments Association of Ireland (FPAI) (not exclusively IFSC focused).


Private equity and venture capital

Private equity In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a t ...
and private credit firms with offices and investment professionals in Ireland are mainly operated and funded by large American private equity organisations such as
KKR KKR & Co. Inc., also known as Kohlberg Kravis Roberts & Co., is an American global investment company that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate, credit, and, through its strateg ...
,
The Carlyle Group The Carlyle Group is a multinational private equity, alternative asset management and financial services corporation based in the United States with $376 billion of assets under management. It specializes in private equity, real assets, and ...
and Oaktree Capital Management. Additionally, investments and acquisitions are also made by non-domestic firms such as Brookfield Asset Management's €120M takeover of Imagine Communications, Insight Partner's purchase of a €100m stake in the AMCS Group (in conjunction with the ISIF) and Apollo's takeover of Ireland's largest hotel chain Tifco in a €600m deal in 2018. Domestic private equity firms include Renatus and most notably Causeway Capital who were responsible for the rescue of Patisserie Valerie in February 2019. The trade body for the private equity and venture capital industry is the Irish Venture Capital Association (IVCA).


Technology expansion

The 2015 IFSC III phase saw the "financial" IFSC merge with the neighbouring Grand Canal Dock and
Dublin Docklands Dublin Docklands ( ga, Ceantar Dugaí Átha Cliath) is an area of the city of Dublin, Ireland, on both sides of the River Liffey, roughly from Talbot Memorial Bridge eastwards to the 3Arena. It mainly falls within the city's D01 and D02 ...
areas; comprising major offices of global technology multinationals including Google, Facebook, and Amazon. Since the 2015 expansion, the term "International Services Centre" (ISC) is sometimes used. Some of the biggest offices in the IFSC are the law firms (e.g. Matheson, A&L Goodbody, McCann Fitzgerald, and William Fry), and accounting firms (e.g. PwC, KPMG, Deloitte, and Ernst & Young), who advise both the financial multinationals and technology multinationals, operating in the Greater Dublin Area. The legal structures created by IFSC law and accounting firms for securitization (e.g. Section 110 SPVs, and QIAIFs), became important to the tax structuring of US technology firms in the IFSC. Such structures are part of a suite of base erosion and profit shifting (BEPS) tools that enable US technology firms to achieve an
effective tax rate In a tax system, the tax rate is the ratio (usually expressed as a percentage) at which a business or person is taxed. There are several methods used to present a tax rate: statutory, average, marginal, and effective. These rates can also be p ...
(ETR) of under 4% on all non-US global profits ''shifted'' to Ireland (see
here Here is an adverb that means "in, on, or at this place". It may also refer to: Software * Here Technologies, a mapping company * Here WeGo (formerly Here Maps), a mobile app and map website by Here Television * Here TV (formerly "here!"), a ...
). PwC Ireland managing partner,
Feargal O'Rourke Feargal “Sake” O'Rourke (born 3 August 1964) is an Irish accountant and corporate tax expert, who is the managing partner of PwC in Ireland. He is considered the architect of the '' Double Irish'' tax scheme used by U.S. firms such as App ...
, was credited as creating the Double Irish BEPS tool, while Matheson have also been identified an important developer of US tax structures in Ireland. With the closure of the Double Irish arrangement in 2020, the most important BEPS tool in the IFSC is the
Capital Allowances for Intangible Assets The Double Irish arrangement was a base erosion and profit shifting (BEPS) corporate tax avoidance tool used mostly by United States multinationals since the late 1980s to avoid corporate taxation on non-U.S. profits. It was the largest ta ...
(CAIA) BEPS tool. Apple used the CAIA BEPS tool in Q1 2015 to execute the largest BEPS action in history, causing the Leprechaun economics revision of Irish GDP data. IFSC tax law firms market the sub–2.5% Irish effective tax rates that the CAIA BEPS tool can deliver for technology multinationals in the IFSC, on all their worldwide income that is ''shifted'' to Ireland. In 2018, the European Parliament GUE/NGL group called the CAIA tool, the " Green Jersey" BEPS tool. The CAIA BEPS tool requires multinationals to create virtual internal
intellectual property Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, co ...
(IP) assets in offshore locations (e.g. Apple used Jersey). These virtual IP assets are purchased, via intergroup loans, by the Irish subsidiary. The CAIA tool allows the Irish subsidiary to write-off this intergroup purchase against future Irish taxes. An internationally reputable accounting firm is needed to stand over the "valuation" of the virtual group IP asset in the multinational's GAAP accounts.


