The International Financial Services Centre (IFSC; ) is an area of central Dublin and part of the CBD established in the 1980s as an urban regeneration area and special economic zone (SEZ) on the derelict state-owned former port authority lands of the reclaimed North Wall and George's Dock areas of the Dublin Docklands. The term has become a metonym for the Irish financial services industry as well as being used as an address and still being classified as an SEZ.

It officially began in 1987 as an SEZ on an docklands site in central Dublin, with EU approval to apply a 10% corporate tax rate for "designated financial services activities". Before the expiry of this EU approval in 2005, the Irish Government legislated to effectively have a national flat rate by reducing the overall Irish corporate tax rate from 32% to 12.5% which was introduced in 2003.

An additional primary goal of the IFSC was to assist the urban renewal and development programme of the North Wall area as a result of its dereliction following the advent of containerisation in the 1960s. Following a period of successful regeneration the Section 23 Relief and other schemes ceased accepting new entrants from 1999.

The original 11-hectare IFSC site has gone through several expansions to become a area by 2018 which is now a major European financial centre. By merging with the Spencer Dock and Grand Canal Dock area, the IFSC is now considered to be an "International Services Centre", covering a broader range than being purely financial. The creation and development of the IFSC is considered to be an important part of Ireland's economic growth story.

Location

The original IFSC 1 (development of the site from 1987 to 1997 under the Custom House Docks Development Authority "CHDDA") comprises the area between Memorial Road, Amiens Street, Lower Sheriff Street (including part of Crinan Strand), Guild Street, and the River Liffey along North Wall Quay and Custom House Quay. Adjacent districts include East Wall to the north and Spencer Dock to the east; the Custom House, Busáras and the city centre lie to the west along Store Street and Abbey Street. Within the IFSC, the original development area lies west of Commons Street.

East of Commons Street is the later IFSC 2 expansion (development of an additional from 1997 to 2007 under the Dublin Docklands Development Authority (DDDA) which runs along North Wall Quay and Lower Mayor Street. It is an integrated development located in the centre of the city which incorporates office accommodation, educational institutions, housing, restaurants and shopping facilities including the Dublin Landings development.

East of Guild Street down as far as the Point Depot is the final part of the IFSC (Docklands Strategic Development Zone, created by Dublin City Council ("DCC") on the dissolution of the DDDA in 2012), as an area containing the Central Bank of Ireland as well the offices of PwC, Credit Suisse and numerous technology companies including Yahoo and WeWork. This was further expanded by DCC in 2015 into a larger special economic zone ("SEZ") to include the full of North Lotts and Grand Canal Docks sites, taking in both financial and technology services companies. Only the area within the North Wall part of the original IFSC includes IFSC as part of a postal address.

History The concept of a low tax international financial service centre is attributed to Irish businessman Dermot Desmond and politician Ruairi Quinn among others, whose ideas were later picked up by Fianna Fáil leader Charles Haughey and incorporated into his 1987 election manifesto (with contributions from AIB CEO Michael Buckley). Despite resistance from the Department of Finance (concerned about the impact on domestic tax revenues), Haughey overruled and got permission from the EU to create a special 10% tax incentive zone (the IFSC), in the 1987 Finance Act (Section 30).

The CHDDA had earlier been created under the auspices of the Garret FitzGerald lead Fine Gael-Labour minority government as a Special Purpose Agency (SPA) in November 1986. The physical manifestation of the IFSC began with the construction of three offices - The International Centre, IFSC House and La Touche House, all with distinctive green colouring. To operate in the IFSC and access the 10% tax rate, companies had to be approved by the Certification Advisory Committee (CAC), composed of representatives from the Irish Development Authority, the Department of Finance, the Department of Enterprise, Trade and Employment and the Central Bank of Ireland.

The next major event was the Irish Taxes and Consolidated Act, 1997 (TCA) which upgraded the legal and tax structures in the IFSC, and in particular created the " Irish section 110 SPV" and laid the foundations for the Double Irish, Single Malt and the Capital Allowances for Intangible Assets BEPS tools. In addition, the Dublin Docklands Development Authority was set up to oversee the expansion of the IFSC's site (most notable being the reclamation of the Grand Canal Basin site)

The "dual structure" Irish corporate tax rate, came under pressure from the EC (due to competition rules), and it was agreed that it would expire in 2005. In advance of this deadline, the Irish Government in the 1998/1999 Finance Acts introduced a lower 12.5% corporate tax rate for the entire country which was fully introduced from 1 January 2003, and by 1 January 2006, all remaining IFSC companies (some held their old licenses) were on a 12.5% rate. The IFSC ceased to exist as a required legal entity.

