BNP Paribas Asset Management (BNPP AM) is planning to domicile ETFs in Ireland in order “to compete” with other ETF issuers in Europe, ETF Stream can reveal.
The French asset manager is currently waiting for approval from the Central Bank of Ireland but expects the process to be “fast”.
The firm currently only domiciles its 108-strong ETF range in France and Luxembourg.
Speaking to ETF Stream, Lorraine Sereyjol-Garros (pictured), global head of ETF and index sales at BNPP AM, said the reason for this move is because Irish-domiciled ETFs have a tax advantage when offering exposure to US and global equities.
US equity ETFs domiciled in Ireland have a 15% withholding tax rate on dividends versus 30% for ETFs domiciled in Luxembourg and other European jurisdictions.
As the Irish Funds Industry Association said: “Ireland has a broad double tax treaty network spanning over 70 countries across the EU, Middle East, Asia and Americas.
“Treaty relief under the Ireland-US tax treaty may be available to an ETF depending on the facts and circumstances resulting in a net withholding tax rate of 15% on US dividend income.”
This is also the case for global equities where the US accounts for a significant portion – 68% of the MSCI World index – of the market.
“In order to compete with other providers and be attractive to investors, we need to have an [Irish collective asset management vehicle] (ICAV) to offer US and global equities,” Sereyjol-Garros added.
A similar decision was taken by Amundi last May when it started domiciling segments of its ETF range in Ireland.
Europe’s largest asset manager has since launched 13 ETFs on the platform including a 10-strong suite of sector ESG ETFs last October, ETF Stream revealed.
Last year was a standout 12 months for BNPP AM which became the eighth-largest ETF issuer in Europe after €4.7bn inflows drove its assets under management (AUM) to €26bn, according to data from Bloomberg Intelligence.