EU government bonds

J

jmccart

New Member
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7
Hi all,

Can anyone definitely tell me whether EU government bonds are subject to capital gains tax. I am aware the interest paid will be treated as income and taxed accordingly. I have found reference that Irish government bonds are not subject to CGT but can't find clear guidance on EU government bonds. Thanks in advance.
 
Yes they are subject to CGT, just like all other assets - the only other exception are those assets subject to Exit tax (life insurance funds, Etfs)
 
The default position is that all types of assets are chargeable to CGT , unless specifically exempted. Section 607 TCA 1997 provides the exemption for Irish government bonds:

(1)The following shall not be chargeable assets—

(a)securities (including savings certificates) issued under the authority of the Minister for Finance,

(b)stock issued by—

(i)a local authority, or

(ii)a harbour authority mentioned in the First Schedule to the Harbours Act, 1946,

(c)land bonds issued under the Land Purchase Acts,

(d)debentures, debenture stock, certificates of charge or other forms of security issued by the Electricity Supply Board, Board Gáis Éireann, the company established pursuant to section 5 of the Gas Regulation Act 2013, Irish Water, Radio Telefís Éireann, Córas Iompair Éireann, , Bord na Móna, or Dublin Airport Authority,

(e)securities issued by the Housing Finance Agency under section 10 of the Housing Finance Agency Act, 1981,

(f)securities issued by a body designated under section 4(1) of the Securitisation (Proceeds of Certain Mortgages) Act, 1995,

(g)securities issued in the State, with the approval of the Minister for Finance, by the European Community, the European Coal and Steel Community, the International Bank for Reconstruction and Development, the European Atomic Energy Community or the European Investment Bank, and

(h)securities issued by An Post and guaranteed by the Minister for Finance.
 
Thanks guys. So I take it that just Irish government bonds are CGT free and not EU ones. Thanks.
 
Are gains on government bonds exempt from tax if held by a company or are they subject to CT? Section 607 of the TCA suggests that they "exempt securities" so not subject to CGT?
 
There is no capital gains on bonds anyway if you hold them to maturity as you just get back your original investment. If you sell them before maturity there maybe a gain but most bonds now selling at a discount due to rising interest rates. Can you harvest a cspital loss from bond investments?
 
You can have a capital gain on maturity if the bond was issued or purchased at a discount

Some brave investors made a fortune on Irish Government bonds during the meltdown, when they were available with a 40% or thereabouts discount

And, yes, capital losses on bonds can be offset against capital gains - except, of course, losses on Irish Government bonds which are exempt from CGT
For now, at least
 
So if irish government forced to accede to EU demands that would mean we can buy any european government bonds at a discount and not have to pay cgt on any gain, thats interesting. But the advantage only applies to irish residents so knowing the irish government they would just quietly remove this cgt free advantage from irish residents investing in irish bonds. The irish media would barely notice
 
jpd said:
Some brave investors made a fortune on Irish Government bonds during the meltdown, when they were available with a 40% or thereabouts discount
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I know of one broker who deduced that the risk in an Irish bank deposit and an Irish government bond was the same (at the time both were guaranteed by the government), and had clients move ARF investments from bank deposits to bonds and they all made a killing.
 
joe sod said:
Is it trading at a discount now?
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A zero coupon bond has to be trading at a discount to give a positive yield
1791038940486.webp
 
Duke of Marmalade said:
This one actually touched 102 at its auction. Negative yields :eek:
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Thats crazy that someone would invest in a bond with no yield, just shows the madness of the whole negative yield phenomenon and that central banks got away with it.

Maybe they will reap the whirlwind now though as investors after getting burnt with these will be seeking ever higher and higher yields .
 
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