Is the 41% Exit Tax Soon to be Scrapped? Michael McGrath to Review

It would be good if we had at least 1 TD who understands this change and is in the Dail raising it.
 
Jim O Callaghan , minister for justice actually does understand it and asked a pertinent question regarding ETF taxation a few years ago when he was a backbencher of Pascal Donohue the then minister for finance. Donohue gave a factually incorrect reply and was just spouting off a departmental reply he was given, his normal tactic is to waste time repeating the question asked rather than just starting with the actual response using up most of the time given without properly addressing the topic asked
 
It would be good if we had at least 1 TD who understands this change and is in the Dail raising it.

I would say there are very few TDs in government or opposition who don't understand,
The also understand scrapping the -41% exit tax could push up Deposit Rates leading to increased mortgage rates
money moving out of the pillar Banks could make it harder to get approval for new mortgages in the middle of a housing crises,
I suspect it is along these lines why it is not raised by any TD,
no party will take a chance on getting it wrong for now,
 
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>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 [...]

So, can you buy, e.g. Luxembourg-domiciled ETFs, without 8 year DD?
 
Does the (paywalled) article say anything different than Pascal said here?
Article is based on the reply to the parliamentary question so no new information no anyone who's already seen that. Article repeats that it will take multiple budget cycles to change due to the "magnitude" of the changes. (Changes proposed are to align exit tax with CGT, and to remove deemed disposal.)

The article added a few comments from people such as a law firm (A&Lgoodbody) stating that Irish people often hold assets outside of pension portfolios and that is undermined by deemed disposal. Also a comment from Derville Rowland, former deputy governor of the central bank, that while Ireland is a key ETF hub the take up by Irish households remained tiny.
 
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.
Revenue is a competent organisation at tax administration.

They don’t have much expertise in economics or any kind of long-term modelling.

The corporation tax bonanza has seemed to catch them by surprise every single year since 2015.
 
I don't see why this should be the case. We previously didn't have deemed disposal and we've had lower tax rates before
From their point of view (not mine) the magnitude is probably due to

- connecting both the reduction in rate to removing deemed disposal - these could be dealt with separately

- the choices in deciding how to stop/phase out deemed disposal. Do they just change it for new investments after some date and end up for 8 years with some funds paying deemed disposal and some not etc..

- dealing with changes in tax take from funds due to the rate decrease and removal of deemed disposal.

- planning for handling a large increase in people investing in ETFs - they do not like additional self-declared income for example see how they've stopped company shares schemes as being self-declared due to collection "problems".

- revisiting the original reason for deemed disposal - to try to stop wealthy people taking advantage of funds as way to pass on inheritances with minimal taxation.

- keeping the fund companies happy

If exit tax and deemed disposal was 23% then people might live with that, and I wonder would Revenue have been so eager to classify ETFs as funds instead of shares if the rate of tax was lower for funds than shares.
 
If exit tax and deemed disposal was 23% then people might live with that, and I wonder would Revenue have been so eager to classify ETFs as funds instead of shares if the rate of tax was lower for funds than shares.
sure that would be worse to administer, then you have 2 different tax rates , before and after and deemed disposal still in place. The problem is not the level of the tax but the deemed disposal itself that is what is stopping people from investing in ETFs. Remember the spotlight is on Ireland because we have 70% of the ETFs worth trillions domiciled in Ireland but only a tiny proportion of that held by irish people. Obviously Europe will be asking what is happening here and probably is already. The simplest solution is to abolish deemed disposal outright so anyone selling an ETF from a certain date just pays the 33% cgt on disposal like any other asset, if someone has already paid the deemed disposal then they get a credit offset against the 33% CGT. Probably the revenue will be down money initially but it is still small fry in comparison to the corporate tax surpluses they have been reaping since covid. They need to look at the bigger picture and the bigger picture is that there are trillions worth of ETFs domiciled here and that is also the focus of Europe
 
The simplest solution is to abolish deemed disposal outright so anyone selling an ETF from a certain date just pays the 33% cgt on disposal like any other asset, if someone has already paid the deemed disposal then they get a credit offset against the 33% CGT.
They already have the this on place from when they increased the tax rates, or for cases where the growth has reduced between the deemed exit tax and the actual disposal.
 
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