Joint Committee on Enterprise, Tourism and Employment debate -
Wednesday, 27 May 2026

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Scaling and Access to Funding: Irish Funds

An Cathaoirleach

As this committee has decided to hold hearings on competitiveness, the cost of doing business and scaling and access to funding in Ireland, I welcome the following witnesses to the meeting from Irish Funds: Mr. Pat Lardner, chief executive; Ms Andrea Kelly, chairperson; Mr. Adrian Mulryan, council member; and Mr. Adrian Whelan, council member. I am delighted they have joined us for this important topic, which will form part of the important work the committee will be doing in its report.

I now invite the chairperson to speak.

Ms Andrea Kelly

A Chathaoirligh, a Theachtaí Dála agus a Sheanadóirí, go raibh maith agaibh as an gcuireadh a thabhairt dúinn inniu. I am the chair of Irish Funds. I am joined by Pat Lardner, our chief executive, and Adrian Mulryan and Adrian Whelan, members of our governing council. We welcome the opportunity to appear before this committee to discuss competitiveness and the cost of doing business in Ireland. For our industry, these are not abstract issues. They go directly to Ireland’s ability to win and retain internationally mobile business, jobs and tax revenue.

Irish Funds is the representative body for Ireland’s funds and asset management industry, representing 150 firms operating across the country. Our industry is a genuine Irish success story, built over four decades through collaboration between industry, policymakers and the wider ecosystem. It has succeeded because Ireland combined a strong, agile offering with an operating environment that global firms regard as competitive. That position must now be actively maintained. Our scale is significant. We are the second largest fund domicile in Europe and the third largest globally. We have €5.8 trillion in funds domiciled here and €7.2 trillion in assets serviced from Ireland. More than 1,000 global fund promoters have chosen Ireland, where those funds are distributed to investors in more than 90 countries worldwide. In excess of 70% of all European exchange-traded fund, ETF, assets are domiciled in Ireland.

This translates directly into jobs and tax revenue. We support approximately 20,000 skilled direct jobs in fund management, servicing and advisory roles. The world’s largest investment managers and service providers have key operations in Ireland, employing staff in every province from Cork to Donegal, Dublin to Galway and everywhere in between. The industry directly contributes over €1 billion annually to the Exchequer in corporation tax and payroll taxes from activities built almost entirely on exporting services. Adding the indirect jobs and economic activity created in communities across Ireland, these numbers are even larger. Revenue flows in from clients across the globe, while the jobs and tax receipts remain in Ireland. This industry adds resilience to the Irish economy due to its international orientation, which broadens the economic base rather than relying solely on domestic demand. The market for our services is global so the scope for further growth and benefit to the country is substantial. Our experience over the past 40 years is that we can grow nationally distributed employment if we have a compelling, competitive offering.

The question at the heart of today’s discussion is what makes a location competitive. For our industry, which is incredibly mobile, location decisions are made every day by global investment managers based on a clear and demanding set of criteria. Firms assess two things: the compelling product offering, where Ireland can deliver the right structures, solutions and services; and the operating environment and whether the conditions exist to run a world-class business here. In making those decisions, firms continually assess the policy and regulatory environment, the depth of the talent base and the strength of the broader ecosystem of service providers, as well as the speed and certainty needed to bring solutions to market. Competitiveness is not static. It must be continually earned through agility, responsiveness and policy certainty.

Ireland is facing stronger competition. Nearly 40 years after the IFSC was established, we must ensure that Ireland’s offering remains compelling to those already here and to the global firms we are trying to attract, which provide regional employment. To do this, we draw the committee’s attention to some fundamental objectives. As regards regulatory proportionality, there needs to be a more deliberate balance between necessary regulation and supervision on the one hand, and competitiveness, innovation and speed to market on the other. Simplification needs to remove the domestic gold plating of EU legislation, which has implemented rules more strictly than required and places Ireland at a disadvantage relative to other member states. We need smart, proportionate regulation that protects investors while also avoiding unnecessary friction for firms seeking to establish, operate and grow their business in Ireland.

There needs to be greater urgency in the pace of legislative and regulatory change, particularly to support the digital transformation of our industry, including tokenisation and other technology-enabled fund structures. This is not a future issue; it is a current competitive issue. Investment managers want to be able to launch new fund types, including tokenised structures, and they are looking to Ireland to be agile and innovative. If we cannot move with sufficient pace and certainty, that activity will be developed and launched elsewhere. We also need to ensure that Ireland's tax environment - not just corporation tax but how we treat investment management activity and domestic retail investment - keeps pace with international norms and is clear and stable.

There are immediate actions the Government could take to protect and enhance the competitiveness of Ireland’s investment industry, such as increasing exports of Irish domiciled fund products and incentivising domestic retail investment in Ireland. This is more pressing, given ongoing geopolitical uncertainty and the commercial pressures that are a feature of a global and mobile industry.

