Dáil Éireann Debate, Wednesday - 6 May 2026
209. Deputy Keira Keogh asked the Tánaiste and Minister for Finance if he will provide an update on the steps his Department is taking towards reform of the deemed disposal rules on ETFs, in an effort to level the playing field for ordinary investors; and if he will make a statement on the matter. [31857/26]
Amharc ar fhreagraThe Deputy has asked about the deemed disposal rules for Exchange Traded Funds (ETFs).
There is no separate taxation regime for ETFs. They are subject to the same rules as other investment funds. However, unlike most other investment funds where the fund calculates the tax due and returns it to Revenue, where an ETF is held on a recognised clearing system, investors are required to calculate and return the tax due in the self-assessment system.
Deemed disposal is an anti-avoidance measure that applies to investments in Irish domiciled investment funds and life assurance products , as well as equivalent offshore funds and certain foreign life assurance products, including relevant ETFs. It was introduced in Finance Bill 2006 to prevent the indefinite roll-up of income and gains, and the associated loss of tax to the Exchequer.
Under deemed disposal, tax is levied eight years after an investment is made, and every subsequent eight years, regardless of whether or not a disposal has in fact occurred. The tax is levied on any gain in the value of the investment from the date of acquisition to the date of the deemed disposal. On the ultimate disposal of the investment, any tax paid is allowed as a credit against the final tax liability.
I acknowledge the complexities associated with deemed disposal, particularly for ETFs, but as articulated in the Funds Review report, any 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.
I am committed to taking the necessary action to support retail investment in Ireland. Budget 2026 introduced a reduction in the taxation rate that applies to Irish and equivalent offshore funds and Irish and certain foreign life assurance products, from 41% to 38%. This change also applies to investments in Exchange-Traded Funds (ETFs) that are taxed under these regimes.
Budget 2026 also included a committed to publishing a roadmap for the taxation of retail investment, setting out an approach to simplify and adapt the tax framework to further support retail investment while retaining necessary and important anti-avoidance protections in a proportionate manner. The roadmap will be published in the coming months. The roadmap will take the Funds Review and the European Commission's Savings and Investment Account recommendation into consideration,. A key aspect of the roadmap is the development of a new Irish investment account that aims to reduce the complexities related to retail investment taxation and allows Irish people to grow their savings more efficiently.
