knowledge 12 September 2023 |

Levies for Regulated Entities in Ireland

In terms of regulatory costs or levies, regulated entities in Ireland face two such levies:

• Central Bank of Ireland Levy; and

• Financial Services and Pensions Ombudsman Levy.

Further details on these levies are set out below.

Central Bank of Ireland Levy:

Application Costs

There is no fee payable to the Central Bank of Ireland when applying for authorisation to the Central Bank of Ireland. However, once an entity is authorised by the Central Bank of Ireland, an annual funding levy will be payable.

Annual Funding Levy

The Central Bank Reform Act 2010 confers on the Central Bank of Ireland the power to make regulations prescribing an annual industry funding levy to be paid by regulated entities to the Central Bank of Ireland.

Any regulated entity who is authorised and regulated by the Central Bank of Ireland on 31 December of a given year is liable to pay the levy for the following year. In addition, a regulated entity that becomes authorised during the course of a levying year will be liable to pay a levy for the period for which it holds the authorisation in that year.

For the purposes of calculating its annual levy, a regulated financial services provider is classified as falling within a particular ‘levy category’, according to the type of business it is authorised to undertake.  There are currently 12 levy categories. A regulated entity may fall into more than one levy category. In such cases, the regulated entity must pay the levy for each applicable category.

The industry levy varies depending on the levy category a regulated entity falls into. These levies vary from year to year. However, as a guide, the below sets out the 2022 levies payable.

Credit Institutions:

Irish Authorised Credit Institutions (Category A1):

Such credit institutions must pay a minimum levy, plus a variable levy.

The minimum levy for 2022 was €172,783.

The variable levy (V) is calculated as follows:

V =[(S+G)* 50%]* C

Where:

S= the credit institution’s percentage share of the sum of total assets for category A1 (based on the credit institution’s report in FINREP template F01.01 row 380 for the period 31 December 2021)

G = the credit institution’s percentage share of the sum of total risk exposure for category A1 (based on the credit institution’s report in COREP template C02.00 row 010 for the period 31 December 2021)

C= the proportion of total variable amount for category A1.

Other Credit Institutions:

Credit institutions authorised in another EEA state which have established a branch in Ireland and credit institutions authorised in another EEA state operating in Ireland on a freedom of services basis are required to pay a minimum levy of €28,000.

Supplementary Levies:

Credit institutions (where appropriate) are also liable to pay supplementary levies to the Central Bank of Ireland for the purposes of providing sufficient funds to recover costs arising from:

• the conduct of inquiries and investigations under Part IIIC of the Central Bank Act 1942;

• the tracker mortgage investigation and related issues; and

• significant changes to business models and/or activities, where appropriate.

Insurance Undertakings

Similar to credit institutions, the levy payable by insurance and reinsurance undertakings depends on whether these are authorised in Ireland or another EEA state.

Insurance and reinsurance undertakings authorised in Ireland

The levy payable depends on impact category as follows:

• Low: €28,147

• Medium Low: €90,608

• Medium High: €455,784

• High: €1,993,369

• Ultra High: €4,393,100

Insurance Undertakings authorised in another EEA state

The levy payable depends on the type of insurance undertaking in question e.g. life insurance undertakings or non-life insurance undertakings and gross written premium on Irish risk business. In some cases, a flat premium applies. Depending on the category in question, the levy varies from €21,110 to €227,892.

Special Purpose Reinsurance Vehicles

A different levy is payable by such entities. Depending on the category in question, these entities pay a levy of €14,073 or €4,691 per arrangement.

Intermediaries and Debt Management Firms

Levies payable by intermediaries and debt management firms are determined by the firms’ total income from fees and income from commission. These entities must pay a minimum levy, plus a variable levy.

The minimum levy for 2022 was €950.

The Variable Levy is calculated as follows:

(A - B) x C

Where:

A = total of firm’s ‘Income from Fees’ and ‘Income from Commissions’ as reported in the firm’s On-Line Regulatory Return for the year ended 31 December 2020 which was due for submission to the Central Bank of Ireland at end-June 2021 or the most recently received previous report from the firm

B = threshold level of total ‘Income from Fees’ and ‘Income from Commissions’ of €200,000

C = variable levy rate of 0.31%.