First, the upcoming update to the Ireland for finance strategy offers a timely opportunity to prioritise concrete measures and structures which will deliver the policy and regulatory framework needed to support jobs and boost competitiveness and exports. It must foster greater policy, legislative and regulatory agility and drive a more proportionate, innovation-friendly approach to regulation, including in the Central Bank's authorisation and supervision activity.

Second, we need to update the Irish Collective Asset-management Vehicles, ICAV, Act and company law to support the digitalisation of Ireland’s fund sector, including tokenisation. Irish laws governing the legal structure of a fund have been drafted without current or future technologies in mind. These changes need to be completed in 2026. Our competitors have already made these changes.

Third, there is a need to update the 1907 Limited Partnerships Act. This Act introduced a limited partnership model which is still relevant and used today, but this colonial-era legislation is outdated and inflexible. Updating the law is taking too long. In 2024, the Department published the general scheme of the registration of limited partnerships and business names Bill 2024. We urge members to request this be referred here for pre-legislative scrutiny to speed up the process.

Fourth, Ireland must have a tax environment that supports both the continued exportability of funds developed, domiciled and serviced in Ireland and domestic retail investment. We have included an annexe, which has a summary of our fund’s pre-budget submission.

As part of this, we welcome the Government's proposals for personal investment accounts. However, new tax measures to support retail investment must not ignore existing investors. We believe the next budget must implement the outstanding actions from the Funds Sector 2030 report, including abolition of the deemed disposal rule, and we have called for a co-ordinated and sequenced approach to addressing deemed disposal and introducing new investment accounts.

Our fifth and final ask is that budget 2027 be a competitiveness budget. We appreciate that the upcoming budget will need to do a lot of things and that there are expectations regarding action on income tax and the cost of living, but there must also be a strong competitiveness focus, including measures such as those that outlined in our pre-budget submission.

That said, most of what we are talking about today goes beyond the budget process. It requires policy, regulatory and legislative urgency in the context of action critical to sustaining competitiveness. We hope that the committee can use its influence to demand this urgency. Ireland starts from a strong position given the established expertise, the ecosystem and the track record and firms want to do business here but only if we can meet their changing needs at the pace international markets demand. This industry involves about 20,000 jobs in communities across Ireland. It is about more than €1 billion a year flowing into the public finances and it is about Ireland's reputation as a place that is serious about international business. This must be a clear national priority. In an industry where activity is mobile, competitiveness must be continuously demonstrated and enhanced. We are happy to discuss many of these matters further with the committee members during questions.

Deputy Rose Conway-Walsh

One of my questions concerns the deemed disposal rule and the request for additional tax incentives. What evidence can the witnesses provide that benefits would flow beyond the financial services sector? If we already have 70% of the market, obviously things are going quite well. What evidence do the witnesses have? I am looking at all of this in the context of the most recent budget, in which there were no tax incentives for ordinary workers who are really struggling. I want the witnesses to justify why they would put forward a proposal for further tax incentives when they already have 70% of the market.

Mr. Pat Lardner

I might start and then go to my colleagues. The 70% represents the fact that in Ireland we have located and domiciled 70% of the exchange traded funds that are used by investors right across Europe, so that is about a capability that exists here that is used and exported, because we are an export services industry, right around the world. Those same solutions would also be available to Irish investors but because deemed disposal applies to exchange traded funds in ways that do not happen anywhere else where these are very successful and investor friendly, it means that we have not seen the type of take-up and we have deemed disposal, which means that the primary reason for investing in markets over time is to get the benefit of compounding. The deemed disposal rule effectively reduces the amount of money that people are accumulating over the life of their investments and destroys value. As a result, it is about removing an existing barrier and a disincentive. We are encouraging people to invest by means of a lower tax rate on deposits at 33% than we are with ETFs. That is just by way of opening. I will let my colleagues come in to augment that.

Mr. Adrian Mulryan

This is something about which I have been quite passionate. When one compares us with other countries, what we are trying to do is, first, improve financial literacy throughout the country and, second, improve the outcomes for households. If one looks to other jurisdictions such as the UK, it has what I call a three-legged stool approach. It has a pensions system, which we also have - a very good one. We have auto-enrolment now, which is so important for the financial future of our citizens. The UK has a second system, which is its ISA. The latter is an incentivised process to get people saving and investing. The third leg involves people in the UK having absolute clarity regarding when they invest. It is very simple and straightforward. The UK has two rates of capital gains tax - a higher rate for higher earners and a lower rate for lower earners. It is very simple.

When we come to the Irish system, we talk about deemed disposal. When one explains to people what they are going to do with their after-tax income, we have to remember that we are encouraging people to take money on which they have paid tax and to invest it rather than using it for a holiday or a car. There are two parts to that. The first thing is if they invest it with deemed disposal, every eight years, they have to go and find tax to pay on that amount. That lowers the performance of their return. It lowers the amount they have on the market, which ultimately lowers their ultimate end return, so citizens are actually getting a lower return over time. As a result, the State is consequently getting a lower return because it is taxing a smaller pot all the way up.

