Investment Intermediaries – Markets in Financial Instruments Directive (MiFID)

Section 1035A of the Taxes Consolidation Act, 1997 removes the charge to Irish tax on the profits of a trade exercised in the State by a non-resident person solely through an Irish resident agent where:

• the agent is an authorised agent,
• the trade is a financial trade and
• the agent is independent in relation to the non-resident person.

The term ‘authorised agent’ is defined by reference to the Investment Intermediaries Act, 1995 and the Stock Exchange Act 1995. The enactment of the EU (Markets in Financial Instruments) Regulations, 2007 (as amended) (the Regulations) has impacted on this definition. The Regulations provide that the Investment Intermediaries Act, 1995 no longer applies to investment firms from 1 November 2007. These investment firms now operate under a deemed authorisation under the Regulations.

As a result of this and the replacement of EU Directive 2000/12/EC with EU Directive 2006/48/EC, Revenue is aware that the definitions used in Subsection (1) of Section 1035A will need to be updated.

Until such time as amending legislation is introduced, Revenue will administer the relief as originally intended. Firms that are authorised investment firms in accordance with Regulation 6 of the Regulations will continue to qualify for Section 1035A treatment provided they comply with the other criteria listed in the Section. Similarly, new firms authorised by the Central Bank and Financial Services Regulatory Authority in accordance with Regulation 11 of the Regulations will also qualify for the relief if they otherwise comply with the requirements of Section 1035A.