Dáil Éireann Debate, Thursday - 7 May 2026
239. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance the estimated annual Exchequer yield attributable to the deemed disposal regime as it applies to Exchange Traded Funds and other gross roll-up investment products held by individual retail investors; and to provide a breakdown of this yield for each of the past five years. [33767/26]
View answer240. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance whether the Department has undertaken any forward projections or dependency analysis in respect of Exchequer revenues arising from the deemed disposal regime; and if so, to provide details of such projections. [33768/26]
View answer241. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance what empirical analysis, behavioural modelling, or impact assessments have been undertaken since the introduction of deemed disposal in 2006 to evaluate its effectiveness in preventing tax deferral or avoidance by retail investors; and if none have been undertaken, to confirm same. [33769/26]
View answer248. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance whether the Department has conducted any costings, scenario modelling, or fiscal impact assessments in relation to the abolition or reform of the deemed disposal regime as it applies to retail investors; and if so, to provide details of same. [33776/26]
View answerI propose to take Questions Nos. 239, 240, 241 and 248 together.
The Deputy has asked about the Exchequer impact of deemed disposal. The tax revenue arising from the taxation of investment funds and life assurance policies, including deemed disposal rules, was examined in the context of Budget 2026. The information available to Revenue does not allow them to isolate the tax returned due to deemed disposal rules from other chargeable events which give rise to a tax liability. Chargeable events include:
- the making of relevant payments,
- the redemption of the investment,
- the transfer by an investor of their investment, and
- the ending of an eight-year period following the acquisition of the investment and then every eight years thereafter. This is commonly referred to as a deemed disposal.
Therefore, it is not possible to identify directly the tax revenue arising from the application of deemed disposal rules. This is because investment funds are not obliged to report the category of chargeable event that the exit tax relates to at the time of making payment to Revenue. Similarly, as respects investments in certain Irish domiciled funds and offshore funds in respect of which investors are required to self-assess tax due, taxpayers are not required to separately report data for each category of chargeable event when filing their tax return.
Therefore, while it is possible to identify the amounts of tax paid by funds in respect of unit holders, being Investment Undertaking Tax (IUT), and income tax accounted for by individuals in respect of their investments in Irish domiciled funds and offshore funds, it is not possible to provide a breakdown of the tax which relates to the eight-year deemed disposal nor is it possible to provide data on the number of individuals who are impacted by the deemed disposal rule.
On the basis of the information available to Revenue, and based on tax paid over the last eight years, if it was assumed that all tax paid by funds in respect of unit holders, tax paid by life companies in respect of policy holders, and income tax accounted for by individuals in respect of their investments in Irish domiciled funds, offshore funds and life products were as a result of deemed disposal, removing deemed disposal could give rise to a potential cost of €284 million. For Budget 2026, an estimate was prepared for the Exchequer impact in a year where deemed disposal did not apply, assuming that deemed disposal was closer to 50% of the total tax paid. This assumption results in an estimated full year cost to the Exchequer of €142 million for the removal of deemed disposal for investment funds and life assurance products.
However, it is important to note that the actual cost could vary where the proportion of tax which arises from deemed disposal rules is higher or lower, as well as where the gains in a particular year are larger or smaller than the eight-year average used for this estimate.
No specific empirical analysis of the impact of deemed disposal on tax deferral has been undertaken. It is the case that the operation of the deemed disposal rules, by including a charge to tax every eight years, ensures that tax is not deferred indefinitely.
My Department forecasts a number of income tax sub-heads, including PAYE, USC and smaller components such as Life Assurance Exit Tax (LAET). In addition, other taxes such as Investment Undertaking Tax (IUT) are included within general income tax forecasts. The most recent set of projections for income tax, published in the Annual Progress Report, take into account the latest macroeconomic projections and policy factors, such as the decrease in the LAET and IUT rate introduced in Budget 2026.
The table below provides the estimated amount of overall tax arising from 2016 to 2024 in respect of investments in investment funds, including IUT and income tax on Irish domiciled funds and certain offshore investment funds, which includes amounts in respect of ETFs. It also included tax arising from life assurance products, including LAET. Data for 2025 is not yet available. As noted above it is not possible to identify the tax arising from the application of deemed disposal rules.
|
Year |
Tax on Offshore Funds* €m |
Tax on Foreign Life Policies* €m |
IUT €m |
LAET** €m |
Total €m |
|
2024 |
* |
* |
73.5 |
169 |
242.5 |
|
2023 |
29.4 |
0.6 |
90.8 |
231 |
351.8 |
|
2022 |
33.8 |
1.0 |
82.1 |
233 |
349.9 |
|
2021 |
62.0 |
1.0 |
57.3 |
129 |
249.3 |
|
2020 |
33.0 |
0.8 |
39.1 |
124 |
196.9 |
|
2019 |
28.6 |
0.4 |
28.0 |
128 |
185 |
|
2018 |
21.0 |
0.6 |
39.7 |
165 |
226.3 |
|
2017 |
25.6 |
2.0 |
39.6 |
184 |
251.2 |
|
2016 |
22.4 |
0.3 |
37 |
228 |
287.7 |
*Total gross tax liability on income / gains from offshore funds and foreign life policies per Form 11 return. Form 11 data for 2024 is not yet available.
** IUT and LAET represent the amount of tax paid to Revenue. It is not possible to identify whether the figures for IUT and LAET represent amounts taxed at 25% in respect of corporate investors or 41% in respect of individual investors.