I am all about small amounts leading to greater outcomes for citizens and the country. If one takes April 2007, when the SSIA scheme finished, if each individual who was in that scheme - 1.3 million of our citizens - had invested €100 a month into a global market product, depending on which market, somewhere between €50,000 and €90,000 would be sitting there having accrued to those citizens. That is from €100 a month. To the State, it would be somewhere between €50 billion and €90 billion of accrued gains, which is taxable at a rate of 33% or 38%, whatever that might be. The important thing for me is that small amounts over time accrue.

Regarding the Deputy's point in terms of what that would do for the country, if we look over that 20-year period, we would have households today that would have money to invest in their businesses or in their homes, to go on a cruise or whatever the case may be. As a country, we have not enabled people to take advantage of the benefits of investing for their future outside of their pensions wrapper. Pensions are great, but they are long term. We need people to be able to think in terms of ten, 20 or 30 years accessing capital. Deemed disposal reduces that ability.

Mr. Adrian Whelan

I am working class. I come from Finglas on the northside and do financial literacy in Finglas and Ballymun. One of the things I hear all the time is that cash is king. That is a phrase used a lot among the working-class population of Dublin. It is not. The tax incentives that we are saying to get to investment involve actually a financial inclusion measure rather than an industry benefit. People are in cash while it is eroding in an inflationary environment when they should be in long-term investing. Without the deemed disposal revisions, it is difficult to make a financial inclusion case to actually invest and not stay in cash, so it is a for-everybody measure not for a select few.

Deputy Rose Conway-Walsh

When people are really struggling and when 317,000 households are behind on their energy bills, to say that the solution is financial literacy is difficult to reconcile.

Mr. Adrian Whelan

It is not really because if we had a culture and a narrative that involved long-term investing - over-saving when you have the few bob - we would be collectively all the way up and down the spectrum in a better financial condition.

Deputy Rose Conway-Walsh

The witnesses stated that the funds industry supports jobs in every province and contributes strongly to the wider economy. Can they give me some examples of that?

Mr. Pat Lardner

I would be happy to start. Of the 19,500 people employed in the industry, the last time we did an economic impact assessment, 46% lived outside of Dublin. Ms Kelly mentioned Donegal. In Donegal, PGIM Investments has over 200 people in Letterkenny. In Limerick, Northern Trust employs somewhere in the region of 1,200 people coming from 11 different counties. In the Cork region, something in the region of about 1,490 people in the region are employed in the industry while there are people employed in Kilkenny in the eastern part of the country and up along the east coast as well. What we found, which is why it is core to the point about competitiveness, is that people came to Ireland originally when the IFSC was conceived almost 40 years ago and the activity was very much constrained to a very specific geographic location. That is not the case any longer. In fact, some of the biggest employers and some of the fastest growing employers are utilising the skills and the strength of regional skill bases that are coming through our universities and our technical universities with very close alignment between those firms.

The growth case for our industry, as has been proven in the last ten years in particular, is that if we can create conditions that are conducive to competitiveness around both the offering and the environment, firms will grow and, in a number of cases, will set up second sites. Indeed, they will look to find centres of excellence for their activities.

Deputy Rose Conway-Walsh

I know my time is up but maybe we will get a second round.

An Cathaoirleach

I thank Deputy Conway-Walsh. We will now proceed with Fianna Fáil's Deputy Albert Dolan.

Deputy Albert Dolan

Gabhaim buíochas leis an gCathaoirleach. I thank representatives from Irish Funds for being with us today. It is important for me to say that I am somebody who knows the industry. I trained with PwC in Galway, so I saw that regional benefit. Particularly when I joined in 2019, there was so much growth happening in jobs in the regions. I think there was an understanding among a lot of the major firms at the time that there was the opportunity to provide these sorts of remote or satellite offices right across the country. That can be seen with the larger firms. They have opened offices right in many counties across the country and have provided huge employment and training opportunities for me. I am always really grateful for the opportunity I got as a young person to train as a chartered accountant and also to be exposed to the sophistication of the funds industry. What Ireland has done in the last 20 or 30 years in terms of funds is incredible and probably something that is not hyped enough. Approximately 20,000 people are employed now.

I liked what Ms Kelly said about the need for competitiveness and the ability to adapt to the changing landscapes. I appreciate her sentiment about the need to update the ICAV Act and her other ideas. One thing she mentioned was how, domestically, Ireland had gold-plated legislation. Does she have any examples of gold-plating that has taken place and how that has slowed down our ability to grow?

