41% Exit Tax - Will we see Budget 2026 changes

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ETF uncertainty remains as Paschal Donohoe cautious about scrapping tax of unrealised gains​

That article didn't age very well now that Pascal exited stage left the very next day. I would be more optimistic now with Simon Harris at the helm that this will be escalated, he has alot more political skin in the game than Pascal did and that this is topic is gaining alot of traction when even Pearce Doherty felt compelled to tackle PD on it in the dail
 
I mailed my local representative expressing my disappointment about the ETF taxation the day after the budget, I got a reply last Monday morning:

Thank you for your email and for sharing your concerns regarding the deemed disposal rule. We fully understand the frustration this measure causes for investors and appreciate you taking the time to outline its impact.

It is still fully the intention of Fine Gael to deliver the agreed Programme for Government, including the removal of the deemed disposal measure. Our Funds Sector 2030 review is a five-year plan, and while we appreciate your disappointment, this is the first of five Budgets to be delivered by this Government.

Budget 2026 has taken an important first step by reducing the ETF exit tax from 41% to 38%, and the Minister has assured us that he remains committed to bringing the rate down towards 33% and ultimately removing the deemed disposal measure.

Thank you again for raising this issue.

Kind regards,

Jude



Constituency Office of Maeve O’Connell TD

Dublin Rathdown

Address: Leinster House, Kildare Street, Dublin
 
www.oireachtas.ie

Tax Code

Tax Code Dáil Éireann Debate, Thursday - 18 December 2025
www.oireachtas.ie
First answer to PQs on this from Simon Harris as Minister for Finance. This line in particular seems significant, that there would still be some mechanism to prevent indefinite gross roll-up.

The roadmap is to be published early next year and will set out an approach to simplify and adapt the tax framework to further support retail investment while retaining necessary and important anti-avoidance protections in a proportionate manner, and existing legislation is being considered as part of the process of developing the roadmap.
 
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Deputy Michael Cahill asked the Tánaiste and Minister for Finance if he is aware that financial advisers, tax consultants, accountants, and legal professionals widely regard the taxation regime for exchange-traded funds as unnecessarily complex and opaque;
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It has become clear that the Revenue do not have a grasp of the taxation of ETFs and funds. They get the money from life companies and accept it as final settlement. They did not envisage people doing their own investments through platforms, which are subject to the same taxation rules. It is an absolute shambles.

The Revenue guidelines on deemed disposal for year 16 adds back in the first deemed disposal amount when calculating the second event. If you have your own account, you can pay the deemed disposal from your own cash reserves, so you do not have to add back in any previous deduction. There is no mention of that.
 
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Steven Barrett said:
The Revenue guidelines on deemed disposal for year 16 adds back in the first deemed disposal amount when calculating the second event.
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I thought that was so that you didn't pay more tax on the 16th anniversary than might otherwise happen if you ignored any 8th anniversary tax previously paid?

Or maybe I'm missing the point here? (Very possible!)

Could you maybe illustrate your point with a simple example subjected to the two different approaches? Thanks.
 
Steven Barrett said:
There is no such thing as a simple example ;)
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Doesn't this guy provide a simple example? ;)

Calculating Deemed Disposal on a long term investment - Bluewater Financial Planning

Deemed disposal is a pain for many investors. Having to pay tax on an investment that they have not cashed in. The issue is the whole “gross roll up” system where dividends and profits are reinvested tax free with no income to the Revenue. If the Irish Revenue allowed some alternatives where...
www.bluewaterfp.ie www.bluewaterfp.ie
 
  • In calculating the second deemed disposal, we use the assumption that the first one didn’t occur, so we have to add the €41,000 back to the fund value.
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It's at this step: if you add the tax back where it wasn't deducted from the fund, your taxable gain would appear 41k larger than it should be.
 
Am I right in worrying that if you are selling shares in your fund, to pay the deemed disposal tax - you are therefore implicitly doing an actual disposal of those shares - which further muddies the waters in terms of what would be owed.
 
Innisfree said:
Am I right in worrying that if you are selling shares in your fund, to pay the deemed disposal tax
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I presume you mean selling ETF holdings as opposed to shares subject to CGT? Yes, that will complicate the calculations but it should be possible to deal with that by accounting for them appropriately.
 
This is (very) far from simple, but the method in Appendix I(b) does work for both cases:
- selling part of the fund, as shown in the example
- paying separately, if you exclude the forced redemption

Part 27 - Sections 731-747F

www.revenue.ie www.revenue.ie
 
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In this context, I take it to mean investing in a gross roll-up fund after deemed disposal is removed and not having to pay any tax until you sell.

They want to prevent that.
 
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After deemed disposal is removed ... how would Revenue know if you have made a gain... surely its self-assessment, and not deducted by the broker.
 
It could be a different self-assessed mechanism that has the same principle as deemed disposal (avoid indefinite tax deferral) but is proportionate rather than punitive.
 
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ClubMan said:
I presume you mean selling ETF holdings as opposed to shares subject to CGT
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Yes, ETF holdings - but still commonly referred to as shares I think.

I’ve no idea what level of information revenue receive from brokers about trading activity, but I doubt they have any idea what’s going on with people’s transactions unless they decide to individually audit you.
 
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