Dáil Éireann Debate, Wednesday - 11 February 2026
68. Deputy Emer Currie asked the Tánaiste and Minister for Finance to outline in detail his Department’s concerns over possible tax avoidance in the context of the consideration of measures to increase retail investment in Ireland. [10521/26]
Amharc ar fhreagraI am advised by the Revenue Commissioners that a ‘gross roll-up’ applies under the domestic fund regime such that there is no annual tax on income or gains arising to a 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. The fund has responsibility to deduct the exit tax. Exit tax applies at a rate of 38 per cent (with effect from 1 January 2026) in respect of Irish resident individual investors unless the fund is a Personal Portfolio Investment Undertaking.
In the case of regulated funds located in other EU/EEA countries, as such funds are subject to the same regulation as Irish funds, the tax treatment of an investment in such a fund is similar to that which applies in respect of an investment made in an Irish domiciled regulated fund. Investments in funds located in other OECD member states, where the fund is substantially similar to an Irish fund, are also taxed on a similar basis to investments in Irish funds. An EU/EEA or OECD domiciled fund cannot apply Irish exit tax. Therefore, Irish investors are required to account for this tax through the self-assessment system at the rate of 38% for individuals (with effect from 1 January 2026).
A Personal Portfolio Investment Undertaking as defined in section 739BA of the Taxes Consolidation Act 1997 is a fund, either domestic or offshore, where the selection of the property of the fund was, or can be, influenced by an individual who is the investor i.e. the investor, or certain connected persons, who places personal investments within a fund. Personal Portfolio Investment Undertakings were created to gain access to the gross roll-up regime which allows the income and gains to roll-up within a fund without suffering tax. The higher rate of tax of 60 percent applies to a gain arising on a chargeable event with respect to a Personal Portfolio Investment Undertaking.
Finance Act 2006 introduced an anti-avoidance measure, the eight-year deemed disposal, for all investments that benefit from gross roll-up: that is, investments in Irish funds, investments in life policies and investments in offshore funds that are similar to Irish funds. The eight-year deemed disposal was introduced as a new category of ‘chargeable event’. This amendment was designed specifically to prevent the avoidance of tax by the indefinite roll-up of income and gains and the associated loss of tax to the Exchequer. A deemed disposal occurs eight years following inception of a policy of life assurance or acquisition of a fund and then every eight years thereafter. The deemed disposal rules also apply to equivalent offshore funds. Any gain on the investment which arises from the date of inception or the date of acquisition to the date of the deemed disposal is subject to tax. This ensures that income isn’t being rolled up in life assurance policies or funds without being taxed. On the ultimate disposal of the investment any tax paid which arose as a result of a deemed disposal is allowed as a credit against any final tax liability on disposal.
This is a complex area of taxation that encompasses a wide breadth of tax legislation on domestic funds, life assurance products and offshore funds. Detailed consideration is therefore being given to the best way to bring about the necessary reforms and to support a greater level of retail investment in capital markets.
A Roadmap is currently being developed, for publication in the coming months, which will set out a proposed approach to simplify and adapt the tax framework to encourage retail investment. However, as articulated in the Funds Review report, changes to these rules require guardrails to protect the Exchequer and ensure that appropriate taxation is paid. A balance between supporting retail investment while retaining important and necessary anti-avoidance protections, taking account of potential Exchequer impacts is required. This aspect is being considered as part of the work underway on the roadmap for the taxation of retail investment. This work will also take account of developments at an EU level in respect of the Savings Investment Union.
