Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

what is the tax situation with investing?

  • 20-09-2018 1:29am
    #1
    Registered Users Posts: 161 ✭✭JourneyMan8


    over the past few weeks iv opened a demo account and read up on trading strats etc... i've always thought id love to give it a go, get rich and live the life(joke well 99.99%)....

    what is the tax situation on a person using say derigo, i never thought about this, i always thought it was a gambling type thing, you bet your money you win and off you go to spend your money.

    is there anywhere that explains the ins and outs of trading from ireland. a easy to read guide of what steps you have to climb over to do it safely.

    side note - trading is one of the worst explained things on the internet for someone new trying to get a grasp of. it's so scattered.


«1

Comments

  • Registered Users Posts: 28,043 ✭✭✭✭drunkmonkey


    The first €1270 a year is free, anything over that is 30% tax.

    For tax free betting on share you'd have to spread bet.


  • Registered Users Posts: 4,315 ✭✭✭Pkiernan


    The first €1270 a year is free, anything over that is 30% tax.

    For tax free betting on share you'd have to spread bet.

    Revenue may tax regular trading (day trading for example) as normal income, subject to marginal rate.


  • Registered Users Posts: 161 ✭✭JourneyMan8


    The first €1270 a year is free, anything over that is 30% tax.

    For tax free betting on share you'd have to spread bet.

    okay there's a start thanks. the first 1270 is free, does it only start once it is your money(you withdraw it and it's in your pocket/bank) - or does everything you have in your portfolio online have risk of being taxed?

    I assume there are many cons to spread betting so if people favour regular taxed trading over it?
    Pkiernan wrote: »
    Revenue may tax regular trading (day trading for example) as normal income, subject to marginal rate.

    i wouldn't be a serious trader at all, just lot of long terms darts.


    im starting to think trading would be more hassle than good for someone that just wants to throw darts and enjoy it.


  • Registered Users Posts: 1,347 ✭✭✭cmac2009


    Why is it the government here seem to discourage investing and saving, with both a low threshold and high taxes on savings. In the UK the threshold is 11k odd and they encourage saving/investing with a 20k ISA allowance each year.


  • Registered Users Posts: 372 ✭✭Skelet0n


    okay there's a start thanks. the first 1270 is free, does it only start once it is your money(you withdraw it and it's in your pocket/bank) - or does everything you have in your portfolio online have risk of being taxed?

    As soon as you realise a gain/loss it’s eligible for tax. That is whenever you sell a stock. Revenue doesn’t care where that money is.


  • Advertisement
  • Registered Users Posts: 372 ✭✭Skelet0n


    cmac2009 wrote: »
    Why is it the government here seem to discourage investing and saving, with both a low threshold and high taxes on savings. In the UK the threshold is 11k odd and they encourage saving/investing with a 20k ISA allowance each year.

    So you’ll buy property as an investment.


  • Registered Users Posts: 1,136 ✭✭✭OEP


    cmac2009 wrote: »
    Why is it the government here seem to discourage investing and saving, with both a low threshold and high taxes on savings. In the UK the threshold is 11k odd and they encourage saving/investing with a 20k ISA allowance each year.

    This is something that never comes up around budget time either, at least I've never noticed it. I guess it's because not that many people are actively trading or investing with their own money, so the government isn't too concerned with winning/losing votes here. All these limits are doing is targeting the small guys, an increase to UK levels isn't going to make any difference to someone making massive Capital Gains every year. We're losing out on so much money compared to people in the UK


  • Registered Users Posts: 372 ✭✭Skelet0n


    OEP wrote: »
    This is something that never comes up around budget time either, at least I've never noticed it. I guess it's because not that many people are actively trading or investing with their own money, so the government isn't too concerned with winning/losing votes here. All these limits are doing is targeting the small guys, an increase to UK levels isn't going to make any difference to someone making massive Capital Gains every year. We're losing out on so much money compared to people in the UK

    It's still 1000 punts for feck sake, hasn't even been adjusted for inflation, just converted to Euro.


