ETFs and capital gains tax

Discussion in 'Exchange Traded Funds (ETFs)' started by galway_blow_in, 9 Jun 2017.

  1. jeanneau39

    jeanneau39 Registered User

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    Last edited: 5 Sep 2017
    Hi, i'm new here. Than you for the information about the exit tax, I would like to know, when should you pay the exit tax? Is the same timeline described for the cgt ? Can i use the payslips for the cgt? Thanks
     
    Last edited: 5 Sep 2017
  2. Gordon Gekko

    Gordon Gekko Frequent Poster

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    No; you pay it through your income tax return (i.e. on or before 31 October of the following year).

    Unless the tax has been withheld at fund level, which does arise with certain Irish based funds.
     
  3. SBarrett

    SBarrett Frequent Poster

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    If your investment is through an insurance company, they deduct the exit tax from your fund and pay it to the Revenue. You do not have to report it.

    If it is not through an insurance company, you are responsible for paying over the tax yourself. It does not have to come from the fund, it may be through cashflow. Paid in October of the following year as Gordon said.


    Steven
    www.bluewaterfp.ie
     
  4. jdmartinho

    jdmartinho Registered User

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    Hi,

    I'm new to the forum and I have a question related to ETF taxation in Ireland.

    If you're an Irish resident but not domiciled (e.g. expat, temporary worker) this means that foreign income and disposal of foreign assets are not taxable in Ireland as long as they are not remitted to Ireland (i.e. don't transfer any income/gains to an Irish bank account). This seems to be well established and I've read it and heard it from multiple sources, but let me know if I'm missing something.

    For US domiciled ETFs, like Vanguard's:
    Am I correct in assuming that this means that if you hold an ETF domiciled in the US you are actually not liable to any CGT on disposal as long as the money never reaches Ireland and you're also not liable to income tax on dividends because, again, assuming you just reinvest the dividends or never bring the money into the country?

    For EU domiciled ETFs, like BlackRock iShares, Deutsche Bank, Amundi, etc, which are usually based in IE, LU or FR:
    What is the treatment for the UCITS (Europe) domiciled ETFs? If one buys an ETF based in LU, for instance, does that mean that because as a non-domiciled resident you're not liable to the exit tax of 41% (instead of the CGT like the above example) as long as you just reinvest or never bring the money into the country? What is the rule regarding where the asset gain is made, is it the domicile of the ETF? In my example, because the fund is domiciled in Luxembourg this means that for instance, the same rules as for the above US domiciled ETFs would apply in regards to non-domiciled residents?
    This would mean that an IE domiciled fund would possibly be treated differently and, in fact, in this case, even a non-domiciled resident would be subject to the 41% exit tax that applies to UCITS ETFs when selling their position at a gain.

    Has anybody ever had this question before?

    It's a lot of questions in one post, I suppose, but I've researched the subject a lot and I can't find anybody that asked about this particular case.

    Cheers
     
  5. Gordon Gekko

    Gordon Gekko Frequent Poster

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    US ETFs qualify for the remittance basis.

    European funds don't.

    Irish ones don't (obviously).
     
  6. jdmartinho

    jdmartinho Registered User

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    Thanks for the quick clarification!

    Just for curiosity's sake, do you know the reason why European based ETFs that are not based in Ireland are treated the same as the Irish ones for purposes of non-domiciliation?
     
  7. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Indeed I do.

    The remittance basis only applies to income that is taxed under Schedule D Case III of the Taxes Act.

    Regulated European Funds are taxed under Schedule D Case IV, so the remittance basis does not apply to either income or gains in respect of same.
     
  8. jdmartinho

    jdmartinho Registered User

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    Great to know!
    Cheers
     
  9. jeanneau39

    jeanneau39 Registered User

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    Last edited: 8 Oct 2017
    Hi thank you for these information!

    Another question:

    Are the ETC (commodity) subjected to the CGT? in this case if you have a case as per Jdmatinho (person not domiciled in ireland), are the gains taxed on remittance basis?

