I propose to take Questions Nos. 82, 83, 84, 85, 91, 99, 101 and 102 together.
The deputy has asked a number of questions about the cost 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 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.
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. Data for 2025 is not yet available. Revenue cannot provide the 2015 figures in the time available to provide a response.
|
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.
As regards the administration costs to Revenue of collecting and administering the tax from deemed disposals, Revenue operates an integrated tax and customs administration and therefore in most instances the costs of administering a single tax cannot be quantified.
It should be noted that Budget 2026 included a commitment to the publication of an approach to the taxation of retail investment, which will set out an approach to simplify and adapt the tax framework to further support retail investment. The work underway includes consideration of the Funds Sector 2030 Report deemed disposal, as well the European Commission’s recommendation on Savings and Investment Accounts.
