Would you mind sharing what you believe the original reason for Deemed Disposal was, and why you think it still applies today?My take is that if they were to introduce a tax sheltered EU SIA in the next couple of years for small retail investors there would be few people left complaining about DD and it could be left in-place. Ultimately DD was introduced for a reason and that reason has not gone away.
Wasn't it brought in to access funds during the crash?I believe the reason DD was introduced stemmed from overly-cautious civil service concerns about leaky tax collection:
This has been discussed here plenty and by people with much better understanding of it than me. However my simplistic understanding is that it was introduced because the gross roll up tax regime on funds allowed investors to defer tax indefinitely on gains and income (dividends) whereas for assets like shares tax on gains was deferred indefinitely while income was taxed annually. Fund managers were advertising this as a reason to shift to their funds, it wasn't an imaginary risk. DD was a compromise so gross roll up could stick around but allow the government collect some of the tax they would get on other investments when dividends were paid annually. Might seem like small potatoes to basic investors like us used to 1-2% dividend yields on World Indices, but if you think of somebody putting €10m or €100m into a fund paying 10% the tax advantage pre-DD would be quite significant.Would you mind sharing what you believe the original reason for Deemed Disposal was, and why you think it still applies today?
It was introduced in the Budget announced during 2005.Wasn't it brought in to access funds during the crash?
If I recall correctly, Deemed Disposal was introduced in the Finance Act 2006... so right in the middle of the later phase of the Celtic Tiger, specifically during the property boom that ran from approximately 2002 to 2007. At that point in time, the prevailing sentiment was one of continued prosperity, making an imminent sudden and severe crash seem like an unlikely outcome to the vast majority of the Irish population...Wasn't it brought in to access funds during the crash?
This has been discussed here plenty and by people with much better understanding of it than me. However my simplistic understanding is that it was introduced because the gross roll up tax regime on funds allowed investors to defer tax indefinitely on gains and income (dividends) whereas for assets like shares tax on gains was deferred indefinitely while income was taxed annually. Fund managers were advertising this as a reason to shift to their funds, it wasn't an imaginary risk. DD was a compromise so gross roll up could stick around but allow the government collect some of the tax they would get on other investments when dividends were paid annually. Might seem like small potatoes to basic investors like us used to 1-2% dividend yields on World Indices, but if you think of somebody putting €10m or €100m into a fund paying 10% the tax advantage pre-DD would be quite significant.
I don't think that's less relevant today, if anything taxing unrealised gains and wealth is more part of the zeitgeist than it was.
The only caveat being that tax is payable on death.allowed investors to defer tax indefinitely on gains and income
You’d think, but nope, CGT is not payable and any Exit Tax paid can be used as a credit against CAT the recipient owes.The only caveat being that tax is payable on death.
CGT may not payable on the gain in the case of death, but CAT is payable on the amount inherited. If we removed DD, then there would be no exit tax credit, and CAT would be payable on the entire amount above any relevant tax-free inheritance group threshold.You’d think, but nope, CGT is not payable and any Exit Tax paid can be used as a credit against CAT the recipient owes.
No its not you, its Pascal Donohue and the weird set of blinkers he has been wearing, his whole approach is 20 years out of date and has little relevance to the modern irish workforce and the new generation now emerging.Perhaps its just me and a weird set of blinkers I must be wearing, but I just can't see any valid reason to justify DD
We’re probably taking this thread a bit off track beginning to speculate about how something that might never happen will be implemented. Let’s just agree that DD is a horrible mess for the average retail investor.If we removed DD, then there would be no exit tax credit, and CAT would be payable on the entire amount above any relevant tax-free inheritance group threshold.
There would still be exit tax payable on death, and there'd then still be an exit tax credit against CAT.. If we removed DD, then there would be no exit tax credit,
The main difference between a fund and individual shares is that (a) a fund can roll up dividends and (b) a fund can trade and reposition assets. If you want a level playing field there would need to be look through to dividend income and asset sales and tax them annually. The real driver of our gross roll up regime are the life companies who desperately want to retain taxed at source on a composite rate. 38% is a whole lot better than 40% plus USC but then again 33% DIRT is better still.But I think it’s worth asking: why are ETFs treated as a special class when other assets (like individual shares or property) are also allowed to roll up gains and are simply taxed under CGT when sold?
This is how Switzerland does it. If you have an accumulating ETF, Swiss Revenue provide a simple tool, you look up the ISIN, and it tells you the associated dividend. You then declare the income in your tax return.If you want a level playing field there would need to be look through to dividend income and asset sales and tax them annually
Why would that be? And what would they be doing to facilitate it that they don't already?there will be pressure on life companies to facilitate encash and re-enter.
Can I clarify the DD calculation?No. The rule is still the same. You calculated the tax due on immediate disposal and deduct any tax already paid on account.
Example
2024 unrealised gains 100; 41 paid as an advance of the final actual tax due.
A.
2032 unrealised gains 200; amount due in advance 76 of which 41 has already been paid.
No, the tax rate at the chargeable event applies which is 38% in this case.Is it 41% tax on gains from 2020 until the day before this year's budget was announced (6th Oct 2025) then 38% on gains from 7th Oct 2025?
No, no, no. It is 38% or whatever the rate is then.Is it 41% tax on gains from 2020 until the day before this year's budget was announced (6th Oct 2025) then 38% on gains from 7th Oct 2025?