Global ranking


GFCI ranking (2007–2019)

The IFSC, classed as "Dublin", appears in the
Global Financial Centres Index The Global Financial Centres Index (GFCI) is a ranking of the competitiveness of financial centres based on over 29,000 financial centre assessments from an online questionnaire together with over 100 indices from organisations such as the World ...
(GFCI), a ranking of the competitiveness of over 100 global
financial centre A financial centre ( BE), financial center ( AE), or financial hub, is a location with a concentration of participants in banking, asset management, insurance or financial markets with venues and supporting services for these activities to ta ...
s based on over 29,000 financial centre assessments from an online questionnaire together with over 100 indices from organisations such as the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
, the
Organisation for Economic Co-operation and Development The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
(OECD), and the
Economist Intelligence Unit The Economist Intelligence Unit (EIU) is the research and analysis division of the Economist Group, providing forecasting and advisory services through research and analysis, such as monthly country reports, five-year country economic forecasts, ...
. The index was started in 2007 and is published twice a year; the IFSC (or Dublin) reached a high of ninth in GFCI6, and a low of 73rd in GFCI16.


Xinhua–Dow Jones Index (2010–2014)

The Xinhua–Dow Jones International Financial Centers Development Index (IFCD) was a ranking of circa 45 major global
financial centre A financial centre ( BE), financial center ( AE), or financial hub, is a location with a concentration of participants in banking, asset management, insurance or financial markets with venues and supporting services for these activities to ta ...
s, and was compiled annually by the
Xinhua News Agency Xinhua News Agency (English pronunciation: )J. C. Wells: Longman Pronunciation Dictionary, 3rd ed., for both British and American English, or New China News Agency, is the official state news agency of the People's Republic of China. Xinhua ...
of China with the
Chicago Mercantile Exchange The Chicago Mercantile Exchange (CME) (often called "the Chicago Merc", or "the Merc") is a global derivatives marketplace based in Chicago and located at 20 S. Wacker Drive. The CME was founded in 1898 as the Chicago Butter and Egg Board, an ...
and
Dow Jones & Company Dow Jones & Company, Inc. is an American publishing firm owned by News Corp and led by CEO Almar Latour. The company publishes ''The Wall Street Journal'', '' Barron's'', ''MarketWatch'', ''Mansion Global'', ''Financial News'' and ''Private ...
of the United States from 2010 to 2014; the IFSC (or Dublin) ranked 37th overall of 45 centres in the final 2014 IFCD Index.


