Taxation:
Interest on the bond will be paid gross without deduction of income tax or any other deductions or withholdings.
In general, where the holder of the bond is an Irish resident taxpayer, the interest element payable on the bond is assessable to income tax, whereas any gains arising on disposal or redemption of the bond are exempt from capital gains tax. However, where the bondholder resident in Ireland is dealing in Government bonds as part of a trade, he/she is assessable to income tax or corporation tax, as the case may be, in respect of the interest element and also the gains arising on disposal or on redemption of the bond.
Section 43 of the Taxes Consolidation Act 1997 of Ireland provides that the bond and the interest payable thereon is exempt from all Irish taxation so long as it is shown that the bond is in the beneficial ownership of a person not resident in Ireland. However, where the bond is held by or for an Irish branch or agency of a foreign financial concern, interest and gains on such bond will be chargeable to Irish tax.
Non-zero, but very close to it.(with no credit risk?)
28% after tax.. but I agree the broad point. Nevertheless, I still see it being a more interesting option relative to longer fixed term cash deposit, An Post savings bonds etc.The most risk free asset is considered to be US Treasury Bond
Yes, you get 28% return over 8 years but you have to tie up your money for the full 8 years to guarantee this. Note that 28% over 8 years is "only" 2.8% per annum so taking likely inflation into account, this is likely to be a losing investment
Did anyone get a confirmation on the CGT implications of this, if there is any?Does this mean that if I buy a zero coupon Irish Govt Bond and hold it to maturity that I will pay no capital gains tax? e.g. there is a EUR 9bn 0% issue maturing 18th Oct 2031 that trades at ~78c face value today / 2.8% imputed yield. If I buy that and hold it until is redeemed at par then I have no tax to pay at all?
Did anyone get a confirmation on the CGT implications of this, if there is any?
If not dealing in bonds as part of a trade, no CGT.
Source - Page 2 of the NTMA's bond prospectus for the 0% Treasury Bond 2031
You're definitely not carrying out a trade!What do you mean by 'as part of a trade'?
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