ETFs taxation in ireland

If you can find a platform that allows you to buy Australian shares, I'd imagine they would let you buy the many ETFs in that market.

An article in the independent yesterday said that minister mcgrath is doing a review of the whole exit tax deemed disposal regime in relation to etfs. Maybe they are going to simplify it so that etfs are taxed the same as shares

US ETF's are now also taxed at 41% since 01.01.23.

Keep us updated on any further info here! I’ve been looking to invest in ETFs for the last few years but the tax is so complicated I didn’t know where to start!

When you ask about whether it would be a good thing, are you suggesting government's make that determination for investors and act accordingly?

Well then why are they doing a review of this taxation at the behest of the minister so soon after the last revenue review? Obviously because many people are not happy with it and it explicitly mentioned in the article that large sums of money are remaining uninvested because of this.

Low interest rates on savings accounts is a completely separate issue .I don't understand why you are posting on this page anyway about etfs when your gripe is really about low interest rates on savings accounts

Life/Pensions industry are on the same side as ETF investors here, they're lobbying to bring exit tax rate down to 33% too, they don't like that DIRT on savings and CGT on shares are lower than 41% on their policyholders. It should be streamlined that the same rate applies to gains on...

• ETF's
• Shares
• Bank Deposits
• Investment Accounts

Don't forget Life companies are levied 1% on all premiums too. Sort out the deemed disposal issue and we're all on the level playing field.

Besides, it's not a big area for Irish private investors because of the tax treatment. People are pushed into investment trusts, which are limited.

I am invested in ETFs, in a big way.

SMT.

I warned a friend about buying this.

It's volatile, holds unquoted, illiquid securities.

Its available on my Davy PRSA AVC account :

Do you mean does Revenue have the balls to try and shag an investment company the way it does individual investors? My bet is that they don't, and that a company can invest in and own ETF's no differently than individual shares and would pay normal CGT on disposal and normal company tax rates on dividend income from them, less costs.

I have come to the conclusion that Revenue have a policy of preventing individuals from benefiting from investment. They want you to spend all that you earn. They rendered interest from savings irrelevant with DIRT and persisted with this inexplicable tax even when bank accounts essentially stopped paying any interest.

This attitude to ETF taxation is yet another incredibly heavy handed way of preventing Irish individual investors from doing things which are perfectly normal throughout the OECD.

Take Australia as an example. Any interest you earn on a bank account is treated as income and you just pay tax on it at your marginal rate. ETF's are treated the same as shares. You pay CGT on disposal and any dividend income is taxed at your marginal rate.

For shares and ETF's there is even a significant fair-mindedness sweetener of franking. Australia does not consider double taxation to be fair, so if a company pays tax on it's profit and then distributes some of that profit to shareholders as a dividend, those shareholders do not then have to pay tax on those dividends. This is a mechanism that is a great incentive for investment in the share market.

Revenue don't want individuals profiting by investment and have come up with a range of taxation measures unique to Ireland to ensure they can't.

Wouldn't "bank interest taxed at marginal rate" (40%) be worse than Irish DIRT (33%)?

Complicated, isn't it? Suffice it to assume it's not worth investing in ETFs if you are tax resident in this country. You would be far better off to mirror an ETF and buy the individual shares it comprises in the same ratio, and regularly check back with the ETF provider to re-check the holdings so as to then mirror any changes to the holdings with appropriate buys or disposals.

You will love this: If you acquire assets while in Ireland and then leave the country and then sell those assets within 3 years of departure, you are 'supposed' to then pay CGT on any gain to Revenue.

Of course this is unenforceable unless you return to Ireland and you are not subject to Irish law once you are in and subject to another legal jurisdiction.

You are not doing any stock picking, the manager of the ETF is doing that, you are just copying their decisions.

ETFs are not free, you pay a small % as a management fee to the ETF provider. Not paying this fee would offset your transaction costs to some extent.

Oh yes, it would be a hassle, but the deemed disposal highway robbery might be a significant enough incentive for some.

Can you possibly clarify a couple of things? I see them repeated a lot, and I'm not sure I fully understand.

Are you forced to sell a portion of your ETF to pay the deemed disposal tax? On here and Reddit people keep correcting those who don't take this into account. Can you not cover the tax bill from other sources? I'm still in the early stages of investing, but my process is that I invest a certain amount per month, as tax bills arise I intend to pay out of the funds I would otherwise be using to invest.

Also, if I am paying taxes on deemed disposal in 2023, is it only on shares purchased in 2015 (and/or 2007 if any)? As I understand it, it's not on my total investment rolled up. So if I have 100 shares in an ETF, 10 of which I purchased in 2015, I look at the cost I paid for those 10 and compare it to the price today when calculating deemed disposal. The other 90 don't come into the calculation for 2023. In 2024 I look at shares bought in 2016, in 2025 those bought in 2017 etc. If this is not correct, and the bill owed in 2023 is for everything purchased 2015 to 2023 then I need to rethink my strategy.

I'd appreciate corrections if I have misunderstood.

Very much appreciated. As someone who works in a discipline that requires a detailed understanding of mathematics, I have gotten myself into trouble in the past by assuming that I can understand a completely separate discipline also related to mathematics.

I do this also through a Davy PRSA account. EQQQ and VUSA and done, it's so unfair on retail investors here that we are effectively punished for investing the safest way possible via ETF's (outside of a PRSA account).

Interesting that the central bank itself would draw attention to the disconnect between ireland has a home for all these ETFs and then the taxation policy that discourages its own citizens from investing in those very ETFs. Are they really worried that this disconnect draws more attention to the narrative that Ireland is a tax haven but only if you are a huge fund or MNC but not if you are a little guy investor