Ms Andrea Kelly

Yes, and I will bring in both my colleagues. We operate under European legislation, which is very stringent. In terms of the way in which certain activities are done in Ireland, though, we have gold-plated that European legislation and put additional requirements in place. This is problematic because it puts us on an uneven footing with other jurisdictions in Europe. It also means that firms are now looking at Ireland and other jurisdictions, and when deciding where they are going to put centres of excellence or additional capability, they are not choosing Ireland. The companies that are here are having to continually reinforce why they are doing it in Ireland when it is more difficult to do it here than elsewhere. If we go back even ten or 12 years ago, we would have had a reputation for being very agile and for being a leader in terms of servicing. We would have had a reputation for being a leader in terms of-----

Deputy Albert Dolan

Do we not have that reputation at the moment?

Ms Andrea Kelly

No. We are still seen as a successful domicile but we are not as agile or as easy to do business in as some of our European neighbours because we require gold-plated and additional requirements. Mr. Mulryan, as an asset manager, may want to give his perspective.

Mr. Adrian Mulryan

It is very interesting. The Central Bank is very clear that it does not have a competitive mandate. That does not mean that the actions it takes do not have an impact on our competitiveness. This is the thing we do not understand. There can be a drag from policy positions that we take, and that causes issues for us. It should not be, in a European context, that we have arbitrage between jurisdictions but that does occur. For the last number of years, Ireland has typically been having to fight harder to get a level of equivalence with other jurisdictions on products and on the way we do things. I will always talk about asset management and, in particular, the funds industry as one of Europe's greatest exports. It is so important for us from a European perspective that we are focused on it being an opportunity for growth for Europe. I do not necessarily mean arbitrage between jurisdictions but, sometimes, there is a headwind in trying to progress matters. We do not have the level of clarity and certainty within some of our rules and rule books that other jurisdictions have, which makes it more of a challenge to get things done quickly and efficiently.

Deputy Albert Dolan

Obviously, a significant amount of people are employed in the industry and this is an area that is heavily based on knowledge work, being proficient, having financial literacy and being proficient in Excel and other far-reaching applications. How is the industry feeling currently about the speed at which AI is improving and developing? How is the industry integrating AI? How is the industry leveraging AI and what sorts of threat may exist for employment currently?

Ms Andrea Kelly

The industry is adopting AI. Firms around town are looking at AI in terms of how it can be used to make things more efficient and effective. A lot of firms are still in the early stages of this, so there is a lot of ongoing work around the governance of AI, being comfortable that a use case is appropriate and ensuring that the human is kept in the loop. There still need to be those checks and balances in the system where AI is being used to augment and improve what is being done.

We are still definitely at the earlier stage of this. There are a lot of test cases being used. There are people looking to the scale they will be able to bring from AI. In our industry, it is about the human in the loop. There is a lot of judgment and knowledge needed in the asset management industry that AI is not going to replace. It can help with managing data and having better data to make better decisions but it still needs that human in the loop. It is about bringing that in and also making sure that staff are trained and encouraged to upskill in terms of where and how they can use AI to get the value out of the human and out of the technology that can enable things to work better.

Mr. Pat Lardner

The Deputy mentioned AI. I use that as a proxy for "technology". Our industry is digitalising in a huge way and that is why it is very important that, when we talk about things like tokenisation, there is a rewiring of the financial system. Linking this back to competitiveness, there will be technologies that will assist, augment and disrupt and it is very hard for us to foresee the jobs that will be created because of this activity. However, we do know the extent to which Ireland has a broader product offering that is very competitive and agile, which means that the firms here and the people working in those firms will not be focused on one product or serving one type of customer. It will not be the one geography. Those are the characteristics that will allow us to both retain and grow employment in the industry. Technology is very much an enabler. One only gets to use that enabler if one gets the decision for the business to be here in the first place. That is the key.

An Cathaoirleach

That was very interesting. We now go to Senator McCarthy.

Senator Aubrey McCarthy

I thank the witnesses for being here today. Ms Kelly sort of surprised me when she said that Ireland had always been seen as a centre of excellence and a leader in this industry yet we were not at the same pace any more. She said that we were still a successful domicile but now we were not seen as attractive as some of our European counterparts. Mr. Mulryan mentioned that we were fighting harder to even get to the same level of equivalence. Even in the opening statement, there was mention of a need for urgency from the witnesses' perspective. What is the single biggest headwind, as Mr. Mulryan put it, facing this industry in the Irish economy?

Mr. Adrian Mulryan

It is interesting. I often describe to my global colleagues what Ireland's role is in asset management generally. I explain that, alongside being a domicile where we host a lot of assets, we have become the global project management hub for asset management. We used to be very much what we would call "back office" in terms of teams of accountants crunching numbers. Technology replaced the accountants, but we took those jobs and we pivoted - I apologise to Ms Kelly - into a new world where we have become central to that global outlook.

On the piece that we have, from my perspective looking at it, I often say that my role is in sales. I sell Ireland internally to my company. I am constantly trying to sell what the opportunity is to put people here, and the relevance we think we have in our roles and value-adds that we can add. To that very point, I am currently in the process of doubling the size of our office here. We see that as more well-paid jobs for qualified graduates to help and develop within this country.