  • Registered Users Posts: 1,136 ✭✭✭OEP


    Genuine question, how do you go about lobbying for a change to something like this? 
    I believe it's not even on their radar, as it doesn't effect enough people. A change to this wouldn't lose them any votes but they could swing it as another way of helping the "squeezed middle". After all, it only matters to those with a small bit of spare cash to invest - not the big guys and not the social welfare people.


  • Registered Users Posts: 372 ✭✭Skelet0n


    OEP wrote: »
    Genuine question, how do you go about lobbying for a change to something like this? 
    I believe it's not even on their radar, as it doesn't effect enough people. A change to this wouldn't lose them any votes but they could swing it as another way of helping the "squeezed middle". After all, it only matters to those with a small bit of spare cash to invest - not the big guys and not the social welfare people.

    Write your TD. The same way any change is brought about.


  • Advertisement
  • Registered Users Posts: 3,612 ✭✭✭Dardania


    I intend trying to address it via: http://www.welfare.ie/en/Pages/Consultations.aspx#strawman
    A nice simple solution like ISA could be merged in with it


  • Registered Users Posts: 1,740 ✭✭✭ballyharpat


    Pardon my ignorance, if I invest 10k and make €1200 every year and pull out after 5 years, am I under the threshold? Or does it only work if I pull it out every year and reinvest and make €1200 every year that way.


  • Registered Users Posts: 372 ✭✭Skelet0n


    Pardon my ignorance, if I invest 10k and make €1200 every year and pull out after 5 years, am I under the threshold? Or does it only work if I pull it out every year and reinvest and make €1200 every year that way.

    Whenever you realise the gain you are eligible for the tax. If you realise 1200 a year, you pay no tax. If you realise the gain after 5 years, you pay no tax on 1270.


  • Registered Users Posts: 1,740 ✭✭✭ballyharpat


    Thanks for that, it really is a strange system, there is nothing to encourage any long term investment. In other countries they encourage you to invest
    and have a reduced rate of tax on profits held for more than 12 months, we really are into property only in this country, Sheep.
    Skelet0n wrote: »
    Whenever you realise the gain you are eligible for the tax. If you realise 1200 a year, you pay no tax. If you realise the gain after 5 years, you pay no tax on 1270.


  • Moderators, Business & Finance Moderators Posts: 9,924 Mod ✭✭✭✭Jim2007


    Skelet0n wrote: »
    So you’ll buy property as an investment.

    Well I don’t know if that was the intention...

    But here in Switzerland capital gains from investing are tax free, while capital gains on property are taxed. The result is that everyone has a portfolio and very few are interested in getting on the property ladder.

    To be considered a trader and have your gains taxed as income you need to execute ten trades or more per month for at least six months of the tax year, so there is a fair bit of flexibility there.


  • Registered Users Posts: 161 ✭✭JourneyMan8


    gonna jump in with a stupid question, with it being an online thing, how do revenue know what you have and when you get over the limit etc, or is it simply up to you to declare??


  • Registered Users Posts: 4,069 ✭✭✭relax carry on


    gonna jump in with a stupid question, with it being an online thing, how do revenue know what you have and when you get over the limit etc, or is it simply up to you to declare??

    It's self assessment. You track your gains and return them each year.

    https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/how-to-calculate-cgt.aspx

    Note that Revenue already have access to a wide array of information regarding worldwide and domestic sources of income relating to individuals and companies. These sources increase each year.


  • Registered Users Posts: 1,639 ✭✭✭Sugar Free


    Jim2007 wrote: »
    Well I don’t know if that was the intention...

    But here in Switzerland capital gains from investing are tax free, while capital gains on property are taxed. The result is that everyone has a portfolio and very few are interested in getting on the property ladder.

