Our expertise
What we advise on within the private credit universe
FUND FORMATION
Ireland is a leading global fund establishment jurisdiction. The access to a pan-European marketing passport, flexible regulatory framework, favourable and transparent tax regime, broad product spectrum and well-established fund services provider industry all contribute to Ireland being the jurisdiction of choice for establishing a fund in Europe.
Arthur Cox has a highly diverse fund formation practice and extensive experience establishing funds across the spectrum of private credit strategies. Our experience in advising a diverse range of private credit managers and sponsors means that our team has established an acute understanding of the private credit market and has the ability to advise on complicated structures. We advise on a broad spectrum of private credit strategies including direct lending, asset-based finance, traded credit, CLOs, real asset finance and many more. Our team provides practical, commercially driven and effective advice in respect of establishing a fund in Ireland.
Arthur Cox is globally recognised as a leading fund establishment law firm and we advise clients on establishing regulated funds (such as the investment limited partnership and the ICAV) and unregulated funds (such as the 1907 limited partnership) while leveraging capabilities across a range of practice groups to offer expertise in tax, structured finance and regulatory aspects of such funds.
Arthur Cox established the first investment limited partnership to be launched following the amendment of the Investment Limited Partnerships legislation in 2021.
DIRECT LENDING/LOAN ORIGINATION USING IRISH STRUCTURES
Ireland has a long-established tried and tested loan origination funds regime. Funds established in Ireland can engage in direct lending/loan origination and participate in loans, invest in debt/credit instruments among other activities.
With the introduction of Directive 2024/927/EU (“AIFMD II”) amending Directive 2011/61/EU on Alternative Investment Fund Managers (“AIFMD”), the regime applicable to alternative investment funds (“AIFs”) that engage in loan origination activities will be harmonised across the EU from April 2026. The AIFMD II loan origination provisions define "loan origination" or "originating a loan" as the granting of a loan:
(i) directly by an AIF (as the original lender); or
(ii) indirectly through a third party or special purpose vehicle ("SPV"), which originates a loan for or on behalf of the AIF, or for or on behalf of an AIFM in respect of the AIF, where the AIFM or AIF is involved in structuring the loan or defining or pre-agreeing its characteristics, prior to gaining exposure to the loan.
AIFMD II provides that certain of the loan origination provisions shall only apply in respect of "Loan-Originating AIFs", which are AIFs: (i) whose investment strategy is mainly to originate loans, or (ii) whose originated loans have a notional value that represents at least 50% of its net asset value.
The following is a summary of the rules that apply to loan origination funds in Ireland:
Pre-2026:
Certain Irish domestic rules relating to prohibited borrowers, a concentration limit per borrower group and limits to the operations of the fund to activities related to loan origination and debt investment. Leverage limit of 200% of gross assets.
2026 onwards:
- Loans to AIFM, depositary, delegate or group entity and “Originate-to-distribute” investment strategies prohibited.
- 20% concentration limited for certain categories of borrowers (financial undertakings, other AIFs, or UCITS)
- AIF must retain 5% of notional value of each loan originated and subsequently transferred to third parties.
- Leverage limit: (1) closed-ended 300% NAV, (2) open-ended: 175% NAV)
- Potential for all members states to prohibit loans to consumers
In light of the existing framework and service provider experience in Ireland with loan origination funds and the fact that a loan origination fund can avail of a 24-hour authorisation process, it is expected that Ireland's reputation as a domicile for loan origination funds will continue to go from strength to strength.
