Irish Private Fund Structures

To the point

• ILPs are common law partnerships regulated by the CBI, with limited liability for Limited Partners. They can avail of quick regulatory approval for QIAIFs, possessing umbrella fund capabilities and are tax transparent vehicles.
• ICAVs are corporate vehicles with separate legal personality. They can be structured as an umbrella structure with no Irish tax on income or gains at the fund level. The ICAV can generally access Ireland’s double tax treaties and the option to “check the box” for U.S. tax purposes.
• From 1 January 2026, ILPs can benefit from a new DWT exemption on qualifying distributions from Irish corporate entities (e.g. asset holding companies), subject to certain conditions being met.
• Also effective from 1 January 2026 is a reduction in the rate of exit tax (from 41% to 38%) on distributions/redemption gains paid to Irish taxable investors in ICAVs (and other tax opaque funds).

Introduction

Ireland offers a robust, flexible, and tax-efficient environment that attracts both global asset managers and investors. The Irish private funds sector features a variety of fund vehicles tailored to different investment types and regulatory requirements.

Among these, the Investment Limited Partnership (“ILP”) and the Irish Collective Asset-management Vehicle (“ICAV”) are the most prominent in the market.

Investment Limited Partnership: Structure, Operation and Key Features

An ILP is a common law partnership regulated by the Central Bank of Ireland “CBI” , designed specifically for investment funds including private equity, real assets and infrastructure. ILPs are regulated as alternative investment funds (“AIFs”) and can be formed as a Retail AIF (“RAIF”) or a Qualifying Investor AIF (“QIAIF”).

Structure and operation

An ILP is established by way of a partnership agreement between one or more General Partners (“GPs”) and one or more Limited Partners (“LPs”), governed by the Investment Limited Partnerships Act 1994.

The Investment Limited Partnerships (Amendment) Act 2020 introduced several key changes to modernise[AM1]  the Irish ILP which have further strengthened Ireland’s appeal as an investment destination.

The GP is responsible for managing the ILP’s business and would typically be structured as a body corporate (although non-body corporates are permissible as GPs). The GP can be domiciled in any jurisdiction and is not required to be an alternative investment fund manager (“AIFM”), but the GP is subject to the CBI’s fitness and probity regime.

LPs have limited liability which they can retain even when involved in certain activities related to the ILP. Their risk is limited to the amount they have invested in the ILP.

While the GP can act as the AIFM, it is more likely to be a single use limited liability corporate entity due to the unlimited liability it will have for the debts of the company.

Key features

• An ILP is not a separate legal entity. All the assets and liabilities belong jointly to the individual partners.
• Tax transparent investment vehicle – income and gains at a fund level are attributed directly to the partners.
• Generally, no Irish tax expected on income at fund level or on distribution to partners.
• ILP is typically considered to be tax transparent from a US tax perspective but can be “checked closed” from a US tax perspective if desired.
• GP can be domiciled in any jurisdiction and does not need to be a corporate vehicle.
• ILPs may establish umbrella funds with segregated liability between sub-funds in the event of insolvency (similar to other regulated fund types). Umbrella funds allow for diverse investment strategies within one structure.
• Amendments to the ILP agreement require approval by a majority of limited partners (by value or class, for example) and a majority of the general partners, removing the need for consent from all LPs (unless provided for within the limited partnership agreement).
• ILP can avail of the CBI 24-hour approval process (however depends on approval status of participants).
• ILPs may register an alternative foreign name in a non-English speaking jurisdiction to allow for more efficient marketing in other jurisdictions.

Irish Collective Asset-management Vehicle: Structure, Operation and Key Features

Introduced in 2015, the ICAV is a corporate vehicle regulated by the CBI and can be authorized as both a UCITS (Undertakings for Collective Investment in Transferable Securities) and an AIF (as a QIAIF or a RAIF). It combines the benefits of a corporate structure with enhanced flexibility and tax efficiency.

Structure and Operation

An ICAV is governed by the Irish Collective Asset-Management Vehicles Act 2015 and is essentially a corporate entity limited by shares but with variable capital, which allows the ICAV to issue and redeem shares without the need for shareholder approval for capital changes.

An ICAV must appoint a depository located in Ireland to perform functions such as safe keeping of assets, cash monitoring and oversight duties.

An ICAV is managed and controlled by its board of directors however the board generally delegates many functions to third party service providers, including fund administration and investment management services.

Key features

• Separate legal personality, allowing the ICAV to hold assets and enter contracts in its own name.
• ICAVs can be structured as an umbrella fund with multiple sub-funds, each with segregated liability, enabling fund managers to offer a range of investment strategies under one legal entity.
• ICAVs can file a “check the box” election to be treated as a partnership for US federal income tax purposes.
• ICAVs are not subject to annual tax on income or gains however it has a responsibility to deduct exit tax in respect of payments made to certain unit holders and on deemed disposals. Non-resident unit holders can generally receive distributions free from tax provided a non-resident declaration is submitted.
• Can benefit from reduced withholding tax rates on certain income due Ireland’s extensive double taxation treaty network.

Upcoming changes impacting Irish fund vehicles

Finance Bill 2025, announced on 16 October 2025, introduced a number of key changes to Irish domestic tax legislation which will positively impact both corporates and partnership fund vehicles operating in the private assets space.

DWT Exemption

Effective from 1 January 2026, there will be a new dividend withholding tax (“DWT”) exemption on distributions made by Irish corporate entities to ILPs where certain conditions are met.

The following conditions must be satisfied by the ILP to avail of the exemption:

• The partners must be beneficially entitled to at least 51% of the ordinary share capital of the company making the distribution,
• The distributing company’s ordinary share capital must be an asset of the ILP, and
• The ILP must submit a declaration to the distributing company in the form prescribed by the Irish Revenue Commissioners before the distribution is made. At the date of drafting, the declaration had not yet been released by the Irish Revenue Commissioners.

This extension of the DWT exemption to ILPs is a positive development which can significantly reduce tax drag for ILP investors. Consideration will also need to be given to the Outbound Payments Defensive Measures as dividend payments are also subject to these rules.

Reduction in exit tax for Irish taxable investors

Also effective from 1 January 2026, Finance Bill introduced a reduction in the rate of exit tax applicable from 41% to 38% on distribution and redemption gains paid to Irish taxable investors in ICAVs (and other opaque funds).

Reverse hybrid rules

At the time of writing, the Committee Stage amendments to the Finance Bill 2025 were published. There are welcome updates particularly in the context of the reverse hybrid rules, with the broadening of the meaning of collective investment scheme, increasing the % threshold of diversification from 10% to 20%.

Further, the legislative amendments provide clarity that an ILP Holdco structure should not inadvertently fall foul of the reverse hybrid rules due to lack of diversification.

In conclusion

With the continued growth in the private asset sector, there are a variety of fund structures available to be utilized in a number of jurisdictions, each with unique legal and operational features. Ongoing regulatory developments continue to shape the environment in which these vehicles operate, both in an Irish and wider European context. When choosing a fund structure, it is important to consider the key features, rules and requirements of the jurisdiction in line with the investment strategy.