Why does Ireland hate investors?

Taylor365

Taxes on dividends.

Taxes on Capital Gains.

Taxes on taxes.

Minuscule allowances.

Cén fáth?

alb

Shut up and buy more houses. Buy all the houses, then buy one more.

Squozen

alb wrote: »

Shut up and buy more houses. Buy all the houses, then buy one more.

I’d love to. Pity there aren’t any I can afford!

alb

Squozen wrote: »

I’d love to. Pity there aren’t any I can afford!

That's because you're not doing it right, leverage yourself to the hilt for the rest of your working life, take on as much debt as anyone will give you, lie on applications if you need to. This is all acceptable because property never goes down (except when it does).

Squozen

alb wrote: »

That's because you're not doing it right, leverage yourself to the hilt for the rest of your working life, take on as much debt as anyone will give you, lie on applications if you need to. This is all acceptable because property never goes down (except when it does).

Curse my honesty!

I left Australia in part because it became impossible for regular people to buy a house in Melbourne or Sydney, and I chose to come to Ireland because it's just soooo much better here. :P

Taylor365

no takers?

CGT Allowance:

UK - £11,300
Ireland - €1,270

Dividends Allowance:

UK - £5,000
Ireland - Nothing

benjamin d

Taylor365 wrote: »

no takers?

CGT Allowance:

UK - £11,300
Ireland - €1,270

Dividends Allowance:

UK - £5,000
Ireland - Nothing

The question was answered for you in the first reply. The ONLY acceptable investment in Ireland is property. There are too many vested interest in all aspects of the property market to see an end to that.

alb

Taylor365 wrote: »

no takers?

CGT Allowance:

UK - £11,300
Ireland - €1,270

Dividends Allowance:

UK - £5,000
Ireland - Nothing

no CGT on primary house!
mortgage interest relief!

Gotta invest with leverage on an illiquid asset that isn't portable and is heavily dependent on the economy of a small country which is heavily dependent on turbulent mid-brexit UK and bunch of multinationals that we would prefer pay more tax... or would we prefer not, we don't seem sure.

... but anyway, why would you want a globally diverse, sector diverse portfolio of shares and bonds at all, when you can have Irish property?

Your "101 reasons to not return a tenant's deposit" guide is in the post, you should receive it soon, then you're all set.

Taylor365

Any real answers out there?

FernandoTorres

I've often wondered this myself. The rules around investing in Ireland are ridiculous and over-complicated especially when it comes to ETFs/managed funds. I think it's due to the fact that both the people in Government and the general public have quite low financial literacy. As has been said before, property is the only game in town. People who baulk at the thought of investing a few grand in shares because they're "high risk" or "only for the rich" will happily go out and get a loan for 400k to buy a house or invest in a timeshare in Bulgaria. 
Ultimately there isn't enough pressure to change anything so the status quo just continues. In terms of products, we get rubbish and high fees due to the low population. It's simply not a market that any big companies want to focus on.

Wanderer78

Squozen wrote:

I left Australia in part because it became impossible for regular people to buy a house in Melbourne or Sydney, and I chose to come to Ireland because it's just soooo much better here.

I suspect you 'll get your chance to buy in Australia soon, patience required

denismc

alb wrote: »

Shut up and buy more houses. Buy all the houses, then buy one more.

I have just spotted a typo in your username, I think that L should be an I.:D

Dardania

Perhaps because we haven't had listed companies as long as other countries? (despite the fact ISE is one of the longest existing active bourses out there apparently)

I have hopes that REITs could be used to introduce Irish people into investing more prudently, using bourses etc...

Sabre Man

Taylor365 wrote: »

no takers?

CGT Allowance:

UK - £11,300
Ireland - €1,270

Dividends Allowance:

UK - £5,000
Ireland - Nothing

If you only have dividends and no capital gains, can you use your €1,270 allowance towards dividends?

draiochtanois

This post has been deleted.

cooperguy

draiochtanois wrote: »

This post has been deleted.

Except for "deemed disposal" after 8 years.

Taylor365

FernandoTorres wrote: »

I've often wondered this myself. The rules around investing in Ireland are ridiculous and over-complicated especially when it comes to ETFs/managed funds. I think it's due to the fact that both the people in Government and the general public have quite low financial literacy. As has been said before, property is the only game in town. People who baulk at the thought of investing a few grand in shares because they're "high risk" or "only for the rich" will happily go out and get a loan for 400k to buy a house or invest in a timeshare in Bulgaria.
Ultimately there isn't enough pressure to change anything so the status quo just continues. In terms of products, we get rubbish and high fees due to the low population. It's simply not a market that any big companies want to focus on.

