Being an Irish-resident investor in the stock market compares very unfavourably with other countries. It's ironic that so many ETFs are Irish-domiciled when its own residents are taxed to the hilt. Even countries like Spain, which is not renowned as a tax haven, has a more favourable regime for investors in shares.
The Irish approach:
1. The exit tax of 41% on ETFS/Index Funds is very high. Even worse, the arbitrary 8 year deemed disposal rule removes much of the advantage of compound interest.
2. CGT 33% is very high compared to other countries. Furthermore, there is no indexation i.e. the purchase price of the shares is not adjusted for inflation.
3. Dividend income is taxed at marginal income rates which can be as high as 50%. In other countries, passive income is taxed separately and the rate does not exceed 30%.
4. No tax-free investment accounts (outside the pension wrapper), such as UK ISAs.
5. Not restricted to Irish residents but Stamp Duty is 1% for shares purchased in Irish companies. The rate is 0.5% in the UK, 0% elsewhere.
6. High pension charges with no option to invest in cheap index trackers.
7. Speculation is tax-free (gambling and spread-betting) while investing is heavily taxed.
The Irish approach:
1. The exit tax of 41% on ETFS/Index Funds is very high. Even worse, the arbitrary 8 year deemed disposal rule removes much of the advantage of compound interest.
2. CGT 33% is very high compared to other countries. Furthermore, there is no indexation i.e. the purchase price of the shares is not adjusted for inflation.
3. Dividend income is taxed at marginal income rates which can be as high as 50%. In other countries, passive income is taxed separately and the rate does not exceed 30%.
4. No tax-free investment accounts (outside the pension wrapper), such as UK ISAs.
5. Not restricted to Irish residents but Stamp Duty is 1% for shares purchased in Irish companies. The rate is 0.5% in the UK, 0% elsewhere.
6. High pension charges with no option to invest in cheap index trackers.
7. Speculation is tax-free (gambling and spread-betting) while investing is heavily taxed.