Degiro - Taxation of ETF's

HcksawJimDuggan

Having read the Revenue guidelines in relation to taxation of ETF's, it is my understanding that Irish domiciled funds are liable to exit tax at 41% on dividends earned in such funds. As such, I don't think the receipt of these dividends need to be included on my Irish Income tax return. However, when I look at my Degiro statement it does not appear as if exit tax has been deducted. Has anyone come across this? Is my understanding of the taxation of dividends from ETF's correct or should they be declared as regular dividends on the Income tax return?

Many thanks, Hcksaw.

Viscount Aggro

any Ucits etf is liable for 41% tax on gains, or income.

check the domicile of the etf.. usually the IE ones are paid gross,

so you do have to account for the income in tax return.

DE ones have other DWT rules.

check what was the gross Vs. nett dividend you received.

This is a minefield, so I would not assume anything.

HcksawJimDuggan

https://www.boards.ie/discussion/comment/118073927#Comment_118073927

Thanks for the quick response. The domicile of the fund is Ireland and the ISIN number begins IE. I have checked the gross dividend online and the rate matches the amount I have been paid by Degiro so looks like I have been paid gross. I had incorrectly assumed that exit tax would be taken by Degiro and I would not need to report anything on Form 11 (similar to savings policies with the likes of Irish Life, New Ireland etc.). On the Form 11, there is a section under Irish Other Income for Investment Undertakings with a section "Gain on deemed disposal (S.739E(1)(bii)) Taxable at 41%". This would appear to be where this dividend needs to be reported.

Agreed that it is a minefield and the revenue guidance could do with a few detailed examples included.

Viscount Aggro

They dont want people investing in these products.

Taxed the same as unit funds sold by the life and pensions industry,

its to protect this industry, from people switching wholesale into passive funds (ETFS).

Vanguard and Ishares dont even bother marketing them in Ireland.

HcksawJimDuggan

Ah that makes sense now.

In relation to reporting on the Form 11, I was incorrect above in my assumption that its included under Irish Other Income.

I found a guide from Davy's on the tax treatment and they state that Income from Irish Domiciled ETF's should be disclosed under 'Foreign Income - Offshore Funds - Payment taxable at 41% (S747D(a)(i)(II))'.

Thanks for the info above,

Hcksaw.

I only have PAYE income and only used MyAccount on Revenue.

If I buy an Irish domiciled ETF and later sell it for a gain do I have to register on ROS and complete a Form 11 in order to pay tax on the gain?

Gumbyman2000

I think the 41% tax applies on exit via dividends but also on the capital appreciation. Trying to get my head around this myself too. Revenue charge you as if you crystallise the gain every 7 or 8 years (if you just leave it in there).

Anyone know if an AVC would be deductible against this 41% chargeable 'income' if the person's marginal rate was only 20%?

Viscount Aggro

NO

its not classed as income.