ETFs and capital gains tax

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.

I have tried to verify this online but have not found anything specific to these particular funds and under which Schedule it is taxed. Would you have any link to the Revenue document/rule clarifying this?

A related question on these EU regulated funds:
As a non-domiciled tax resident in Ireland, let's say I have 50k at a stockbroker in the UK. These funds come from my online income outside Ireland and have not been taxed yet, as they haven't been remitted to Ireland.
- If I invest the 50k in one of the regulated EU funds, is this considered remittance to Ireland? Or do I only pay CGT on this investment and no income tax on the basis as it has not been remitted yet?
- In this scenario, does the answer change depending on whether the ETF is domiciled in Ireland? (e.g. VUSA vs. ESEH)
 
Google Section 71 TCA 1997...that’s the relevant legislation.

It wouldn’t be a remittance of the whole lot; it’d be future income and gains that would be taxable as normal.
 
I am trying to get my ducks in a row for 2020 regarding ETF taxation. For the rest of the year, I am purchasing the two same UCITs accumulating ETFs each month. I am a PAYE worker, and have a few questions.

1. At the time of purchase - A previous comment on the forum stated you have to notify revenue each time an ETF is purchased. I thought form 11 is an annual form and based on the below from revenue I can interpret it as long as I include the annual submission it is fine. Also, 322(e) is asking for the name and address of the funds, so it doesn't look like something to be updated regularly, Thoughts?

"Acquisition of an EU ETF must be included on Form 11 in panel E at line 322(e) and income and gains from same must be included in 322(a)/(c), as appropriate"


2. As a PAYE worker my taxable non-PAYE income is going to be < 5k this year, so I would submit form 12 instead of form 11? Or as soon as any ETFs / Shares are purchased am I automatically required to submit form 11? [broken link removed]

3. Calculation of Tax Due on Disposal - Is it First in First out (FIFO)? So If I buy 10 units at 100 in January and 10 units at 150 in December, when I sell 10 units at 150 in December the tax would be (10*(150-100))*0.41? How does it work if I sell the entire holding is it the average price? Thus in the example above the average purchase price is 125, or is it taxed on Sale Price vs Purchase price for each unit?
 
1. Only an annual return is due - you can detail all the monthly purchases if you want. I wouldn't bother, just enter the total for the year for each ETF
2. I think you have to submit a form 11 rather than a Form 12 - not sure that Form 12 has the relevant sections
3. You can select either FIFO or average cost - from a practical point of view of keeping track of the purchases, I would advocate using FIFO and keeping track of the monthly purchases separately - this will simplify the book-keeping involved especially if you keep them over 8 years and have to account for deemed disposals
 
Google Section 71 TCA 1997...that’s the relevant legislation.

It wouldn’t be a remittance of the whole lot; it’d be future income and gains that would be taxable as normal.

Great thanks a lot! I have a rough idea how to tax my (quite messy) investment account now. I will pay for a certified accountant to do an audit for me anyway, to keep the taxman happy.
 
Hi, I am new investing. After doing a lot of homework, I would like to buy ETFs. But I afraid of all the tax rules discussed here. I would like to buy vanguard life strategy fund. I would like to invest every month. From my understanding, I have to notify the revenue when I buy first buy this ETF. Then I have to pay 41% tax every 8 years on my dividends?
 
Hi, I am new investing. After doing a lot of homework, I would like to buy ETFs. But I afraid of all the tax rules discussed here. I would like to buy vanguard life strategy fund. I would like to invest every month. From my understanding, I have to notify the revenue when I buy first buy this ETF. Then I have to pay 41% tax every 8 years on my dividends?

No, you pay 41% tax annually on dividends and 41% tax every 8 years on gains.
 
No, you pay 41% tax annually on dividends and 41% tax every 8 years on gains.
Not quite.

It’s 41% exit tax on all dividends/gains, with a deemed disposal every 8 years. Dividends obviously roll up in an accumulating fund.
 
Not quite.

It’s 41% exit tax on all dividends/gains, with a deemed disposal every 8 years. Dividends obviously roll up in an accumulating fund.
I don't understand this reply at all. Do you mean, one needs to pay the tax (41%) only once in 8 years?
 
If it is an accumulating fund, then there are no dividends paid out, so no tax on dividends

There is Exit tax at 41% on any gains recorded on disposals or on the gains made by deemed disposals every 8 years
 
One point on the 8-year deemed disposal rule that I think people often miss is that you can submit a claim to Revenue for overpaid tax if the fund subsequently falls in value and you cash in your fund.
 
If it is an accumulating fund, then there are no dividends paid out, so no tax on dividends

There is Exit tax at 41% on any gains recorded on disposals or on the gains made by deemed disposals every 8 years
Thanks for the clarification, so if I buy the aacumulating ETFs now, I no need to worry about the tax for the next 8 years??
 
One point on the 8-year deemed disposal rule that I think people often miss is that you can submit a claim to Revenue for overpaid tax if the fund subsequently falls in value and you cash in your fund.
Thanks for the reply. You mean for the first 8 years if I paid tax on gains, and if losses occur in the next subsequent 8 years, then I can claim back some tax??
 
Thanks for the reply. You mean for the first 8 years if I paid tax on gains, and if losses occur in the next subsequent 8 years, then I can claim back some tax??
Sort of!

Say you bought shares in an accumulating fund at €100 and eight years later the shares were worth €150. Under the eight year rule, you were deemed to have sold your shares on that eight anniversary and were liable for €20.5 tax (41% of €50).

Two years pass and the market has been unkind. Your shares have now fallen in value to €125 and you decide to redeem your shares in the fund at that price. So, your actual gain was €25, not €50.

You can now submit a claim to Revenue for the repayment of the overpaid tax of €10.25.

In other words, ultimately you only pay tax on your actual gain.

Hopefully that makes sense.
 
Last edited:
I have a similar question. A number of shares built up over 15-20 years through company scheme (took part of bonus in shares tax free and sit on them four min. 3 years). If I sell some now how do I calculate tax given they were all bought at different prices?
 
Google Section 71 TCA 1997...that’s the relevant legislation.

It wouldn’t be a remittance of the whole lot; it’d be future income and gains that would be taxable as normal.
So, if I understand correctly, a non-domiciled Irish resident who purchases an Irish domiciled ETF with foreign money is not remitting the money into Ireland, but will simply pay taxes on capital gains/income deriving from the ETF? I have extensively researched this topic online and found very little … many thanks in advance
 
Back
Top