The issue is we have a project management problem at a country level. For example, Mr. Lardner referred to tokenisation. We are talking about digital change and transformation. We launched the fund's 2030 review to much fanfare in October 2024 with an update in October 2025. It is now May 2026 but in terms of the legislative change required to underpin our ability to have tokenised product, that is still "in progress". If I am asked by an external stakeholder where Ireland currently is in its journey towards having its infrastructure ready for tokenised product, I will say that it is "in progress". I will be asked what that means but I have nothing further to say. I do not have a date, a responsibility or anything further that I can add to that and that is a communication point. If I have the information and if someone tells me that it will be 5 November, then I can communicate that and we will understand where we are at.

Senator Aubrey McCarthy

Do the delays, such as legislative delays, make us less attractive?

Mr. Adrian Mulryan

To be clear, other jurisdictions have a much easier path to explain where they are at and, as I often say, once you are explaining then you are slightly behind.

An Cathaoirleach

I will briefly interrupt. Senator McCarthy asked a good question about "where" and it would be interesting for the committee to know the answer. Can Mr. Mulryan tell us what other countries are doing a good job?

Mr. Adrian Mulryan

Last week, I was on a panel at a conference in Luxembourg. The head of the Commission de Surveillance du Secteur Financier, CSSF, which is the Central Bank equivalent and the regulator within Luxembourg, was very clear that tokenisation is a huge opportunity for Europe. We are part of that opportunity. He was also able to confirm they had put in place four implementing pieces of legislation that meant they have the road ready and prepared such that when the tokenised products arrive, they are ready to hit the road in developing that. We are fast followers, as I often describe us, but it would be much easier if we had articulated a clearer, cleaner path because a lot of energy is being spent on trying to establish that.

Senator Aubrey McCarthy

What difference would a cleaner path make?

Ms Andrea Kelly

At the moment, our experience when we talk to clients about where they are going to domicile those types of funds in Europe to distribute them globally to global investors, they get a better answer in other jurisdictions than in Ireland. They are voting with their feet. A number of these funds have been domiciled in other countries in Europe, rather than putting them into Ireland, and we are losing.

Senator Aubrey McCarthy

Is it all about speed and the reaction time when Governments revert?

Ms Andrea Kelly

Yes. There is a similar piece in relation to speed around regulation and some of the gold plating we talked about earlier. We are making it a bit more difficult for firms to do it than it is somewhere else in terms of different types of asset classes. They are managers that have a presence already in Ireland and they are now putting a presence in another jurisdiction because it is more difficult to do it here.

Senator Aubrey McCarthy

Can the witnesses quantify what we are missing out on?

Mr. Pat Lardner

The difference between our industry and many others, particularly in manufactured goods where a factory has created a number of jobs, is the decisions in our industry happen every day. Our lived experience is that we were early adopters in the exchange-traded fund space, which Deputy Conway-Walsh asked about, of which we have a very large and significant share. When it comes to enabling investments into private companies, whether that is equity into those companies or lending them money, we were very slow and did not transpose or implement it in the same way, which means we have lost significant ground. The tokenisation piece is about how our funds, across many different types, will be delivered into the future. The fact is decisions are made every day and if you are not right at the start of the beginning of a change in behaviour-----

Senator Aubrey McCarthy

You are behind.

Mr. Pat Lardner

-----and commercial activity, and someone has already established their next fund someplace else, it is hard to get them to move back. The best business we have is the business we already have that we can grow and that means agility. The next best piece is the brand new business that we can win, which we will only win with agility.

Senator Aubrey McCarthy

I hear that we need speed, agility and to revert with legislation. What does success look like? What do we need to do?

Mr. Pat Lardner

Success looks like a policy, legislative and regulatory system that is very clear about what is changing in the marketplace in terms of investor need because that is what we are here to deliver. It is that we work with them in collaboration to agree specific outcomes, whether that be legislative change or regulatory change within workable timelines and, again, the industry funds this activity. We must then work, as we do already, with our enterprise agencies and our own activity to aggressively promote that business internationally. That is why the EU Presidency is an important spotlight. We are providing a very important function here to the capital markets of Europe and there will be a spotlight on this country for the next six months. From the point of view of competitiveness and enterprise policy, we really want to use it and-----

Senator Aubrey McCarthy

The advantage of it. Mr. Mulryan mentioned that a lot of new jobs are being created in his department. How many of those, percentage wise, will be indigenous and from Ireland?

Mr. Adrian Mulryan

That depends very much on the application process. The majority are indigenous at the minute. We are all European citizens and, particularly in a post-Brexit environment, we are delighted to see so much European talent from which we can benefit. We have some phenomenal Italian graduates and Irish graduates coming to us. I have about 15 people who are under 30 years of age in my office. I am far away from that at this point, but it is wonderful to see what they are developing with their energy.

