page_title: Qualifying investor alternative investment fund (QIAIF)
section_title: Abuses
hierarchical_section_title: Qualifying investor alternative investment fund (QIAIF) / Abuses
caption_attribution_description: English: Comparison of the sales price of a prime office in Dublin compared to other EU-28 countries (2016)
context_page_description: Qualifying Investor Alternative Investment Fund or QIAIF is a Central Bank of Ireland regulatory classification established in 2013 for Ireland's five tax-free legal structures for holding assets. The Irish Collective Asset-management Vehicle or ICAV is the most popular of the five Irish QIAIF structures, and was designed in 2014 to rival the Cayman Island SPC; it is the main tax-free structure for foreign investors holding Irish assets.
  In 2018, the Central Bank of Ireland expanded the Loan Originating QIAIF or L–QIAIF regime which enables the five tax-free structures to be used for closed-end debt instruments. The L–QIAIF is Ireland's main Debt–based BEPS tool as it overcomes the lack of confidentiality and tax secrecy of the Section 110 SPV. It is asserted that many assets in QIAIFs and LQIAIFs are Irish assets being shielded from Irish taxation. Irish QIAIFs and LQIAIFs can be integrated with Irish corporate base erosion and profit shifting tax tools to create confidential routes out of the Irish tax system to Ireland's main Sink OFC, Luxembourg.
context_section_description: The QIAIF regime has contributed to making the International Financial Services Centre (IFSC) one of the largest fund domiciling and shadow banking locations in Europe.  Many asset managers, and particularly alternative investment managers, use Irish QIAIF wrappers in structuring funds.  However, fund structuring is a competitive market and other corporate tax havens such as Luxembourg offer equivalent products.  It is asserted that many of the assets in Irish QIAIFs are Irish assets, and particularly from the sale of over €100 billion in distressed assets by the Irish State from 2012–2017.
  Irish QIAIFs have been used in tax avoidance on Irish assets.  It transpired that the regulator of Irish QIAIFs, the Central Bank of Ireland, was paying rent to a U.S. entity using an Irish QIAIF ICAV to avoid Irish taxes on the rent.  Irish QIAIFs have been used to circumvent international regulations,  on avoiding tax laws in the EU and the U.S.  Irish QIAIFs can be combined with Irish corporate BEPS tools (e.g. the Orphaned Super–QIF), to create confidential routes out of the Irish corporate tax system to other tax havens such as Luxembourg, the main Sink OFC for Ireland.
  QIAIFs link Ireland's strength as a corporate-focused tax haven, with the world's largest corporate BEPS tools, to more traditional tax haven type activities (why Cayman SPCs are re-domiciling as Irish ICAVs).  The launch of the Irish ICAV was widely covered, and praised, by the leading offshore magic circle law firms, the largest of which, Maples and Calder, claimed to have been one of its chief architects.
  The ability of foreign institutions to use QIAIFs and the ICAV wrapper, to avoid Irish taxes on Irish assets, has been linked to the bubble in Dublin commercial property, and by implication, the Dublin housing crisis. Despite Dublin's housing crisis, and issues of housing affordability, foreign landlords (also called "cuckoo funds") operate in Ireland on a tax-free basis.  It is asserted that property development, and over-inflation of property prices via tax incentives, are favoured historical economic strategies of the two main Irish political parties, Fianna Fáil and Fine Gael.
  This risk of QIAIFs was highlighted in 2014 when Central Bank of Ireland consulted the European Systemic Risk Board ("ESRB") after initial, and unsuccessful, lobbying by IFSC tax-law firms to expand the L–QIAIF regime, so as to remove Irish taxation from Irish loan investments.
  In March 2019, the UN Special Rapporter on housing, Leilani Farha, formally wrote to the Irish Government on behalf of the UN, regarding its concerns regarding "preferential tax laws" for foreign investment funds on Irish assets which were compromising the human rights of tenants in Ireland.
  In April 2019, Irish technology entrepreneur Paddy Cosgrave launched a Facebook campaign to highlight abuses of QIAIFs and L-QIAIFs, stating: "The L-QIAIF runs the risk of being a weapon of mass destruction".
caption: Comparison of the sales price of Dublin prime office with EU–28 countries (2016).
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