Irish limited partnerships: What are they and what is the problem?

Act introduced in 1907 to limit risks for investors in farms being used in offshore deals

These days limited partnerships play a huge role in the venture capital sector. Photograph: iStock

Irish limited partnerships are entities provided for under the 1907 Limited Partnership Act that allow people invest in a business venture while limiting their exposure to the size of their investment.

Classically they were used in ventures such as farms where the farm owner, the general partner, could have the benefit of an investment in the farm by a limited partner, with the latter knowing that the risk he or she was taking was limited to the amount of money they were putting into the farming venture.

These days limited partnerships play a huge role in the venture capital sector, where investors can put money into funds that have a particular purpose, knowing that the risk they are taking is limited.

The structure is also used in property investments, stallion syndicates, and family investment structures.


Limited partnerships are not taxed because any profits that arise from the business they are engaged in are (theoretically) taxed at the partner level. The profits flow through the partnership, so to speak.

The problem that has arisen, firstly in the UK and now apparently in this jurisdiction too, is that the use of proxy partners and partners based in offshore or secrecy jurisdictions, can bring about a situation where you have a legal entity registered in a first-world economy which is untaxed, and the ownership of which is totally obscure.

You end up with a de-facto offshore entity, with an address in Dublin, Cork, London or Edinburgh.

Because of this, the UK government has over recent years introduced some reforms, and is continuing to examine the possibility of further changes to its regime, while being careful not to do any harm to its venture capital sector.

In this jurisdiction the Department of Enterprise, Trade and Employment sought submissions in 2019 on reforming the 1907 law. The heads of a Bill are currently in preparation.

Colm Keena

Colm Keena

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