On the AI point, what is really instructive for us about AI is we will have a similar number of jobs in the future as we have today. The opportunity for us is the additional jobs that are created by AI and technology and the additional jobs that are created by melding. Ireland's story is we have the tech infrastructure ecosystem and individuals, alongside asset management and project management experience. When we marry those together, we have a very compelling story for the next few years if we can get the ecosystem to work, which Mr. Lardner pointed out, and the messaging provided for us so we can go out and sell and bring in those additional jobs.

An Cathaoirleach

I am particularly interested in Ireland's entrepreneurial ecosystem. Not too far away from where the Irish Funds office is based there are some fantastic start-ups. We have seen the power of what Irish people can do when they create their own companies, particularly in the areas of unicorn start-ups and the fintech space. A quite advanced life sciences industry has been developed in Ireland through the pharmaceutical industry over decades. That environment has created enormous entrepreneurial activity. However, I get the impression that we are not fully harnessing the capability of Ireland to become a world-class incubator for small businesses that want to scale and scale fast. On the funds point, I would appreciate to hear the insight of Mr. Lardner.

Mr. Pat Lardner

If we chart the path of our industry, it is between 35 and 40 years old. Irish Funds is 35 years old as an association this year. As my colleagues, Ms Kelly, Mr. Whelan and Mr. Mulryan, outlined, businesses first came here to do a thing. They grew their exposure and activity here to become larger operations. We then had multiple firms doing that and that started to grow into an ecosystem.

What we started to see, particularly in the course of the last seven or eight years, is people coming out of those firms who have worked and developed particular expertise in growing their own businesses. We have some indigenous companies in our industry. Fund Recs is a really good example of an indigenous business that is providing services into the wider ecosystem. It is a bit like what was said in terms of whether it would be pharmaceuticals or medical devices. When we have reasonably large incumbents, as they evolve and mature, opportunities are being created for specialist service provision to come in to them. There is clearly an opportunity there.

We have spoken to Enterprise Ireland about how we bring our resident group of member firms that are large, and some of those firms that are newer, indigenous or incubators, to see if we can bring them together from a service point of view to create opportunities. It goes back to the earlier question from Deputy Dolan. If the industry grows, there will be opportunities for incubators and entrepreneurship. If the industry does not grow and is not competitive, we will not see that. A precondition for those incubators is that we have large existing businesses that need expertise and need to augment their permanent staff. I will pass over to Mr. Whelan to add to that.

Mr. Adrian Whelan

Our industry, like every industry, is at an inflection point. It is moving into a new era that is technology driven. We need to have pragmatic policymaking, speed of execution and an acceptance of acceptable risk as well. We cannot be belt and braces on every policy and regulation because innovation cannot flourish in that environment. We are saying there is an inflection point across the board that we can take advantage of because we have done it before. As we speak about competitiveness, we have to have pragmatism and a tolerance for a certain amount of risk. Global firms want to operate globally. They want to have a single technology stack, as best they can. If Ireland is putting in belt and braces or gold plating, to Mr. Mulryan's point, we are explaining and we are losing. What are we really good at? Complexity. Why have we really succeeded? We are able to address any global investor in plain English on complexity. It is our communication skills that drive our ability to communicate technology, sophisticated asset classes and so on. That is our real Irish advantage. It needs to be bolstered with pragmatic and speedy legislation, regulation and oversight.

An Cathaoirleach

I will touch on something that was in the opening statement and is quite complex to those who are not fully aware of it. There was reference to the legislative change to support members with launching new types of funds, and the tokenised structures were spoken about. On the role of tokenisation for the future funds industry, I want to get a sense of the witnesses' proposed legislative changes. Do they have any thoughts on that they want to share?

Ms Andrea Kelly

Industry has done a huge amount of work on tokenisation and enabling investors to access product through technology, which is what ultimately investors want and where things are going. Specific to tokenisation and the changes that are required to both our ICAV Act and the Companies Act to allow for a technology solution, draft legislation has been put together by industry. It has been drafted by legal firms that are members of ours and has been shared with the Department around what needs to change. That lift has been done by industry to point out where there are tweaks needed to the legislation so that it is clear that this is allowed under our legislation. At the moment it is grey. One person might think it is X and another might think it is Y. It is not explicit. Parts of it are grey and parts of it would suggest that it is closer to black than grey. That work has been done. It is with the Department. What we need now is the Department and that process to work quicker around reviewing the changes that are required from a legislative perspective, to put a timeline and pathway in place to make those legislative changes to enable this to happen, and to do that quickly. As was referenced, other jurisdictions in Europe have already made these changes to their legal structures to allow for those future requirements around technology.

An Cathaoirleach

Absolutely. I really appreciate you being here today. Do members wish to indicate if they want a second round? Deputy Conway-Walsh is first.

Deputy Rose Conway-Walsh

This is an important session today and I take the point around literacy and all that. Tax efficiency is a major attraction for here, probably the greatest one. If we compare that with Luxembourg, which seems to be our main competitor at the moment in terms of tokens, blockchain and where we are trying to situate ourselves, how much is the Irish tax on the income on fund gains here?