Investment Firms

The levy payable depends on impact category as follows:

• Low: €20,951

• Medium Low: €163,897

• Medium High: €824,451

• High: €1,648,902

In addition, investment firms subject to Client Asset Requirements shall pay a supplementary levy as follows:

• Low: €6,922

• Medium Low: €49,381

• Medium High: €248,404

• High: €496,807

Furthermore, investment firms within the meaning of Regulation 3 of the European Union (Bank Recovery and Resolution) Regulations 2015 shall pay a supplementary administration levy as follows:

• Low: €10,184

• Medium Low: €20,367

• Medium High: €102,453

• High: €103,877

Investment Funds

All investment funds authorised by the Central Bank of Ireland shall be liable to pay a minimum levy of €7,165. Umbrella funds will also pay a contribution per sub-fund of €475 up to a maximum of twenty sub-funds, resulting in a maximum contribution for umbrella funds of €16,665.

Alternative Investment Fund Managers and Other Investment Fund Service Providers

The levy payable depends on impact category. For AIF Management Companies; Administrators;

UCITS Managers (Non Delegating); Depositories; Alternative Investment Fund Managers; and UCITS Managers (Delegating) the levy is as follows:

• Low: €20,951

• Medium Low: €163,897

• Medium High: €824,451

• High: €1,648,902

UCITS managers and alternative investment fund managers authorised in another EEA state which have established a branch in Ireland pay a flat rate levy of €20,951.

Credit Unions

A credit union is liable to pay a levy of 0.03022 per cent of total assets as reported in its quarterly prudential return setting out its balance sheet as at 31 December 2021.

High Cost Credit Providers (formerly known as Moneylenders)

These entities must pay a minimum levy plus a variable levy.

The minimum levy is €1,920.

The variable levy is calculated as follows:

(A - B) x C

Where:

A = firms’ turnover reported to the Central Bank of Ireland in section 6.2 of the most recently received Renewal Application for the entity

B = threshold level of total ‘Turnover’ of €60,000

C = variable levy rate of 1.178%.

Approved Professional Bodies

The levy for such bodies is €5,015.

Bureaux de Change

The levy for such entities is €2,254.

Retail Credit Firms, Home Reversion Firms and Credit Servicing Firms

Retail credit firms and credit servicing firms are liable to pay a levy of €60,727.

Home reversion firms are liable to pay a levy of €4,525.

Payment Institutions and E-Money Institutions

These entities must pay a minimum levy plus a variable levy.

The minimum levy is €5,000.

The variable levy is calculated as follows:

A = B/ C

Where:

A = Variable Levy Rate % (i.e. firm’s % share of Total Value of Transactions processed by all firms)

B = Value of Transactions processed by the firm as reported in On-Line Returns to the Central Bank of Ireland for year ended 31 December 2021

C = Total Value of Transactions processed by all firms as reported in On-Line Returns to the Central Bank of Ireland for year ended 31 December 2021.

Payment institutions and e-money institutions with a risk rating of ‘Ultra High’ from an anti-money laundering / combating the financing of terrorism perspective are required to pay the €5,000 minimum

levy and a separate flat fee of €375,000.

Default Assessment

Each regulated entity defined as a defaulting entity is liable to pay a flat rate levy of €3,600.

Financial Services and Pensions Ombudsman Levy:

The Financial Services and Pensions Ombudsman is partly funded by levies on financial services providers. The categories of financial service provider subject to a levy by the Financial Services and Pensions Ombudsman are based on authorisations held by each entity with the Central Bank of Ireland and as prescribed in the Financial Services and Pensions Ombudsman Act 2017.

In order to ensure an equitable distribution of the levy among financial service providers, a rebalancing exercise is carried out each year to ensure that the proportion of the levy applicable to each category reflects the volume of complaints received by the Financial Services and Pensions Ombudsman in the previous three-year period.

The below set out the typical levies payable to the Financial Services and Pensions Ombudsman.

Credit Institutions

Each Irish authorised credit institution or EEA authorised credit institution operating in Ireland on a branch or cross-border basis shall pay, in respect of its liability for the year ended 31 December 2023, a levy calculated at the rate of €0.861 cent per consumer as at 31 December 2021. A minimum levy of

€450 is payable by each credit institution.