STRUCTURED FINANCE
Section 110 Companies are well suited to structured finance transactions such as CLOs, receivables financing, syndicated loan transactions and other asset-backed securitisation transactions either as stand-alone entities or part of a broader multi-vehicle structure. Irish corporate law enables noteholders to be exposed only to liabilities and assets that are intended to be secured. In addition, favourable tax laws allow the structures to be, in most cases, tax neutral (with no material annual minimum profit or ‘spread’ required at the SPV level) and a ‘quoted Eurobond’ exemption, together with numerous double taxation treaties, allows interest on securities to be paid gross. A minimum share capital requirement of €1 in most cases makes incorporating an Irish SPV a straightforward process. In addition, Euronext Dublin is a market leader in the listing of debt securities. Investors in some jurisdictions see debt issued by EU/OECD issuers as more favourable than investing in so-called tax havens.
As the leading structured finance and securitisation practice in Ireland, Arthur Cox’s receivables and asset finance practice offers expertise in structuring and documenting structured finance and asset finance transactions of all types including sustainability-linked finance. We are frequently mandated by domestic and international clients to advise on structured finance and securitisation transactions including collateralised loan obligations (CLOs), synthetic securitisations, SRT transactions, derivatives, trade receivables and asset-based lending transactions.
FUND FINANCE
The ever-increasing use of Irish funds for private credit and private equity structures has seen a corresponding increase in both capital call/subscription line facilities and NAV/asset-backed facilities being deployed into Irish fund structures by lenders. Increasingly, we are also seeing Section 110 companies being used as hybrid private equity /investment bank warehouse vehicles for fund financing deployment.
Ireland's favourable regulatory framework facilitates credit lines to investment funds in a manner that allows flexibility to borrowers, and certainty and robust security to lenders. US security features such as cascading pledges are seen as increasingly common and can also be a useful solution to issues otherwise presented by certain restrictions on third-party credit support.
Arthur Cox’s market-leading finance group has built extensive knowledge and experience in advising leading fund sponsors, investment funds and lending banks across all elements of fund finance. The finance group work closely with the Asset Management and Investment Funds group in advising fund finance clients which results in delivering a seamless service to clients.
TAX
Ireland is an internationally recognised, open and tax-efficient jurisdiction. Ireland’s domestic corporation tax rate is 12.5 per cent, one of the lowest headline corporate tax rates in the OECD. Ireland has signed tax treaties with 78 countries, with 75 in effect. Ireland’s tax regime, as well as being highly efficient, clear, and certain, is open, transparent and fully compliant with OECD guidelines and EU law (including Pillar II).
The Irish framework is legislation-based and does not rely on rulings. Irish regulated funds are exempt from Irish tax on income and gains derived from their investments and are not subject to any Irish tax on their net asset value. There are additionally no net asset, transfer or capital taxes on the issue, transfer or redemption of units owned by non-Irish resident investors. Other than in respect of certain funds which hold interests in Irish real estate (or particular types of Irish real estate-related assets), non-Irish investors are not subject to Irish tax on their investment and do not incur any withholding taxes on payments from the fund. As provided under EU law, the provision of management, administration and custody services to an Irish regulated fund is exempt from Irish VAT. Other services, such as legal and accounting services, can result in an Irish VAT liability but may be offset, depending on the fund’s VAT recovery position.
The Arthur Cox Tax Group has extensive experience advising on both regulated and unregulated structures and fitting an Irish structure into a wider global tax structure for sponsors and investors to minimise tax exposure in Ireland and fit within international tax planning.
SUSTAINABILITY
As a member of the EU, Ireland is subject to and benefits from the package of legislative measures in introduced by the EU Commission in 2018 with the aim of furthering sustainable finance and environmental, social and governance (“ESG”) integration. The key regulations that we regularly advise on are the Taxonomy Regulation; the Sustainable Finance Disclosure Regulation (“SFDR”), the Low Carbon and Positive Impacts Benchmarks Regulation and, more recently, the Corporate Sustainability Reporting Directive (“CSRD”) and the Corporate Sustainability Due Diligence Directive (“CSDDD”). Our teams advise on all aspects of the ESG regulatory framework from the production of SFDR pre-contractual disclosures for financial products to advising on policies and procedures. Our expertise in this area complements all aspects of our private credit practice.
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