    I fount this in the Revenue Guidance Note on Exchange Traded Funds (ETFs)

    ETC investment will not come within the tax regime for offshore funds, but will insteadcome within general taxation principles, with any income
    payments being liable to income tax at the standard or higher rate as appropriate, and gains on disposals being liable to capital gains tax

    Are the etf domiciled in Jersey considered as offshore? this means that for ireland are subjected to the CGT and therefore taed on remittance basis.?

    I found this:
    Νοtes for Guidance –Taxes Consolidation Act 1997 –FinanceAct 2016 Edition- Part 27

    745 Charge to income tax or corporation tax of offshore income gain

    Offshore fund gains realised by individuals who are resident or ordinarily
    resident in theState but domiciled outside the State are taxed on the part of the gains remitted into theState.

    thank you for your answer!
     
    Last edited: 8 Oct 2017
  10. Gordon Gekko

    Gordon Gekko Frequent Poster

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    ETCs are all subject to CGT.
     
  11. jeanneau39

    jeanneau39 Registered User

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    Thank you Gordon.

    Do you know if this means that are taxed on remittance basis?
     
  12. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Last edited: 8 Oct 2017
    Yes if non Irish situs (i.e. foreign ETC fine, Irish based ETC not fine)
     
    Last edited: 8 Oct 2017
  13. jeanneau39

    jeanneau39 Registered User

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    Ok. Thanks Gordon.

    I think that u need to start my calculation to pay the CGT then.

    Regarding the exit tax is it possible to use the average cost instead of the fifo?

    Cheers
     
  14. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Yes
     
  15. jeanneau39

    jeanneau39 Registered User

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    Hi Gekko,

    first of all thank you very much for your help and the answers provided in this forum.


    I was checking your answer:

    quote:

    Indeed I do.

    The remittance basis only applies to income that is taxed under Schedule D Case III of the Taxes Act.

    Regulated European Funds are taxed under Schedule D Case IV, so the remittance basis does not apply to either income or gains in respect of same.

    Unquote


    and this, seems to say something different:

    notes for Guidance – Taxes Consolidation Act 1997 – Finance Act 2016 Edition - Part 4

    745 Charge to income tax or corporation tax of offshore income gain

    Summary This section and Schedule 20 provide for the charging of offshore income gains as income and the calculation of the amount of those gains. The gains are to be treated as income chargeable under Case IV of Schedule D. The charge is on persons who are resident or ordinarily resident in the State during the year of assessment in which the income gain arises and also on persons who are not so resident but who trade in the State through a branch or agency. Non-domiciled individuals who are resident or ordinarily resident are charged only on a remittance basis
     
  16. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Oh ye of little faith...

    Section 745 deals with bad offshore funds (e.g. an open-ended fund based in a jurisdiction like Guernsey).

    Such funds are subject to income tax/USC/PRSI on both income and gains, and the remittance basis applies for Non-Doms.

    That is very different to the position for open-ended funds based in the EU.
     
  17. jeanneau39

    jeanneau39 Registered User

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    :) sorry if I had a moment of doubts.

    I have to file a f11 for every etf then. Do you know if the ones in Jersey (under remittance basis) need to be declared? Or I can omit it as not taxable in Ireland?

    Best regards
     
  18. Gordon Gekko

    Gordon Gekko Frequent Poster

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    Omit I believe
     
  19. mtk

    mtk Frequent Poster

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    does deemed disposal not apply to these EU regulated funds if bought before 1/1/2001?

    http://www.irishstatutebook.ie/eli/2006/act/6/section/51/enacted/en/html


    "(2) This section applies as respects any relevant event (within the meaning of section 747B(1) of the Principal Act) occurring on or after the passing of this Act in respect of a material interest in an offshore fund (within the meaning of Chapter 4 of Part 27 of the Principal Act) acquired on or after 1 January 2001."
     
  20. jeanneau39

    jeanneau39 Registered User

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    Hi

    I'm trying to file the form 11. My ros is still not active so I decided to do it on paper.

    At the end there is a pay slip that is a sample.

    Do you know where I can download a blank ?

    Thank you!