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Question about taxes on ETFs

  • 27-04-2020 8:10pm
    #1
    Registered Users Posts: 229 ✭✭ bonjurkes


    I am aware that there is 41% deemed disposal exit tax on Irish domiciled ETFs every 8 years. So either you sell or not, you have to pretend that you sell the ETF and pay 41% tax for it.

    I was wondering does anyone know what happens if you move out of Ireland, change your tax residency while having Ireland domiciled ETFs? Do you have to pay 41% tax instantly when you change your tax residence? Or does this 8 year duration pauses and it continues from where it left when you return to Ireland?


Comments

  • Registered Users Posts: 541 OttoPilot


    bonjurkes wrote: »
    I am aware that there is 41% deemed disposal exit tax on Irish domiciled ETFs every 8 years. So either you sell or not, you have to pretend that you sell the ETF and pay 41% tax for it.

    I was wondering does anyone know what happens if you move out of Ireland, change your tax residency while having Ireland domiciled ETFs? Do you have to pay 41% tax instantly when you change your tax residence? Or does this 8 year duration pauses and it continues from where it left when you return to Ireland?

    I don't believe you would be liable if you lost ordinary residence but I am not a tax expert.


  • Registered Users Posts: 10,905 ✭✭✭✭ Bob24


    bonjurkes wrote: »

    I was wondering does anyone know what happens if you move out of Ireland, change your tax residency while having Ireland domiciled ETFs? Do you have to pay 41% tax instantly when you change your tax residence? Or does this 8 year duration pauses and it continues from where it left when you return to Ireland?

    As the previous poster I am no tax expert, but I also don’t see why you would have to pay that tax if you stop being a tax resident before the 8 year have elapsed.

    What happens when you return to ireland is less clear to me though, but I would tend to thing what matters is just the anniversary date from which you purchased the shares, not the duration you spent as a tax resident.


  • Registered Users Posts: 1,566 ✭✭✭ Patsy167


    bonjurkes wrote: »
    I am aware that there is 41% deemed disposal exit tax on Irish domiciled ETFs every 8 years. So either you sell or not, you have to pretend that you sell the ETF and pay 41% tax for it.

    I was wondering does anyone know what happens if you move out of Ireland, change your tax residency while having Ireland domiciled ETFs? Do you have to pay 41% tax instantly when you change your tax residence? Or does this 8 year duration pauses and it continues from where it left when you return to Ireland?


    Very similar question asked here that may be of interest...https://www.reddit.com/r/eupersonalfinance/comments/enlcsg/ireland_etfs_taxes_and_8_yrs_mark/


  • Registered Users Posts: 10,905 ✭✭✭✭ Bob24


    By the way on a similar topic I was wondering, if you pay the deemed disposal tax in Ireland after 8 years and then move to another country and sell your ETF shares, are you not going to get completely screwed? You would already have paid CGT on the gains in ireland but you will also be liable for CGT in your new country. And would the new country let you offset the amount already paid to Ireland against their own CGT or (I think more likely) just not care for or try to understand our stupid concept of deemed disposal, and simply tax you on your selling price minus purchasing price? (meaning you effectively get taxed twice on the same capital gain)


  • Registered Users Posts: 3,284 ✭✭✭ irishguy


    bonjurkes wrote: »
    I am aware that there is 41% deemed disposal exit tax on Irish domiciled ETFs every 8 years. So either you sell or not, you have to pretend that you sell the ETF and pay 41% tax for it.

    I was wondering does anyone know what happens if you move out of Ireland, change your tax residency while having Ireland domiciled ETFs? Do you have to pay 41% tax instantly when you change your tax residence? Or does this 8 year duration pauses and
    it continues from where it left when you return to Ireland?

    I dont have an answer to your question, but was wondering do you also also need to pay prsi or USC on this? Or is it just a flat 41% over 8 years for all dividends and gains.

    Edit - answered my own question here. EU domiciled one are not liable for USC/prsi

    https://www.irishtimes.com/business/personal-finance/don-t-invest-in-an-etf-until-you-understand-the-tax-1.3421331?mode=amp


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