Tax haven concerns

IFSC growth is closely related to concern regarding tax issues, and Ireland as a tax haven, estimated in 2018 by academics to be the world's largest tax haven. The role that the major IFSC accounting and IFSC law firms have played in creating Irish tax haven-type legal structures, including Double Irish, Single malt, and
Capital allowances for intangible assets The Double Irish arrangement was a base erosion and profit shifting (BEPS) corporate tax avoidance tool used mostly by United States multinationals since the late 1980s to avoid corporate taxation on non-U.S. profits. It was the largest ta ...
(CAIA) BEPS tools, as well as Section 110 SPV, QIAIF and ICAV zero-tax legal structures, has been chronicled. For example, PwC Ireland, one of the largest professional services firms in the IFSC, was identified in 2013 by Bloomberg as the "great architect" of the
Double Irish arrangement The Double Irish arrangement was a base erosion and profit shifting (BEPS) corporate tax avoidance tool used mostly by United States multinationals since the late 1980s to avoid corporate taxation on non-U.S. profits. It was the largest ta ...
, the largest known legal tax avoidance structure in history, responsible shielding over US$100 billion annually from taxation. In addition, Matheson, who state that they have the largest corporate tax group of all IFSC law firms, was identified in 2013 by the ''
Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
'' as the headquarters of 125 major US multi-nationals seeking to benefit from the Irish tax system, and avoid US corporate taxes. The IFSC's reputation as a global centre of tax haven activities, has seen several of the "
offshore magic circle The offshore magic circle is the set of the largest multi-jurisdictional law firms who specialise in offshore financial centres, especially the laws of the British Overseas Territories of Bermuda, Cayman Islands, and British Virgin Islands, and ...
" law firms set up in offices in the IFSC. IFSC firms have also been associated with helping foreign firms avoid Irish taxes on Irish assets. In 2016, it was discovered US
distressed debt Distressed securities are securities over companies or government entities that are experiencing financial or operational distress, default, or are under bankruptcy. As far as debt securities, this is called distressed debt. Purchasing or holding s ...
funds used IFSC Section 110 securitization vehicles to avoid Irish taxes on their Irish investments (see vulture fund Irish tax avoidance), supported by IFSC law and accounting firms, It was estimated these US distressed funds would avoid €20 billion in Irish taxes from 2016 to 2026 on circa €40 billion of Irish investments made from 2012 to 2016 (which represented circa €80 billion in headline Irish loan balances). Matheson was exposed as using children's charities to hide their client's Section 110 SPVs. The IFSC's growth has led to Ireland's rise in global league tables of
tax havens A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, o ...
, and seen Ireland "black listed" by countries such as Brazil. There is evidence IFSC SPVs are used for circumvention of global sanctions, tax avoidance, and money laundering. Research in 2017–2018 by
Trinity College Dublin , name_Latin = Collegium Sanctae et Individuae Trinitatis Reginae Elizabethae juxta Dublin , motto = ''Perpetuis futuris temporibus duraturam'' (Latin) , motto_lang = la , motto_English = It will last i ...
finance Professor Jim Stewart, and Cillian Doyle, showed many IFSC SPVs are unregulated brass plate structures attracting little oversight by the Revenue Commissioners or
Central Bank of Ireland The Central Bank of Ireland ( ga, Banc Ceannais na hÉireann) is Ireland's central bank, and as such part of the European System of Central Banks (ESCB). It is the country's financial services regulator for most categories of financial firms ...
, and with local individuals holding hundreds of SPV directorships. The
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
("IMF") has noted the same concern regarding governance of IFSC SPVs (and FCVs). In 2018, a former Deputy Governor of the
Central Bank of Ireland The Central Bank of Ireland ( ga, Banc Ceannais na hÉireann) is Ireland's central bank, and as such part of the European System of Central Banks (ESCB). It is the country's financial services regulator for most categories of financial firms ...
stated that the risks from abuses of IFSC SPVs was not fully appreciated by the Irish Government.