What type of pressure is needed?

Just seems backwards to me. "Keep the poor and middle class in place and let the big boys have their houses" sort of deal.

Surely allowing wealth to grow is good thing?

It's no coincidence most are financially inept, the more you know, the more you resent.

robp

draiochtanois wrote: »

This post has been deleted.

Taxes on income (dividends) and Capital gains are common all over the world.

Not sure what the reference to taxes on taxes refers to.

You could legitimately have a beef with stamp duty on Irish shares.

You can buy and hold non dividend paying shares or an ETF and avoid taxes until you dispose of the asset.[/quote]
Stamp duty is annoying and encourages people to ignore Irish listed companies but it can be argued to be very fair and doesn't penalise success. The real problem is the 8 year ETF rule. It really seems to create extremely complicated documentation requirements and arbitrarily makes US domiciled ETFs more attractive.

Dardania

This will help: https://www.ft.com/content/731a27b4-5cb0-11e7-b553-e2df1b0c3220

Ireland is a small market - no matter how interested or financially literate the population are, it costs a lot to serve the Irish market unless there is mass adoption.

The J Stands for Jay

Taylor365 wrote: »

no takers?

CGT Allowance:

UK - £11,300
Ireland - €1,270

Dividends Allowance:

UK - £5,000
Ireland - Nothing

Adopting the UK allowances would make the admin so much easier for the small investor. Imagine that, giving the person starting out a chance to get into investing and learning a bit before having to deal with tax returns and paying tax.

Dardania

McGaggs wrote: »

Taylor365 wrote: »

no takers?

CGT Allowance:

UK - £11,300
Ireland - €1,270

Dividends Allowance:

UK - £5,000
Ireland - Nothing

Adopting the UK allowances would make the admin so much easier for the small investor. Imagine that, giving the person starting out a chance to get into investing and learning a bit before having to deal with tax returns and paying tax.

The prospect of tax returns is definitely a deterrent. We are to some extent spoilt by PAYE, making normal relations with Revenue relatively smooth compared to other countries.

Similarly, we have DIRT - which just feels unfair to me

650Ginge

Very unlikely to get your money out in two months. Just my opinion but that's a long time to wait once you have decided to dispose of any asset.

You can buy and sell a company in the blink of an eye which is much more complex than a house.

So against other options it's illiquid.

Also the number of shares traded everyday far exceeds even the highest demand area for property.

737max

your memory is short.
houses in Dublin and much of the rest of Ireland were not selling from 2008 up until 2013.
You can go off and get the volumes yourself to see that. I'm not bothering.

At present I'm watching the house of somebody known to me receiving absolutely no buying interest on the market at any price.

I sold in 2011. It took a long time to sell. It wasn't an investment house. it was a home but I had a need to sell and after waiting a long time for a buyer I had to take the very low price the market offered me along with high transaction costs which were higher as a percentage of sale price than at a time when the market price would have been higher.

The facts are:
Housing as an investment is illiquid.
Housing as an investment carries huge transactional costs.
Housing is by its very nature exposed to specific markets so risk can't be spread.

If you see housing as an investment and already have a very large investment portfolio spread out amongst many asset types and have a few hundred thousand euro left to spare while still having some of your wealth in accessible cash then go ahead and invest in housing, otherwise keep clear of it.

737max

You don't get it. If your investments drop and you are stuck for money you can sell just enough shares to get your through until the investments pick up again. When you are "all in" on property you can't sell off a portion of it or even re-mortgage it to get some cash.
That is over-exposure to one asset class.

alb

Yeah my original comment wasn't just about whether you can sell it or not, or the time that takes, it's that you generally have to sell it all at once, though of course you may be able to get around that by releasing equity via a loan, but that's at someone elses discretion, will cost interest and may also be slow.

650Ginge

Actually you have a point, so what? This thread was started about the tax on investments in ireland, not about liquidity.

A work colleague and I (they have a rental property) have been bashing the figures for a rental property of the last few months on and off. I just can't see how property with the way the rental income is taxed makes it worthwhile either.