The next major event was the Irish financial crisis from 2008 to 2013. The IFSC was a major EU securitisation hub and the effect of billion euro special purpose vehicles (or SPVs) collapsing added to the concern over Ireland's financial position. It did not help that these SPVs (and other IFSC type activities) produced a further distorted picture of Ireland's already precarious National Accounts statistics. The sudden drop in Dublin's ranking on the Global Financial Centres Index ("GFCI") from an all-time high of 10th in March 2009 (GFCI 5), to 23rd by September 2009 (GFCI 6), sparked a formal investigation.

A tightening by the Irish regulator (after a period of loose regulation) which followed the Irish financial crisis led some financial institutions to move operations elsewhere (as well as others who were exited) and caused Dublin's GFCI ranking as a financial services centre to drop further to 70th in 2014 (GFI 16). IFSC institutions cited the timeliness of decisions by the Central Bank of Ireland as having an impact on their operations. Since 2014 however, the IFSC has started to recover, rising to 31 in the 2016 GCFI 21 ranking.

The IFSC Securitisation Sector produced a major domestic scandal when it was revealed in mid-2016 that US Distressed Debt funds (pejoratively called "vulture funds") had been using the Irish Section 110 SPV to avoid all Irish taxes on their Irish domestic investments. The Irish Government closed the "loopholes" but it was estimated that the loss in Irish tax revenues to the Irish exchequer runs to billions of euros (exceeding the value the securitisation sector ever delivered to Ireland). Discussed further in vulture fund Irish tax avoidance.

The IFSC Securitisation Sector was further pressured when it was revealed in 2018 that Russian banks (some under EU and US sanctions) had also been using the Irish Section 110 SPV to funnel over €100bn through the IFSC. Further academic studies showed that the IFSC SPV sector was operating in an almost unregulated fashion where structures were more akin to brass plate companies. Other former Central Bank of Ireland regulators also publicly highlighted their concerns. Discussed further in unregulated shadow banking.

Financial sectors A 2015 Irish Government IFS 2020 Strategy Paper, lists the Irish financial services sector as comprising over 400 companies, employing over 35,000 people (one third outside Dublin), with over €3.2 trillion in funds under administration, providing €2bn in taxes and €2.3bn in wages and salaries. KMPG estimate the IFSC constitutes 7% of Irish GDP. The IFSC has now become one of Europe's most important centres for , and , and ultimately became the birthplace of and global leader in .

Some of the largest offices in the IFSC are those of the major Irish accounting and law firms. They have become associated with the creation and development of international tax management tools, (such as the Double Irish, single malt, and capital allowances for intangible assets (CAIA) BEPS tools; and Section 110 SPV, QIAIF and ICAV zero-tax legal structures), leading to concerns of Ireland as a tax haven. In 2017, a University of Amsterdam study estimated that the IFSC was one of the world's largest conduit OFCs for facilitating global corporate tax avoidance. In 2018, a Gabriel Zucman study estimated that Ireland had become the world's largest corporate tax haven by virtue of its use as a Conduit OFC.

Some of the main sectors of financial services activity carried out in the IFSC are outlined below:

Fund administration and domiciling

The original proposal for the IFSC was that it would become a location for high-margin activities such as investment management, banking and securities trading given its low tax rate and proximity to the major centres of London and Paris. However, ultimately few of these companies established offices which offered these services or relocated to Dublin in the following years and while the level of material employment has grown significantly relative to its former size, it is still well below many of the larger European financial centres in overall terms such as Frankfurt, London or Paris. Many of the notable fund and investment managers are dealing mostly with domestic businesses e.g. - Irish Life and Bank of Ireland and many of the examples mentioned in the media outlets relate to fund domiciling, custody, treasury and more recently trading rather than investment management and investment banking.

Classic fund administration (i.e. fund accounting, fund administration, fund custody and transfer agency) is the largest employer in IFSC making up almost a third of IFSC jobs and totaling almost 9,274 jobs at the last reliable study. The four largest global fund administration and custody providers all have major offices in the IFSC State Street, BNY Mellon, Citibank and Northern Trust, as well as internal fund administration departments from major global investment banks such as JPMorgan Chase, Goldman Sachs and Bank of America.

Fund domiciling (and distribution) is where specialist law firms, and specialist administration departments of investment firms (i.e. BlackRock, Citibank, Deutsche Bank), provide legal (i.e. creating fund prospectus, fund listing documents etc.) and other professional services (i.e. fund trustees, fund audit etc.) to Irish domiciled, and often Irish listed, fund structures in various Irish legal fund "wrappers" (incl. UCITs, QIAIFs, MMFs and AIFs). The IFSC is one of the largest and fastest growing locations for UCITS in Europe.

The trade body for the IFSC fund administration and domiciling sector is the Irish Funds (Industry) Association (previously Dublin Funds Industry Association, or "DIMA").

Securitisation