Notable IFSC corporate offices

Fund Administration and Custodial Services * State Street Corporation * The Bank of New York Mellon *
Citibank Citibank, N. A. (N. A. stands for " National Association") is the primary U.S. banking subsidiary of financial services multinational Citigroup. Citibank was founded in 1812 as the City Bank of New York, and later became First National City ...
* Northern Trust *
Bank of America The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank ...
* JPMorgan *
US Bancorp U.S. Bancorp (stylized as us bancorp) is an American bank holding company based in Minneapolis, Minnesota, and incorporated in Delaware. It is the parent company of U.S. Bank National Association, and is the fifth largest banking institution ...
Banking & Insurance *
HSBC HSBC Holdings plc is a British multinational universal bank and financial services holding company. It is the largest bank in Europe by total assets ahead of BNP Paribas, with US$2.953 trillion as of December 2021. In 2021, HSBC had $10.8 tr ...
* AIG *
BNP Paribas BNP Paribas is a French international banking group, founded in 2000 from the merger between Banque Nationale de Paris (BNP, "National Bank of Paris") and Paribas, formerly known as the Banque de Paris et des Pays-Bas. The full name of the grou ...
*
Wells Fargo Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and intern ...
Investment Banking * Davy Group *
Goodbody Stockbrokers Goodbody Stockbrokers is Ireland's longest established stockbroking firm with roots dating back to 1877. As well as being one of the leading institutional brokers, it is one of the largest private client firms in Ireland. It is a member firm o ...
* Cantor Fitzgerald Aviation and Aircraft Leasing * AerCap * Avolon *
GECAS GECAS (GE Capital Aviation Services) was an Irish–American commercial aviation financing and leasing company. AerCap acquired the company from GE Capital on November 1, 2021. GECAS was the largest commercial airline leasing/financing company in ...
* SMBC Aviation Capital *Irelandia Investments - (developer of low cost carriers including
Ryanair Ryanair is an Irish ultra low-cost carrier founded in 1984. It is headquartered in Swords, Dublin, Ireland and has its primary operational bases at Dublin and London Stansted airports. It forms the largest part of the Ryanair Holdings famil ...
,
Tiger Airways Tiger Airways Singapore Pte Ltd, operating as Tigerair, was a budget airline headquartered in Singapore. It operated services to regional destinations in Southeast Asia, Bangladesh, Taiwan, China and India from its main base at Singapore Changi ...
and VivaColombia Trading * Citadel LLC *
Susquehanna International Group Susquehanna International Group, LLP (SIG) is a privately held trading and technology firm. SIG comprises a number of affiliated entities specializing in trading and proprietary investments in equities, fixed income, energy, commodity, index a ...
*
Credit Suisse Credit Suisse Group AG is a global investment bank and financial services firm founded and based in Switzerland. Headquartered in Zürich, it maintains offices in all major financial centers around the world and is one of the nine global " ...
*
Investment Technology Group Investment Technology Group, Inc. was a United States-based multinational agency brokerage and financial markets technology firm aimed at a hedge fund and asset management clientele. One of the first suppliers of electronic trading services, IT ...
(Acquired by Virtu Financial) * Ion Trading Group ( Fidessa,
Dealogic Dealogic is a financial markets platform offering integrated content, analytics, and technology via a service to financial firms. From origination to distribution and investors, the Dealogic platform provides a connection across banking, capita ...
and
Acuris Acuris is a financial news and data firm known for its products fixed income research provider Debtwire and Mergermarket, a specialist in Mergers and acquisitions, M&A intelligence. It is owned by ION Investment Group, a financial software and da ...
) * Corvil (acquired by Pico) *Geneva Trading Fintech and Regtech *
First Derivatives First or 1st is the ordinal form of the number one (#1). First or 1st may also refer to: *World record, specifically the first instance of a particular achievement Arts and media Music * 1$T, American rapper, singer-songwriter, DJ, and reco ...
* Fenergo * TransferMate - part of the Taxback Group *
FEXCO Fexco is an Ireland-based financial services and financial technology company focusing on bureau de change and payment card services. Its head office is located in Killorglin, County Kerry. As of 2019, Fexco reports it has more than 2,500 staf ...
incorporating a majority shareholding in
Goodbody Stockbrokers Goodbody Stockbrokers is Ireland's longest established stockbroking firm with roots dating back to 1877. As well as being one of the leading institutional brokers, it is one of the largest private client firms in Ireland. It is a member firm o ...
* CurrencyFair *
Stripe Stripe, striped, or stripes may refer to: Decorations *Stripe (pattern), a line or band that differs in colour or tone from an adjacent surface *Racing stripe, a vehicle decoration *Service stripe, a decoration of the U.S. military Entertainment ...
Managed Futures * Abbey Capital Family Offices *Elkstone Capital - various HNWI *Island Capital - Denis O'Brien family office *International Investment & Underwriting (IIU) - Dermot Desmond family office Private Credit * Guggenheim Partners * Blackstone ( GSO Capital Partners) - acquired Harbourmaster Capital Partners * GoldenTree Asset Management *Atlantic Capital Management *Bain Capital Private Equity *
KKR KKR & Co. Inc., also known as Kohlberg Kravis Roberts & Co., is an American global investment company that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate, credit, and, through its strateg ...
(formerly Avoca Capital) *Renatus * Carlyle Cardinal Ireland (CCI) * Causeway Capital *Lioncourt Venture Capital *Draper Espirit PLC Supermancos - in order of AUM(€bn) *Carne Global Fund Managers * Northern Trust Fund Services *
Goodbody Stockbrokers Goodbody Stockbrokers is Ireland's longest established stockbroking firm with roots dating back to 1877. As well as being one of the leading institutional brokers, it is one of the largest private client firms in Ireland. It is a member firm o ...
Fund Management *Link Fund Manager Solutions * Davy Group Investment Fund Services *DMS Investment Management Services *KBA Consulting *MPMF Fund Management (part of the
Maples Group Maples Group (previously Maples and Calder) is a multi-jurisdictional firm providing legal and financial services, headquartered in the Cayman Islands. It has offices in many financial centres around the world, including several tax neutral jur ...
)


See also

* List of companies listed on Euronext Dublin * Offshore financial centre *
Dublin Docklands Dublin Docklands ( ga, Ceantar Dugaí Átha Cliath) is an area of the city of Dublin, Ireland, on both sides of the River Liffey, roughly from Talbot Memorial Bridge eastwards to the 3Arena. It mainly falls within the city's D01 and D02 ...


Notes


References


External links

* * (Mainly Directory Site) {{coord, 53, 20, 58, N, 6, 14, 50, W, region:IE, display=title Dublin Docklands North Wall, Dublin Financial districts Economy of the Republic of Ireland Economy of Dublin (city) Corporate tax avoidance Offshore finance Special economic zones 1987 establishments in Ireland