Solutions

Exchange Traded Funds

Helping you navigate the market

The European exchange-traded fund (ETF) industry continues to build on the significant growth over the last 10 years. Promoters for ETFs are developing new products by expanding the nature of ETFs in the market and the assets under management (AuM). Ireland is the leading domicile for European ETFs with assets of over $300bn. This represents over 50% of the AuM for the European ETF market.

How can we help

At Deloitte we recognise there are no "one-size-fits-all" solutions. Our investment management team comprises of multi-disciplinary professionals from audit / assurance, tax, risk, advisory and regulatory consulting.

As professionals with year of experience in the investment management and ETF industry we understand that promoters and service providers to ETFs operate in a complex and dynamic marketplace that is facing a wave of regulatory, operational and compliance challenges. Deloitte has the depth and breadth of multi-disciplinary skills through our Investment Management Advisory practice to understand your industry and respond to your needs.

ETF Audit and assurance services

Our dedicated Investment Management department has over 250 professionals that has the required expertise for the provision of audit and assurance services to ETFs. We also have extensive experience in auditing all ETF strategies.
Our multidisciplinary investment management capabilities across audit, consulting, regulatory advisory, corporate governance and tax allows us to see the ETF industry very clearly, creating greater value for our clients. Deloitte has extensive expertise with ETFs and the services providers who support them.

Imbedded in our audit approach to ETFs is the use of data analytics and in particular our bespoke analytics tool, D.NAV, which has been enhanced specifically to assist in the audit of passive ETFs. In addition to the standard D.NAV capabilities; the functionality is designed specifically for passive ETFs and includes recalculating the tracking error and then adjusting the NAV for the primary drivers of the tracking error including management fees, transactions charges, spot FX, withholding tax differential to the benchmark etc. By adjusting for the drivers of the tracking error DNAV can provide advanced analytics and details insight on tracking performance for passive ETFs.

The use of data analytics forms the basis of our approach to the auditing of ETFs and will allow us to provide tailored insights to each of our clients.

 

ETF Tax services

ETFs reap the benefits of operating in a jurisdiction which adopts a tax neutral regime in relation to funds. Not only are Irish ETFs themselves exempt from Irish tax on their income and gains from underlying investments, but they generally benefit from a wider range of treaty benefits than non-ETF products, including being generally in a position to access the reduced rates of withholding tax provided for under the US/Ireland Double Tax Treaty, which non-ETF funds will not always achieve.

Deloitte’s ETF Tax Specialists have extensive experience in dealing with Irish ETF taxation issues, which may arise both in Ireland and overseas. We are available to provide practical and technical advice to guide you through the initial launch of the ETF from an Irish tax perspective. In addition, we can provide a wide range of services throughout the life of the ETF across all tax heads and can also provide advice to the fund manager and service providers in relation to Irish direct and indirect tax issues. We have set out below a list of Irish tax services that may be relevant to your fund:

  • Tax consultancy advice in relation to the efficient structuring of the ETF, prior to its establishment.
  • Review of the ETF prospectus and application forms.
  • Advice in relation to the tax residency requirements of the Irish ETF, and practical guidance thereon.
  • Minimising any VAT cost is also key and our experts can advise you on how best to structure your fund documents to eliminate any VAT leakage.
  • General advice in relation to the VAT affairs of the fund including advice on VAT registration, recovery ratios, and assistance in preparing VAT returns.
  • Foreign investor tax reporting obligations.
  • EU and Treaty reclaims of withholding tax suffered by the ETF. 
  • Advice on the tax developments affecting the investors in your funds, providing you with timely information in relation to any proposed changes.
  • Advice in respect of the minimisation of capital taxes and stamp duty on transactions particularly where you envisage transferring an existing portfolio of equities to seed the new Fund.
  • Ad-hoc tax consultancy advice as requested.
     

ETF Regulatory services

ETF managers and their services providers must respond to a steadily increasing range of complex regulatory requirements. At Deloitte we have the required regulatory expertise to provide guidance in relation to each of these requirements.
MiFID II will require reporting of ETF trades for the first time. As the liquidity of ETFs and the transparency requirements become clearer, it is very likely ETFs will be used in a greater capacity by the securities lending market.

Deloitte believes that one of the keys to the continued growth and success of ETFs is the development of FinTech particularly for retail investors. FinTech is a key area which can provide data analytics to produce product comparisons and online distribution platforms, which will result in increased trading and transparency.

Contact Our ETF Leaders

Christian MacManus

Christian MacManus

Partner - Audit and assurance

Christian is an audit partner in our financial services practice. He specialises in the investment management sector working with a variety of asset managers and third party service providers. He prov... More

Darren Griffin

Darren Griffin

Partner - Audit and assurance

Darren is an audit partner working in the financial services industry group. He has over 12 years’ experience specialising in the provision of assurance and advisory services to clients in the investm... More