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ETF deemed disposal tax - calculating yourself on a single lump purchase

  • 12-06-2022 6:58pm
    Registered Users Posts: 53 ✭✭

    Can anyone confirm if you only buy 1 lump sum initial share of an ETF is the tax come 8yrs as simple as 41% on the unrealised gain?

    I don't fancy taking on keeping track of multiple regular purchases of the same ETF via a trading platform, for example buying a share of it every week / month / quarter as I think the admin of keeping track of this and then trying to calculate the actual tax on the 8th yr anniversary of every purchase is beyond me.

    However, if I buy a single share in the form of a lump sum, just say 10,000 for easy numbers, come the 8yr anniversary is calculating the tax a simple case of 41% of whatever the unrealised gain figure is. This I could handle, but I'd like to be 100% sure I'm correct on this before I go purchasing. I'd appreciate some confirmation of this from some experienced folks :)


  • Registered Users Posts: 53 ✭✭BishopBrennen

    I came across the following from an old thread from searching. It's a response someone else got from Revenue apparently and posted it in another thread. Can anyone confirm that this is the correct way for calculating the tax, that each individual purchased unit of the same ETF will be it's own independent deemed disposal event in 8yrs? If you bought 1 unit monthly from June to Dec like below, totaling 7 unit purchases, come the 8rys is calculating the tax due just a matter of sale price minus each purchase price * its quantity purchased? Or can you get calculate your average purchase price of all the units you bought and just use the average price?

    The end figure should be the same regardless of which method you use above, yeah?

    Can anyone confirm please, I'd like to be sure I know how to practically calculate the tax before I go purchasing Etf's. :)

    ""I got the following reply from Revenue regarding the eight year rule, it might clear up a few things for people:""

    "I refer to your queries below.

    1. If you acquire an interest in an Irish domiciled ETF you do not need to notify Revenue. However, for any year in which you acquire an interest in an EU domiciled ETF then you must notify Revenue of same (via (h) – (j) of line 319 (Offshore Funds) of Form 11).

    If you acquire new units each month, you will have a deemed disposal in respect of each acquisition in 8 years time, unless, of course, you sell the units before you’ve held them for 8 years. If you receive a payment (e.g. an annual distribution) from either an Irish or EU domiciled ETF, you must return the details of same on Form 11.

    You do not need to complete a Form 11 on each occasion that you receive a payment or have a deemed disposal, rather you will total all payments and/or all gains for the year of assessment and enter the relevant details at (a) – (f) of line 319 of Form 11 and submit the return and payment in the October following the year of assessment. See page 1 of Form 11 for further details in relation to filing/payment dates.

    If, say, you commence purchasing ETFs on a monthly basis in June 2015, by the end of 2015 you will have 7 different ETFs. If you hold these investments for 8 years, you will return the total of the deemed disposals of the 7 ETFs on the various dates in 2023 in you tax return in 2024. And so on for subsequent purchases.

    2. Because US ETFs are not regarded as having structures and regulation that are similar in all material respects to Irish ETFs, they are taxed as share investments generally. Income payments i.e. annual distributions/dividends will be subject to income tax at the standard or higher rate as appropriate, and gains on disposals will be subject to capital gains tax. The deemed disposal provisions apply to gross roll-up funds only. However, PRSI and USC will apply.

    I hope the above helps clarify the issue."