Dáil Éireann Debate, Tuesday - 25 November 2025
280. Deputy Barry Ward asked the Tánaiste and Minister for Finance his views on whether the existing level of deposit interest retention tax acts as a disincentive to investment in the stock market; and if he will make a statement on the matter. [66054/25]
Amharc ar fhreagraDeposit 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 are various exemptions from the obligation to deduct DIRT on deposit interest paid or credited by financial institutions.
Individuals can invest in the stock market by directly acquiring shares in a company or by investing in an investment fund which includes an Exchange Traded Fund.
Where an Irish resident individual invests directly in a company by acquiring shares in the company, any income payments received (e.g. dividends) from the company are subject to income tax at the individual’s marginal rate of tax and gains from the disposal of shares are subject to capital gains tax at a rate of 33%. Irish resident investors account for this tax through the self-assessment system.
In relation to investments in investment funds, the domicile of the investment fund will generally determine the applicable fund regime, specifically whether the domestic funds regime or the offshore funds regime applies.
Investment funds generally make multiple acquisitions and disposals of assets over the lifetime of the fund and will be in receipt of income and gains in respect of fund assets. Where the relevant fund is an Irish domiciled investment fund, or an investment fund located in the EU, EEA or an OECD member state and which is substantially similar to an Irish domiciled investment fund, the gross roll-up regime applies and there is no annual taxation of the income and gains of the fund. Instead, exit tax arises in respect of payments made to certain unit holders in that fund or on the sale of units by those unit holders. To prevent indefinite or long-term deferral of this exit tax, a disposal is deemed to occur every 8 years. The taxable gain arising on the 8-year deemed disposal (the chargeable event) is the value of the units at the time less the amount invested. Provision is made in Finance Bill 2025 to reduce the rate of exit tax from 41% to 38%.
In respect of investment funds domiciled in the EU/EEA or in another OECD member state, but which are not substantially similar to an Irish investment fund, the applicable tax treatment in respect of income and gains arising will follow general principles of taxation in Ireland. That is, any income payments will be subject to income tax at the individual’s marginal rate of tax, USC and PRSI may apply. Gains on disposals will be subject to capital gains tax at 33 percent.
Funds that are not located in an OECD member state or the EU/EEA are taxed differently depending on whether they are distributing or non-distributing funds. Further information is available on the Revenue website.
The need to grow retail investment in Ireland, and across the EU, is recognised, including in the Funds Review. As set out in the Funds Review Implementation Plan published on Budget Day, and as noted by my predecessor, Paschal Donohoe, in his Budget 2026 speech, a roadmap will be published in early 2026 which will outline how the current system of taxation for retail investment will be simplified and adapted. The roadmap will take account of the recommendations of the funds review in relation to retail investment and developments at an EU level in respect of the Savings and Investments Union.
