41% Exit Tax - Will we see Budget 2026 changes

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TomEdison said:
But you also want to avoid funds being used to shelter income and gains from any tax at all for an indefinite, and possibly unlimited, period
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I'm baffled as to why this point keeps getting trotted out. Unless you are immortal, your gains will eventually be subject to CAT. There is no valid reason for a share of a fund to be taxed any differently to a share of a company, full stop.
 
Nermal said:
I'm baffled as to why this point keeps getting trotted out.
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"Indefinite" and "unlimited" don't mean "eternal". Most of the gains that accrue to ETFs will eventually be taxed (but not all — some holders will cease to be ordinary resident before they die) but it's still the case that the gross-roll up of gains within the fund is hugely valuable, and is more valuable the longer that it continues. And because people who invest directly in the underlying shares and securities wouldn't get this, it offends against the principle of revenue neutrality.
 
TomEdison said:
And because people who invest directly in the underlying shares and securities wouldn't get this, it offends against the principle of revenue neutrality.
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They absolutely would if the investment was in a trust or a conglomerate instead of an ETF.
 
Berkshire Hathaway doesn't pay dividends, so it's effectively gross roll-up for the investor.

Investors in other conglomerates or investment trusts are taxed on their dividend income.
 
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Dáil Éireann debate - Tuesday, 21 Oct 2025

Finance Bill 2025: Second Stage Dáil Éireann debate - Tuesday, 21 Oct 2025
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Finance Bill 2025: Second Stage
21 Oct 2025
Minister for Finance (Deputy Paschal Donohoe) reply
I was interested to hear a number of Deputies raise issues regarding deemed disposal and ETFs. It is welcome to hear an issue like this being debated in the Dáil. I did not make a further change on deemed disposal because of the cost involved. It would be a very significant measure. I made other changes to support investment and reduce some of the taxes that people pay in that area. Overall, how we support investment and savings in our economy is an important area that we need to do more on in the time ahead.
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At least he is now getting heat on the issue in the dail, it's not an issue that they can pretend does not exist,
"Nothing to see here, move along"
no longer works.
The next thing he needs to be questioned on is how much would it cost, how much "deemed disposal " taxation is he getting specifically from ETFS. Of course he won't know but he needs to be put on the spot.
 
Corola said:
Email response from Minister for Health Jennifer Carroll-MacNeill affirming the long-term plan is still to remove deemed disposal and reduce exit tax to 33%.
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She is the only one in FG now that is kicking ass, she is fresh and new not like donohue who has been there since 2011, he has been asleep at the wheel since 2020.
 
Finance Bill 2025: Committee Stage
www.oireachtas.ie

Select Committee on Finance, Public Expenditure, Public Service Reform and Digitalisation, and Taoiseach debate - Wednesday, 5 Nov 2025

Finance Bill 2025: Committee Stage Select Committee on Finance, Public Expenditure, Public Service Reform and Digitalisation, and Taoiseach debate - Wednesday, 5 Nov 2025
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Minister for Finance (Deputy Paschal Donohoe)
What we are going to do in the next few months is bring forward a piece of policy work indicating how we are considering these issues and changes that we are going to consider making from a simplification point of view because a growing number of people are participating in it and we need to make tax law, and the implementation of that law, clearer than it is at the moment. That is why in relation to the deemed disposal decision and its consideration in the context of this year's Finance Bill, the cost of doing that according to the figures available to me is €142 million. We believe it is possible that figure could be higher because of various consequences of making the decision. I have to account for that within the particular year of the budget as well.
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TheJackal said:
Finance Bill 2025: Committee Stage
www.oireachtas.ie

Select Committee on Finance, Public Expenditure, Public Service Reform and Digitalisation, and Taoiseach debate - Wednesday, 5 Nov 2025

Finance Bill 2025: Committee Stage Select Committee on Finance, Public Expenditure, Public Service Reform and Digitalisation, and Taoiseach debate - Wednesday, 5 Nov 2025
www.oireachtas.ie
Minister for Finance (Deputy Paschal Donohoe)
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Very, very interesting, thanks for this.

So it appears that Pearse Doherty’s position is that he broadly supports reducing the ETF tax rate and sees the move from 41% to 38% as a step towards 33%. He argues that the deemed disposal rule should be reformed, possibly by introducing thresholds to protect small investors, while still preventing large-scale wealth hoarding in funds. He emphasises the need for simplified, retail-friendly guidance on ETF taxation, given the rise of app-based investing. Evidence to me that a certain side of the house will be very hesitant for fast large changes, and that any perception of fat cats benefiting (whether true or ficticious) will be fodder for bashing the incumbents for political gain and advantage.

Paschal Donohoe seems to acknowledge the growing importance of retail investing and the complexity of current tax rules but refuses to signal any changes for the next Finance Bill. He provided the deemed disposal rule’s cost implications (around ~€140m) and says any reform would require careful consideration and significant budgetary planning. He commits to simplifying tax guidance for retail investors but maintains that large-scale changes will be gradual and cautious. More evidence to me of fiscal Calvanism.

Nobody appears willing to accept that Ireland is truly an outlier as regards DD8, and no-one willing to be ballsy like a modern confident economy should be. It appears there’s no appetite in the discussion for bold moves akin to ISA-style regimes. The tone suggests creeping incrementalism rather than a confident, disruptive shift. The political optics of “helping the wealthy” loom large, which makes radical reform unlikely?
 
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RainyDayFund said:
So it appears that Pearse Doherty’s position is that he broadly supports reducing the ETF tax rate and sees the move from 41% to 38% as a step towards 33%. He argues that the deemed disposal rule should be reformed, possibly by introducing thresholds to protect small investors, while still preventing large-scale wealth hoarding in funds. He emphasises the need for simplified, retail-friendly guidance on ETF taxation, given the rise of app-based investing.
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thats interesting even Pearse Doherty with his ear to the ground realises that "deemed disposal" is an anochronism and needs to be reformed, so even SF know that young people are investing through apps and cannot understand why they are being disadvantaged relative to their peers internationally. It looks like Pascal Donohue will be dragged kicking and screaming into getting rid of deemed disposal due to growing pressure from within and without the government from more clued in and with it ministers and opposition TDs.
 
why is deemed disposal not fair for small investors but it is fair for investors with large funds? surely its the same for all classes of investor. there is no deemed disposal on other assets. why are they not worried about individual shares being "hoarded"?
 
Because of gross roll-up. Funds can buy and sell shares within the fund without paying capital gains or dividend taxes.

Holders of individual shares cannot do that.
 
but doesn't the individual investor eventually sell the funds (or die)? and couldn't dividends be handled a different way as is done in other jurisdictions?
 
Corola said:
Because of gross roll-up. Funds can buy and sell shares within the fund without paying capital gains or dividend taxes.

Holders of individual shares cannot do that.
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Well then the simple solution would be to restrict deemed disposal only to those funds and ETFs that rolled up the dividends. Everything else should have been taxed normally and that would have encouraged people to invest in non gross roll up funds. In any case the vast majority of ETFS pay out dividends and do not roll them up.
Therefore I think this was used as an excuse . They didn't want large numbers of retail investors buying ETFS independently of the Financial industry through low cost trading platforms but we are now in 2025 not 2005 they can't put the genie back in the bottle. Pascal is still running around with the bottle though.
 
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