I was expecting to punch the numbers in and get a confirmation of what I expected to be a decent return. But the only way I could get an acceptable return was to factor in a continuation of the house price increase rates we have see since 2012/3. But as house prices are historically correlated with wages, I don't see the same jumps in the average working salary.

Again property because of the taxation is another area it is hard to make a decent return in Ireland. From what I can tell it is the same in the UK now. I am not saying others haven't made good returns but when you are looking at 2 bedroom ex council houses priced at 400-450k, I just can't see the value from an investment point of view.

If this was 2009-2010-2011, then yes there was value everywhere. But now, and with a 10year bull market certain to crash at some stage (I have no idea when but it will) and take house prices with it.

I can't make the figures work on a rental, I would like to add property at some point.

Cute Hoor

Dublin house prices probably have done better than any equity fund in that timespan but certainly not far better. Dublin house prices have risen by 77% in the last 4 years, a fairly spectacular increase. That 77% doesn't take into account the not inconsequential costs of buying/selling, and ongoing maintenance and other costs during those 4 years.

By contrast VOO (I just picked this one, there will be worse and better ones) has risen by 57%, plus 8.5% by way of dividends. There are virtually no purchase costs, no ongoing maintenance costs, and virtually no sale costs. So overall little enough between them

You could of course pick individual stocks that would whip Dublin house prices by multiples over the same period, or indeed individual stocks that would be well beaten by Dublin house prices over the same period, but of course hindsight is 20/20.


You cannot say that the illiquidity of property is something that needs no heed (you can say it of course but it makes no sense), it most certainly does need heed and there are thousands out there to prove it, thousands who have been devastated by the property crash with their money tied in and not a hope of selling, what do you do if you need money and you could hardly give away your property. At best it's going to take the guts of 3 months to get out of a property (for good or bad), it takes a second to get out of stocks, with a little bit of nous you can tie in your profit or limit your losses, again instantly.

A relatively long term approach is ideal for stocks or property, for property you have little option but to go long term, the buy and sell costs would absolutely murder you. While longterm is probably advisable for stocks as well lots of opportunities can present themselves to make a profitable quick dip in and out, something you couldn't contemplate with property.

This makes no sense to me, with $250 you could start buying VOO in the morning, how much would you need in the kitty to start a property base.

Austria!

Is there any prospect of a reduction in the CGT rate, or an increase in the tax-free allowance?

Taylor365

You could have up-to nearly £200,000 invested in dividend paying shares in the UK and not pay any tax.

robp

I wonder has anyone measure if the heightened risk of buying non dividend paying stocks is justified by the tax savings (for higher bracket tax payers).

Dardania

robp wrote: »

I wonder has anyone measure if the heightened risk of buying non dividend paying stocks is justified by the tax savings (for higher bracket tax payers).

It's what I tend to do, to avoid the hassle with tax

ZeroThreat

Dardania wrote: »

It's what I tend to do, to avoid the hassle with tax

Ryanair shares are non-dividend paying, right?

Dardania

ZeroThreat wrote: »

Dardania wrote: »

It's what I tend to do, to avoid the hassle with tax

Ryanair shares are non-dividend paying, right?

Historically, yes, I think so. i think that's one of Michael O'Leary's strategies, to have a massive capital reserve in case of recessions etc. - not paying a dividend lets him keep the reserve high enough for safety.

When I responded to robp, I had in mind ETFs - Income/Distributing ETFs versus Accumulation ETFs.

audi5

Taylor365 wrote: »

no takers?

CGT Allowance:

UK - £11,300
Ireland - €1,270

Dividends Allowance:

UK - £5,000
Ireland - Nothing

Ireland certainly does hate anyone who wants to save or invest. Its beyond me why government does not encourage savings or investments in this country.

Just to add to your list:

UK CGT - 20%
Ireland CGT - 33%

UK - Tax free saving ISA 20,000 per year
Ireland - Tax free savings 0 per year

UK - some interest savings allowance (depeding on income tax band)
Ireland - nada

Only saving/investing game in town is pension really, and even there you get taxed on the other end e.g. max tax free lumpsum is 200K.

We often hear Ireland being a low tax country, and it is for most people and for corporations. In my situation I have yet to find a country in this world where I will be taxed more on my income, savings or investments than in Ireland.

audi5

Taylor365 wrote: »

You could have up-to nearly £200,000 invested in dividend paying shares in the UK and not pay any tax.

