Amid the enthusiasm in Europe for ETFs, particularly active ETFs, Ireland and Luxembourg are the two main players when it comes to domiciling cross-border funds. Europe’s leading ETF domicile is Ireland, where more than three-quarters (78%) of European ETFs are domiciled.9 Luxembourg, where 16% of European ETFs are domiciled, is Europe’s distant No. 2.10
Ireland is dominant as an ETF domicile for a number of reasons, including the fact that it has comprehensive double taxation treaties with 75 countries in effect and double taxation agreements signed with three additional countries.11 Notably, Irish ETFs with U.S. equity exposure may benefit from a reduced 15% withholding tax on U.S. dividend income. Large passive managers with high exposure to U.S. assets have established low-cost passive tracker funds in Ireland over any other European domicile. In addition, Ireland does not levy a subscription tax on ETFs.
Although investment funds in Ireland are exempt from corporate tax, their suppliers – such as auditors, consultants, and lawyers – pay 12.5% on average in corporate tax compared to 25% in Luxembourg. Also in Ireland’s favor are attractive structures that facilitate market entry into active ETFs. A recent CBI clarification enables the creation of listed ETF share-classes within mutual funds without the UCITS ETF moniker at the sub-fund level.12 Another recent advent at the beginning of 2025 is the CBI’s authorization of ETFs offering 100% exposure to collateralized loan obligations (CLO), something that was already possible in Luxembourg.13
Though Ireland has been dominating the ETF sector, Luxembourg is attempting to lap at its heels. Luxembourg benefits from comprehensive double taxation treaties with 92 countries.14 Despite Ireland’s strong ETF market, Luxembourg can effectively counter these advantages through mimicking U.S. ETFs in a process called “synthetic replication.”15 In addition, though passive ETFs had been exempt from paying subscription tax in Luxembourg, legislation from Luxembourg’s parliament effective January 2025 discontinued the levying of a subscription tax on active ETFs in Luxembourg as well.16
The Commission de Surveillance du Secteur Financier (CSSF), the Luxembourg financial services regulator, is also collaborating with the financial sector to promote ETF adoption, including a new fast-track approval process.17 Luxembourg also has its own equivalent of ETFs as a share class: its UCITS vehicles, especially Sociétés d’investissement à Capital Variable (SICAVs), now offer ETF share classes within existing mutual fund structures.
There is another recent ETF change afoot, with Ireland and Luxembourg enhancing their capabilities as ETF domiciles: in December 2024, the CSSF relaxed portfolio transparency requirements for active ETFs by permitting managers to publish holdings with a one-month lag.18 Irish regulators responded in kind: in April 2025, the CBI provided the ability to establish semi-transparent ETFs by amending its requirements for portfolio transparency and allowing ETFs to disclose portfolio holdings only at each calendar quarter.19
As with asset managers examining which private asset funds to launch in either Luxembourg or Ireland, those considering an ETF product may benefit from seeking a trusted partner in the process.