Insurance Undertakings

They levy payable depends on the type of insurance undertaking:

• Each life assurance undertaking shall pay, in respect of its liability for the year ended 31 December 2023, a levy calculated on the basis of a sum no greater than 0.0099% of its total net premiums earned for the year ending 31 December 2021, but excluding Class VII premium income, written on Irish risk business. A minimum levy of €450 is payable by each life assurance undertaking.

• Each non-life insurance undertaking with the exception of captive insurance undertakings shall pay, in respect of its liability for the year ended 31 December 2023, a levy calculated on the basis of a sum no greater than 0.0875% of its total net premiums earned written on Irish risk business for the year ending 31 December 2021, save in respect of that portion of the undertaking’s net premium income which is derived from accident and health insurance business. A minimum levy of €450 is payable by each non-life insurance undertaking.

• Each accident and health insurance undertaking (including non-life insurance undertakings providing accident and health insurance) shall pay, in respect of its liability for the year ended 31 December 2023, a levy calculated on the basis of a sum no greater than 0.0311% of its total net premiums earned derived from accident and health risk insurance business for the year ending 31 December 2021. A minimum levy of €450 is payable by each health insurance provider.

Intermediaries and Debt Management Firms

Each intermediary and debt management firm shall pay, in respect of its liability for the year ended 31 December 2023, a levy calculated on the basis of a sum no greater than 15% of the levy payable to the Central Bank of Ireland in 2021. A minimum levy of €155 is payable by each intermediary and debt management firm.

Investment Business Firms (other than Investment Product Intermediaries)

Relevant investment business firms shall pay, in respect of its liability for the year ended 31 December 2023, a levy calculated on the basis of a sum no greater than 7.3429% of the annual industry funding levy payable to the Central Bank of Ireland by the financial service provider in 2021. A minimum levy of €450 is payable by each provider.

Credit Unions

Each credit union shall pay, in respect of its liability for the year ended 31 December 2023, a levy of €625.

Approved High Cost Credit Providers (formerly known as Moneylenders)

The levy is calculated on the basis of a sum no greater than 9.87% of the annual industry funding levy payable to the Central Bank of Ireland by the approved high cost credit provider (formerly known as a moneylender) for 2021. A minimum levy of €450 is payable by each high cost credit provider (formerly known as a moneylender).

Approved Professional Bodies

Each approved professional body shall pay, in respect of its liability for the year ended 31 December 2023, a levy of €450.

Bureaux de Change

Each such entity shall pay, in respect of its liability for the year ended 31 December 2023, a levy of €450.

Retail Credit Firms, Home Reversion Firms and Credit Servicing Firms

Each such firm shall pay, in respect of its liability for the year ended 31 December 2023, a levy of €450.

Payment Institutions and E-Money Institutions

Each such institution shall pay, in respect of its liability for the year ended 31 December 2023, a levy of €450.

Pawnbrokers

Each pawnbroker shall pay, in respect of its liability for the year ended 31 December 2023, a levy of €450.

Business Transfers

In the case of a financial service provider that is liable to pay a levy to the Financial Services and Pensions Ombudsman, whose financial services business is transferred to another financial service provider, the transferee financial service provider shall be liable to pay that portion of the levy payable by the transfer or regulated entity, which has not been paid, and which is notified to the transferee financial service provider by way of a levy notice.

Creditors

Relevant creditors under the Consumer Credit Act 1995 shall pay, in respect of its liability for the year ended 31 December 2023, a levy of €450.

Mortgage Lender

Each mortgage lender shall pay, in respect of its liability for the year ended 31 December 2023, a levy of €450.

Credit Intermediaries

Each credit intermediary shall pay, in respect of its liability for the year ended 31 December 2023, a levy of €155.

Default Assessments

Each default financial service provider shall pay a flat rate levy contribution of €3,600.

How Can McCann FitzGerald LLP Help?

McCann Fitzgerald LLP is a premier law firm in Ireland and advises on levies payable by regulated entities in Ireland. We have experience in guiding applicants through the various regulatory authorisation processes and then assisting clients once authorised with business-as-usual matters. If you are considering becoming authorised as a regulated entity in Ireland, please contact us for further information as to how we can help.