    To be considered a trader and have your gains taxed as income you need to execute ten trades or more per month for at least six months of the tax year, so there is a fair bit of flexibility there.

    Aren’t there other criteria that would also have you fall under the trader classification for Switzerland ? E.g. trading on margin, trading options, realizing gains in one year equivalent to more than 50% of your income etc? I admit I’m not that familiar with it, I just thought there were a few other criteria.

    Still though, the Irish system really doesn’t incentivize investing beyond pensions and property (which if it was purely as an investment would usually be a bad one).


  • Registered Users Posts: 372 ✭✭Skelet0n


    https://www.google.ie/amp/s/irishtechnews.ie/budget-2019-needs-to-brexit-proof-ireland-deloitte/amp/

    Deloitte recommend reduction in CGT to help Brexit proof economy.


  • Banned (with Prison Access) Posts: 1,934 ✭✭✭robp


    Skelet0n wrote: »
    It's still 1000 punts for feck sake, hasn't even been adjusted for inflation, just converted to Euro.

    It is worth pointing out that £1270 Irish punts in 2001 was worth about €1948 in 2017 so yeah there has been significant deterioration if it was £1270 in 2001.


  • Advertisement
  • Registered Users Posts: 161 ✭✭JourneyMan8


    don't get why it's taxed when you haven't withdrawn it yet though, that's what i don't understand. has totally put me off it


  • Registered Users Posts: 1,264 ✭✭✭eeepaulo


    don't get why it's taxed when you haven't withdrawn it yet though, that's what i don't understand. has totally put me off it

    I think you mean the profit from selling a share that's in your degiro account?

    Because you've realised the gain on the asset, you bought an asset (the share), you have then sold an asset (same share), you realised the gain (profit, or loss). If you sell multiple shares during a tax year you can offset realised losses against realised gains.

    The important word is realised. If you simply hold the share in your degiro account it isn't realised until you sell the share.

    If you didn't pay tax on your gains until you removed it from degiro, your degiro account would be a tax free vehicles (until you withdrew the cash)


  • Registered Users Posts: 1,136 ✭✭✭OEP


    robp wrote: »
    It is worth pointing out that £1270 Irish punts in 2001 was worth about €1948 in 2017 so yeah there has been significant deterioration if it was £1270 in 2001.

    1000 punts is €1270


  • Registered Users Posts: 161 ✭✭JourneyMan8


    eeepaulo wrote: »
    I think you mean the profit from selling a share that's in your degiro account?

    Because you've realised the gain on the asset, you bought an asset (the share), you have then sold an asset (same share), you realised the gain (profit, or loss). If you sell multiple shares during a tax year you can offset realised losses against realised gains.

    The important word is realised. If you simply hold the share in your degiro account it isn't realised until you sell the share.

    If you didn't pay tax on your gains until you removed it from degiro, your degiro account would be a tax free vehicles (until you withdrew the cash)

    Oh I see so people still get away with long term trading with out hassle of worrying about tax? They just pay the tax when the shares are sold etc. That sounds a bit better, if I'm reading that right


  • Registered Users Posts: 129 ✭✭dickface


    OEP wrote: »
    1000 punts is €1270

    Back when we switched to the Euro, would be closer to 2000 now


  • Registered Users Posts: 1,136 ✭✭✭OEP


    dickface wrote: »
    Back when we switched to the Euro, would be closer to 2000 now

    I know but that's what he meant when he said it had been the same since punts.


  • Registered Users Posts: 372 ✭✭Skelet0n


    Oh I see so people still get away with long term trading with out hassle of worrying about tax? They just pay the tax when the shares are sold etc. That sounds a bit better, if I'm reading that right

    You pay your tax at the end of the year on realised gains - realised losses.

    You can pay with other money if you don't want to take money out of your degiro account.
    OEP wrote: »
    I know but that's what he meant when he said it had been the same since punts.

    What he said.