Ms Andrea Kelly

An investor in a fund in Ireland will pay tax at 38% currently. It was 41%.

Deputy Rose Conway-Walsh

Is that on the fund gains?

Ms Andrea Kelly

That is on the gain they make in the investment in the fund, yes. That is the investor at 38%, as opposed to 33% that they will----

Deputy Rose Conway-Walsh

That is for Irish-domiciled ETFs; it is 38%.

Ms Andrea Kelly

Yes. An Irish investor will pay 38% tax on a gain.

Deputy Rose Conway-Walsh

I do not mean an Irish investor. I mean a global one.

Ms Andrea Kelly

A global investor in an Irish fund will not pay Irish income tax or capital gains tax in Ireland. They will pay it in their source home country.

Deputy Rose Conway-Walsh

It is 0% here.

Ms Andrea Kelly

It is 0%, yes. When we look at the funds----

Deputy Rose Conway-Walsh

This is very interesting. For foreign investors here, they pay 0% tax here on the income they gain, although they are domiciled here. Is that right?

Ms Andrea Kelly

No. That is an investor. An Irish ETF----

Deputy Rose Conway-Walsh

No, I am not talking about an Irish ETF. I am talking about somebody who has invested from outside.

Ms Andrea Kelly

An investor. A US investor or a-----

Deputy Rose Conway-Walsh

Yes.

Ms Andrea Kelly

A US investor does not pay Irish income or capital gains tax on an investment in an Irish exchange-traded funded. Equally, it is the same situation in Luxembourg. There is a level playing field.

Deputy Rose Conway-Walsh

It is the same in Luxembourg. It would not be a case that it would be 30% tax in Luxembourg.

Ms Andrea Kelly

Not for a Luxembourg investor, no.

Deputy Rose Conway-Walsh

I am not talking about a Luxembourg investor in themselves. I am talking about, say, a US investor in Luxembourg.

Ms Andrea Kelly

No. A US investor pays tax on the gain on that investment in the US.

Deputy Rose Conway-Walsh

They do not pay it in Luxembourg.

Ms Andrea Kelly

No. In a collective investment fund for tax-----

Deputy Rose Conway-Walsh

Is it zero-zero?

Ms Andrea Kelly

Yes. You are taxed in your home jurisdiction. The tax for an investor is in your local jurisdiction.

Mr. Pat Lardner

The core premise here is that people, in putting their money together in a collective investment fund, want that to accumulate and to get the benefit of compounding.

Deputy Rose Conway-Walsh

Obviously, yes.

Mr. Pat Lardner

They also have tax obligations wherever they are from. We are mixing in these funds, which is part of the reason they are so effective, people from different jurisdictions. That is why they pay their tax obligations locally. It is the case----

Deputy Rose Conway-Walsh

Is it at the point where they repatriate those?

Mr. Pat Lardner

Where they remove money from the fund or where they exit the funds. That is very conventional and it has been like that for 40 years. The difference we do have is that for Irish investors, we have in deemed disposal a form of taxation where you are taxed before you ever take anything out of the fund. That seems disproportionate and also contrary to the idea of investing. Finally, to the €1 billion in tax revenue that comes directly to the State, and to the point of competitiveness, that is by virtue of the fact that activity happens here which is taxable through corporation tax and payroll taxes. It goes without saying that the amount of indirect activity-----

Deputy Rose Conway-Walsh

I am asking about the investment funds themselves. I am just trying to get at that. We have the benefit where money is invested here and there is employment and growth. Do the investors actually pay tax?

Mr. Pat Lardner

Yes, the investors pay tax. Wherever they are from is where they pay the tax.

Deputy Rose Conway-Walsh

I am trying to work out the risks attached to all this, as well as the incentives not to take the money from here but to continue to invest here. If they do not pay tax, they can keep reinvesting here and the incentive is there for them to do that.

Ms Andrea Kelly

They will pay the tax only when they exit. That is the investor-level tax but other taxes are paid within a fund structure.

An Cathaoirleach

The witnesses and the Deputy can remain in communication. Unfortunately, they have gone a minute over.

Deputy Rose Conway-Walsh

I will only say this. There is a small concentration of administrators. Surely that is a risk as well.

Mr. Pat Lardner

We are a highly regulated industry. Quite an amount of investment is required to provide services, technology and infrastructure and to cover a global market. What we are doing is going to 90 countries around the world. Making sure emerging companies can offer a wide range of services will, over the long term, create the most resilient and most productive outcome for the Irish State in terms of both employment and Exchequer contribution.

We are unusual in that we in this country are looking after, in a mobile, competitive business, about 6% of the world's mutual fund assets. We are not correlated or linked and our activity does not behave the same as domestic demand. Our addressable market is so large. That is a reason for this being a good and important strategic industry for Ireland in the long term.

Deputy Rose Conway-Walsh

Thanks, and thank you for your indulgence, Chair.

