Is the 41% Exit Tax Soon to be Scrapped? Michael McGrath to Review
- Thread starter Always Learning
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Only thing that I can think of that might delay a reduction in the rate in the Budget this year and some action on 8 year DD is :
DoF - Well lads, how much is this going to cost?
Revenue - It's like this, we know to the cent what the implications might be for LAET but we're a bit vague on this whole self-assessed ETFs stuff
DoF - Say what...?
Steven Barrett
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My experience is that the Revenue really haven't a clue when it comes to self assessment tax on ETFs. It was all set up with the intention that the life companies would do all the work and they'd just cash the cheque. Then investment platforms became a thing and suddenly they had to figure out how it worked.
I have a case where a client on a platform paid his deemed disposal from other funds. He cash out his investment the following year. According to the Revenue's Investment Undertakings Guidelines 2016, he is supposed to add the deemed disposal amount to the final cash in value to calculate the final tax due and then offset it. If he does this, his tax on gains increases from 41% to 51%. I enquired with the Revenue 4 months ago on this matter. Never heard back. I am presuming because they don't know the answer. I would be pretty sure that if the client paid in 41% of his gain, it would be accepted.
From an admin point of view, I'd say the Revenue are perfectly happy for it to move under the established CGT rules.
Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
Adding back the tax only works if you pay the deemed disposal from the fund.
Appendix I(b) describes the calculation with reference to the cost per unit, which works whether you sell part of the ETF or use your other funds to pay the deemed disposal.
www.revenue.ie
Appendix I(b) describes the calculation with reference to the cost per unit, which works whether you sell part of the ETF or use your other funds to pay the deemed disposal.
Part 27 - Sections 731-747F
www.revenue.ie
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PQ reply 28 May 2025
Departmental Correspondence
Departmental Correspondence Dáil Éireann Debate, Wednesday - 28 May 2025
www.oireachtas.ie
ificandream
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Kick the can
That's good news but looks like as others have said they were pushed to act by Europe. It's amazing the trillions of euros of ETFs domiciled in Ireland did not receive more attention. The extremes in Irish tax policy whereby on the one hand they make Ireland the most attractive country in Europe to domicile ETFs and at the same time make it the most punitive in Europe for domestic population to actually invest in those very same ETFs
CharlieMac
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Is it safe to assume that if I were to open an ETF now, invested in a World Equities index fund, in 8 years time that investment will be subject to CGT? Or should we wait until Budget 2026?
It's the government way
Previously, when the government changed the tax rate (or made the deemed exit tax tweak), existing investments just got the new rate. But when the system changed (from net to gross roll up), existing investments kept the old treatment (and still do) and new investments were under the new treatment.
Flybytheseat
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I think we need to invest in a new government.
Djimi Traore
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From what I've heard it's Revenue that are pushing back on the changes. They see reducing the rate as a large "cost" to them and are incapable of comprehending that a reduction in rate and simplification will actually encourage more people to invest and thus actually increase the overall tax take. If they don't have a solid number for that on a spreadsheet then computer says no.
Revenue is one of the best run areas of government with some of the sharpest people I’ve encountered, you can be absolutely certain that a lack of comprehension of this basic premise is not a factor.
Flybytheseat
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Same can't unfortunately be said for our finance ministers or politicians in general.
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Heard from who?
Yes, but those people generally aren't on the front lines manning the phones and responding to MyQueries or whatever their secure email is called.
At the turn of the year we were told these changes were under consideration for this years finance bill, it appears that was never the case and has been put on the long finger. The Dail transcript from yesterday suggests these changes are 'costly' and will not be happening any time soon which is very disappointing but hardly surprising.
Essentially no ISA, no change to the 41% exit tax and not even a mention of deemed disposal as part of their attempt to achieve a 'greater level of retail investment in capital markets.'
Essentially no ISA, no change to the 41% exit tax and not even a mention of deemed disposal as part of their attempt to achieve a 'greater level of retail investment in capital markets.'
The written answer directly addresses both of those points.
Recommendations 22 and 23 of the Fund Review Report include consideration of the removal of the eight-year deemed disposal requirement for Irish domiciled funds and life products and alignment of tax rates across different investment choices.