It gets better. You can start to accumulate 20,000 tax free in a share ISA per year in UK, and after ten year you will have saved 200K and not have to ever pay tax on dividends or capital gains.

Ireland really is living in 19th century with its backward rules on savings/investment like 8-year deemed disposal, huge taxation on capital gains, dividends, savings income.

I don't know if its general financial illiteracy or just that we want to have more people dependant on state during their old age.

audi5

Dardania wrote: »

Perhaps because we haven't had listed companies as long as other countries? (despite the fact ISE is one of the longest existing active bourses out there apparently)

I have hopes that REITs could be used to introduce Irish people into investing more prudently, using bourses etc...

I personally doubt presence of REITs is going to make a difference. Why take the risk of huge price volatility if you have to pay tax at 52% on REITs income.

What would improve things in my opinion is perhaps a UK ISA like scheme where people can save pretax income or at least can compound income tax free until disposal.

Dardania

audi5 wrote: »

Dardania wrote: »

Perhaps because we haven't had listed companies as long as other countries? (despite the fact ISE is one of the longest existing active bourses out there apparently)

I have hopes that REITs could be used to introduce Irish people into investing more prudently, using bourses etc...

I personally doubt presence of REITs is going to make a difference. Why take the risk of huge price volatility if you have to pay tax at 52% on REITs income.

What would improve things in my opinion is perhaps a UK ISA like scheme where people can save pretax income or at least can compound income tax free until disposal.

My theory with REITs is it gives a tangible asset backed security that can be partially liquidated if necessary. And the income one receIves is “in the clear” - all running costs for the property like maintenance etc is taken from pre tax income.



Getting back to the general theme about Ireland hating investors - thinking afresh on it: Ireland selectively hates investors if you think about SSIAs and DIRT. SSIAs are extended to cool down the economy as is DIRT being reduced - all to encourage saving. Whereas DIRT is increased and VAT is decreased if the government doesn’t want people saving, and is trying to stimulate the economy.

Not familiar with the UK’s ISA scheme but the principle sounds great. A much more mature approach. Trying to lobby for it would be difficult though as it screams elitism which Irish politicians don’t want to associate with at all.

Taylor365

Dardania wrote: »

My theory with REITs is it gives a tangible asset backed security that can be partially liquidated if necessary. And the income one receIves is “in the clear” - all running costs for the property like maintenance etc is taken from pre tax income.



Getting back to the general theme about Ireland hating investors - thinking afresh on it: Ireland selectively hates investors if you think about SSIAs and DIRT. SSIAs are extended to cool down the economy as is DIRT being reduced - all to encourage saving. Whereas DIRT is increased and VAT is decreased if the government doesn’t want people saving, and is trying to stimulate the economy.

Not familiar with the UK’s ISA scheme but the principle sounds great. A much more mature approach. Trying to lobby for it would be difficult though as it screams elitism which Irish politicians don’t want to associate with at all.

I would call those tactics fake.

Like they turn the key and spout all this nonsense about growth etc. etc. when its full on manipulation.

Follow this path or get taxed....

c_man

Taylor365 wrote: »

no takers?

CGT Allowance:

UK - £11,300
Ireland - €1,270

Dividends Allowance:

UK - £5,000
Ireland - Nothing

Don't forget about ISA allowances in the UK. I can put £20k into my stocks and shares ISA in a financial year and never worry about tax on it or dividends.


Edit: opps, audi5 beat me to it!

kokiyou

Wow that is some difference, so is there any way to legally work in Ireland but be a UK tax resident?

It seems worth doing if you're saving up to 30-40k sterling on taxes, on the low end that is like 33k euro 0.33% = 11k euro a year...

turbbo

kokiyou wrote: »

Wow that is some difference, so is there any way to legally work in Ireland but be a UK tax resident?

It seems worth doing if you're saving up to 30-40k sterling on taxes, on the low end that is like 33k euro 0.33% = 11k euro a year...

Good question - asking the same but with US instead of UK.

Taylor365

kokiyou wrote: »

Wow that is some difference, so is there any way to legally work in Ireland but be a UK tax resident?

It seems worth doing if you're saving up to 30-40k sterling on taxes, on the low end that is like 33k euro 0.33% = 11k euro a year...