An Cathaoirleach

Only for you, Deputy. No problem.

Deputy Rose Conway-Walsh

It is an interesting subject.

An Cathaoirleach

We now go to Deputy Dolan.

Deputy Albert Dolan

It is important to say for clarification that a lot of the money in the funds in Ireland does not get invested in Ireland, as such. They are globally held assets that are held, processed, administered, traded and audited in Ireland. The witnesses represent the industry that supports all that activity. The exciting thing is we have become one of the leaders in that industry. What is the total sum of money domiciled out of Ireland currently? I remember a few years ago it was in excess of €5 trillion.

Ms Andrea Kelly

It is about €5.8 trillion in Irish-domiciled funds.

Deputy Albert Dolan

Ireland is servicing €5.8 trillion of money flows globally and for us as a-----

Ms Andrea Kelly

It is servicing more. The €5.8 trillion is what is in Irish structures. We also service structures domiciled in other European and global countries, like the US, Cayman and so on. We also administer Luxembourg funds in Ireland.

Deputy Albert Dolan

It is important to state that. When talking of the tax issue, it is important to say they are globally held assets. It is not Irish money being taken out of Ireland; it is money being deposited into the funds in Ireland and then withdrawn on gains.

Mr. Pat Lardner

Absolutely. I thank the Deputy for raising that point. We are dealing with other people's money. We have, therefore, a fiduciary responsibility to make sure that wherever they choose to invest that money, it is highly regulated and done in a responsible way. If we do it well - we have done it well but can do it better - then there are benefits for the investors we serve, the companies that operate here and the communities in which people are employed.

Deputy Albert Dolan

I want to talk about the eighth wonder of the world and that is compound interest, as Einstein put it. When I became aware of the deemed disposal rule and gained an understanding of it, I realised that what is happening to Irish investors is a complete scam. We need to democratise wealth creation and ensure any individual who wants to go the long road and has the discipline to compound something has the ability to do so. Think of a 30-year graph of a pension. It is in the last five or ten years that you see the real win and the real growth. If I take the graph and every eight years I knock down 38% of the gains, that is what is happening at the moment. People find it hard to quantify how big a loss that 38% tax on the gains is.

I am fully behind the scrapping of the deemed disposal rule but I treat that separately from the idea of an investment account. The investment account needs to be the vehicle; the tax treatment is a separate matter and needs to be dealt with in its own right. If you look to the US, you see the Roth IRA. As Mr. Mulryan said, it is an after-tax sum people are being asked to invest. They have already paid the guts of 50% on any money they have left that they are deciding to invest. I would love to hear the witnesses' thoughts on that.

Ms Andrea Kelly

That is an important point. We are focused on deemed disposal for all the reasons the Deputy set out but there is also the link to personal investment accounts. When those accounts come in at the end of the year, the talk is that they will have a simpler structure and might not be subject to deemed disposal. There is a moral hazard there in terms of equitable treatment of investors. When addressing the fact that deemed disposal is a reason people do not invest and making sure that does not impact PIA's ability to help people with financial well-being, there is a need to sequence both of those things so we deal with deemed disposal once and for all as a bad policy for Government and investors, rather than continuing to operate a policy that is flawed on all levels.

Mr. Adrian Mulryan

With the SSIA, 1.3 million of our citizens took that up. When we talk of having zero financial literacy, that is probably not quite correct. My mother in Athenry rang me and harangued me until I went into a branch and signed up for my SSIA. Not enough people understand this. If you are a 30-year-old and you get €10,000 from your grandmother, you are very lucky. If you put it in a high street bank at current deposit rates, you will be 66 before that €10,000 becomes €20,000. If you have it in the market at 9%, at 38 it will have become €20,000, at 46 it will have become €40,000, and so on. That is important for us as a country. Whether in education, inward investment or personal finances, we do not want to just get by. We want to get ahead. That is why there has been a groundswell of people saying this does not make sense. If I take my after-tax income, nobody bats an eyelid if I take out a large car lease, but suddenly there is an issue if I take €400 per month and invest it for the long term, for my financial future and for my household's financial future. It is about getting 20-year-olds in now because that generation has time, and time is the single most important thing you can have when thinking about your financial future and long-term saving and investing.

An Cathaoirleach

That was a very interesting discussion. I thank our witnesses from Irish Funds for coming to discuss the issues raised. It will form part of the work we will be doing. I am grateful for their opinions, advice and insight.

I propose that the committee meet in private session on Tuesday, 9 June at 2.15 p.m. and in public session on 17 June at 12.30 p.m. Is that agreed? Agreed. The select committee will meet on Wednesday, 10 June to consider the Industrial Development (Amendment) and Miscellaneous Provisions Bill 2026.

I wish everybody a pleasant June bank holiday. I forgot the bank holiday was coming up. Fingers crossed we will have good weather for that.

The joint committee adjourned at 2.50 p.m. until 12.30 p.m. on Wednesday, 17 June 2026.

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