New law to tighten rules on Irish limited partnerships used by Russian investors

Legal entities marketed to investors in Russia and former Soviet republics as having tax and secrecy benefits of offshore companies

The Government is to introduce a new law to increase the transparency surrounding limited partnerships, legal entities that are being marketed in Russia and other former Soviet republics as having the tax and secrecy benefits of offshore companies.

Reports in The Irish Times in 2021 highlighted how about one-third of the more than 2,500 then existing limited partnerships were using mailbox-type registered addresses with the most popular such address, an office in a building in Dublin 2, being used by 848 partnerships.

Leaked documents showed the bulk of the partnerships comprised partners that were themselves located in offshore jurisdictions. This meant there was no way of knowing who the actual owners were.

The disclosures, which were part of a project called the Pandora Papers organised by the International Consortium of Investigative Journalists, of which The Irish Times is a media partner, were described as a “matter of concern” at the time by the then tánaiste, Taoiseach Leo Varadkar, who said he had discussed them with the Coalition party leaders.


“These are new revelations, this is new news,” he said. “It would appear on the face of it that some of the arrangements that may be routed to Ireland are very dubious.

“What we have decided is that we would ask the officials in my department to examine this issue from a company law point of view and the Revenue Commissioner from a tax law point of view. If we need to make some changes and close some loopholes, we will do that.”

Minister of State at the Department of Enterprise, Trade and Employment Dara Calleary is working on the heads of a new Bill that will respond to the concerns raised about matters of transparency, according to the department.

“The Miscellaneous Provisions (Transparency and Registration of Limited Partnerships and Business Names) Bill 2023 will update the Limited Partnerships Act 1907 and Registration of Business Names Act 1963 to strengthen Ireland’s regulatory framework and ensure the respective pieces of legislation are fit for modern business practices,” he said.

“The Bill will provide for increased transparency requirements through registration procedures and annual information requirements. It will further provide for additional powers for the Registrar [of Companies] to ensure the integrity of the register is upheld, as well as enhanced enforcement and compliance provisions.”

It is expected that work on finalising the general scheme will proceed over the coming months and be brought to Government as soon as possible thereafter, the spokesman said.

Originally, limited partnerships were used in ventures such as farms so that an owner could have the benefit of an investment by a partner in such a way that the investor’s risk was limited to the amount of money invested.

More recently, the structures have been used by the venture capital sector, so that investors can put money into a fund that has a particular purpose, knowing that the associated risk is limited.

The entities behind limited partnerships are not taxed because any profits that arise from the business the partnerships are engaged fall to be taxed at partner level.

Law firms and others in Russia and other former Soviet republics started to promote the use of Irish limited partnerships to their clients some years ago.

“We are talking about a classic offshore, but with an Irish residence permit,” the Idea Legal Group, a Moscow law firm, was quoted as saying on its website in 2021.

“You can register a kind of offshore company in Ireland”, the website of the Afortis Group law firm, which had offices in 2021 in Russia, Ukraine and Latvia, was quoted as saying.

Ireland has an “excellent reputation”, the website said. It is not included on any blacklists, does not provoke questions from the tax authorities of jurisdictions where transactions are being scrutinised, and “is reputable with European banks”.s

Colm Keena

Colm Keena

Colm Keena is an Irish Times journalist. He was previously legal-affairs correspondent and public-affairs correspondent