Dáil Éireann Debate, Thursday - 16 July 2026
272. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance the Department's assessment of the impact of inflation on the real value of household savings held in low-interest demand-deposit accounts; whether his Department has conducted or commissioned any analysis of the erosion of purchasing power in such accounts over the past decade; and if he will make a statement on the matter. [54507/26]
View answer282. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance his Department's assessment of the impact of inflation on the real value of household savings held in low-interest demand-deposit accounts; if his Department has conducted or commissioned any analysis of the erosion of purchasing power in such accounts over the past decade; if the current tax treatment of deposit interest (DIRT) takes into account the real, inflation-adjusted return to savers, as opposed to the nominal return; if his Department will provide an update on consideration of a savings and investment account or comparable scheme (details supplied); and if he will make a statement on the matter. [54687/26]
View answerI propose to take Questions Nos. 272 and 282 together.
At the Savings and Investment Forum on 31 March, I announced the Government’s intention to introduce the legislative framework for an Investment Account in 2026. We want to make investing simpler, clearer, and more accessible for ordinary people, and help their hard-earned money work harder for them.
Inflation reduces the real value of savings where the interest earned is below the rate of inflation.
Too much of people’s hard-earned savings remains in low-yield deposits. The impact of inflation can erode the real value of savings held in such accounts over time. As part of the ‘Behind the Data’ series, the Central Bank of Ireland published research in April 2025 which found that Irish households’ preference for shorter-term, more accessible deposit account types relative to average euro area household behaviour cost them almost €800 million in unearned interest in 2024 alone.
Deposit accounts are right for many people and for many needs. But they should not be the only practical option. Investment in capital markets can offer households another path to long-term financial wellbeing, while also supporting growth and competitiveness in the wider economy.
The Deputy will be aware that Deposit Interest Retention Tax (DIRT) is a withholding tax that is deducted by Irish financial institutions on deposit interest paid or credited on the deposits of Irish residents. Since 1 January 2020, the DIRT rate is 33%. DIRT is a final liability tax. This means that an individual has no further tax liability in respect of the deposit interest earned. Deposit interest is specifically excluded from the Universal Social Charge. Individuals may however have a liability to Pay Related Social Insurance (PRSI) in certain circumstances. There is currently no such provision within the Taxes Consolidation Act 1997(TCA) which provides for an adjustment to take account of inflation. As with all taxes, DIRT is subject to ongoing review. This involves the consideration and assessment of the rate of DIRT and the relevant exemptions from DIRT as part of the annual Budget and Finance Bill process, as well as the wider tax policy context.
The tax treatment of retail investments was considered as part of a broader review into the funds and asset management sector in Ireland, which culminated in the ‘Funds Sector 2030’ report published in October 2024.
In recognition of the importance of encouraging retail investment, Budget 2026 provided for a reduction in the rate of taxation on returns from Irish and equivalent investment funds and Irish and certain foreign life assurance policies from 41% to 38% which took effect from 1 January 2026.
Budget 2026 also included a commitment to publish a roadmap in 2026, setting out the intended approach to simplify and adapt the tax framework to encourage retail investment. The roadmap will be published in summer 2026.
With regard to the new Investment Account, the aim is to legislate for the framework in 2026 and to allow accounts to be offered from 2027. The Government’s view that the account should be simple, accessible, tax efficient, easy to administer, transparent on fees and portable across borders where possible.
When designing the model that best fits the Irish economy and the needs of Irish households, the views of relevant experts are being considered as well as learning from best international practices.
Officials in my Department are currently developing policy options regarding the investment account framework which will form part of the deliberations for Budget 2027 over the coming months.