Live in NI and work in IRE?

audi5

Taylor365 wrote: »

Live in NI and work in IRE?

Interesting question, but if you spend one minute a day in the state for 183 days a year you become Irish resident for tax purposes. So unless you live in NI, and work remotely, (or maybe work "nights" in the state as they don't seem to count spending nights - maybe I am taking it too literally) I don't see a way of doing this legally.


http://www.citizensinformation.ie/en/employment/migrant_workers/coming_to_ie_tax.html


Residence status
You will be resident in Ireland for a particular tax year if:

If you spend 183 days or more in Ireland for any purpose in that tax year

A count is made of the total number of days you spend in Ireland for any purpose in each tax year. An individual is present for a ‘day’ for residence purposes if he or she is present in the State at any time during the day.

Taylor365

I suppose there's no one to lobby for the little guy?

Dardania

Taylor365 wrote: »

I suppose there's no one to lobby for the little guy?

You'd need to wrap the interests of the little guy investor with some more "holier" goal - something like a "savers society", to conjure images of responsible widows not being a burden on anyone. then it could be lobbied for

ZeroThreat

Dardania wrote: »

You'd need to wrap the interests of the little guy investor with some more "holier" goal - something like a "savers society", to conjure images of responsible widows not being a burden on anyone. then it could be lobbied for

tbh I'm surprised the likes of IBEC or ISME haven't lobbied for CGT to be reduced from the highs they're currently at. Is this not something that tends to disproportionately affect business owners?

Dardania

ZeroThreat wrote: »

Dardania wrote: »

You'd need to wrap the interests of the little guy investor with some more "holier" goal - something like a "savers society", to conjure images of responsible widows not being a burden on anyone. then it could be lobbied for

tbh I'm surprised the likes of IBEC or ISME haven't lobbied for CGT to be reduced from the highs they're currently at. Is this not something that tends to disproportionately affect business owners?

There is lately something about CGT on shares for company founders in the news - I think?

Another thing that get's my goat is the CGT exemption is €1270 per annum. that is clearly adapted from punts. that number should have been adjusted in line with inflation.

From a quick google, it seems that 1,000 punt was first listed in 1992: http://www.irishstatutebook.ie/eli/1992/act/9/section/59/enacted/en/html - think how much inflation there has been since. From CSO, that number would have been 7.8% of annual industrial wage - now it's circa half...
http://www.cso.ie/en/releasesandpublications/ep/p-hes/hes2015/aiw/

Heisenberg.

This post has been deleted.

Taylor365

Heisenberg. wrote: »

This post has been deleted.

What are the options? How can you persuade any change in tax to the hungry hungry hippos?

Grant Stevens

To be honest I feel that the reason we have not seen an improvement in the investment environment here is due to lack of interest/ demand for better conditions. These questions are not high up on peoples' list when the politicians come knocking at election time. Most of the country is floating on credit as it is. Most of the current generation will be repaying mortgages right up until retirement, if they're lucky to hold employment (and their home) until then. A lot have very little in savings and don't get me started on pensions......what's that you say again? Investing??!
I think it's just not a popular thing in Ireland, for the masses anyway.

Bob Harris

robp wrote: »

Stamp duty is annoying and encourages people to ignore Irish listed companies but it can be argued to be very fair and doesn't penalise success. The real problem is the 8 year ETF rule. It really seems to create extremely complicated documentation requirements and arbitrarily makes US domiciled ETFs more attractive.

I've been looking at ETF's recently and didn't realise this self declaration requirement after 8 years for Irish or EU based funds paid at 41% on any gain made (capital+dividends).

If you invested monthly each unit will have a different purchase value and you'd have to calculate the gains on each monthly investment. Over 8 years that's 96 different calculations of tax libility. The alternatve would be bi-annual or annual investment to avoid such a pain in the arse.

US ETF's are split between dividends and capital gains:
'Generally, subject to normal capital gains tax and income tax rules. Therefore,
marginal rate income tax (up to 40%), plus USC (up to 11%) and PRSI (4%), as applicable, on dividends received by Irish resident individuals and 33% capital gains on capital gains arising on the disposal of shares. Capital losses may generally be used to offset gains. Therefore, dividends will generally be taxed at a higher rate than European ETFs (1-3 above) but gains will generally be taxed at a lower rate'

Unnecesarily convoluted and discourages people from investing.