  • Registered Users Posts: 2,029 ✭✭✭Sabre Man


    Isn't there also a time limit for losses where you have to have held the shares for a certain time before the loss can be offset?


  • Registered Users Posts: 4,069 ✭✭✭relax carry on


    Sabre Man wrote: »
    Isn't there also a time limit for losses where you have to have held the shares for a certain time before the loss can be offset?

    You are talking about the bed and breakfast rule I think.

    Disposal of shares within four weeks of acquisition
    The FIFO (First In First Out) rules are modified in any case where shares of the same class are bought and sold within a period of four weeks. Where shares are sold within four weeks of acquisition the shares sold are identified with the shares acquired within that period. Furthermore, where a loss accrues on the disposal of shares and shares of the same class are acquired within a four week period, the loss is not available for offset against any other gains arising. Instead the loss is only available for set off against any gain that might arise on the subsequent disposal of the shares so acquired in the four week period - this provision does not apply where there is a gain on the disposal.


  • Advertisement
  • Registered Users Posts: 5,453 ✭✭✭valoren


    cmac2009 wrote: »
    Why is it the government here seem to discourage investing and saving, with both a low threshold and high taxes on savings. In the UK the threshold is 11k odd and they encourage saving/investing with a 20k ISA allowance each year.

    We just don't have a culture for owning shares as an investment*. It's property, getting in early on pyramid schemes or having a strategic edge in your gambling portfolio that is the way to generate additional wealth here. (joking btw)

    There is no established idea here that you are perfectly free to buy ownership in any listed company and have that as an asset for the years and decades ahead. The idea being that the euro you invested today should be worth a multiple in a few decades time e.g. the price of a can of Coke will be more in thirty-forty years time.

    Slowly but surely this attitude will change particularly with low cost brokers making the markets easily accessible. The bear markets, the panics, the plunges, the crashes will happen of course but we would be wise to remember that they're only temporary but more importantly they are the best times to buy stocks and shares.

    We really need to have ISA's and the Junior ISA (for kids) equivalent here as they would be instant access as well. Life happens and sometimes you need the cash. When you open a pension here then the money you invest is effectively in a blackhole, inaccessible until you're retiring. Access to your money should not be that black and white. Stock ISA's in the UK have the tax benefit of our pensions here.

    I would love to see a situation where young adults just starting to work fill out their income returns from the dividends they got for the year from companies like Shell, Johnson & Johnson, Colgate et al that they've owned since before they could even read and which they will still own when they're deciding to retire.

    I guess there is vested interest in financial ignorance and financial institutions will happily cream fee's from people's ignorance and the billions pooled into their funds whereas the reality is that we would all be better off, literally, by setting aside some savings, investing them in companies that grow their earnings and dividend cash payments and holding them perpetually through the generations.


    * this struck me when watching a programme about Lotto winners. A Dublin family had won €500,000 and their initial plans were to buy two new cars at €40k each, a big family holiday 25k, give cash gifts and then pay off their mortgage (about 150k I think it was).

    If they were clued in, they'd have taken €100k fun money from the winnings to keep their cars serviced, gone on the holiday and all of that with the 100k. Then while keeping on with the manageable mortgage payments with the 400k they could have invested it in shares at say 3.5% yield and gotten after tax income of €11,900. Assuming if they just spent the dividend income on expenses it would have the following income (assuming an average annual 8% dividend increase across the portfolio) then;

    After 10 years they would be getting 23k, after 15 years it would be 35k, 20 years gives 51k, 25 years gives 75k, 30 years 110k, 35 years is 162k and 40 years gives 293k. All without touching the principal and compounding year after year like clockwork.

    That's without reinvesting. The cash would be spent when it was received. Now imagine if they reinvested the dividends and/or reinvested with even more cash. Imagine a rocket blasting off from a blasting rocket. They could have set their kids up to perpetually receive income from their business interests for generations with all and any expenses they might have paid for by that initial decision to forego instant gratification.


Advertisement