Appropriate ETF Investing Strategy Ireland

conorosully

New Member
Messages
3
I am based in Ireland and I'm looking to invest in ETFs using Degiro. I would like to get some advice on a potential portfolio. Some points to note:
  • The ETFs should be accumulative. This is to simplify the tax.
  • Domicile should be Ireland (again for tax).
  • I plan on making regular monthly payments between €300-€500
  • I'm young and I don't plan on touching the money for 20+ years. I also already make regular contributions to a pension fund so I'm looking for a higher reward/risk ETF strategy.
After some research, I'm considering the following portfolio:
I feel like this is a well-diversified portfolio with appropriate exposure to riskier emerging market and small-cap equities. What do you think? I would appreciate any advice or comments and let me know if you need any clarification.
 

jpd

Frequent Poster
Messages
1,843
  • The ETFs should be accumulative. This is to simplify the tax.
  • Domicile should be Ireland (again for tax).
  • I plan on making regular monthly payments between €300-€500
In eight years time, you will have to start accounting for deemed disposals every month and then report and pay the Exit Tax - good luck with that
 

ThatNewGuy

Registered User
Messages
26
The tax structure in Ireland kindly makes it all but impossible to follow a bogleheads / couchpotatoe / index tracking passive strategy per most of the stuff you're probably reading.

Realistically the only way to do it would be yearly investments and have only a once-off headache per year, come that 8 year deemed disposal. Twice yearly if you're feeling really brave.
 

conorosully

New Member
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3
In eight years time, you will have to start accounting for deemed disposals every month and then report and pay the Exit Tax - good luck with that
Ah yes, I assumed that this would be a simple calculation but looking into it it is quite complicated. I also assumed that it would be every 8 years on the fund itself (i.e. 8 years since my first investment) and not 8 years after every payment into the fund.
 

Sarenco

Frequent Poster
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5,946
Pay dividend tax and then invest the remainder back into the fund? I'm assuming you avoid the deemed disposable tax this way.
That makes things even more complicated because you have to pay exit tax on every dividend payment and you still have to contend with exit tax on the disposal or deemed disposal of your shares after 8 years.

Also, bear in mind that you cannot offset losses on one ETF against gains on another.
 

Abren03

Registered User
Messages
16
How about investing into US domicile EFTs? 8 year rule, reporting etc doesn’t apply. I don’t think Degiro allow Irish investors to invest but Interactive brokers do.
 

jpd

Frequent Poster
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1,843
It is illegal for US ETFs to be marketed in the EU because they do not provide the documentation required by law
 

SBarrett

Frequent Poster
Messages
3,274
Would a simpler approach be to investing in dividend-paying ETFs. Pay dividend tax and then invest the remainder back into the fund? I'm assuming you avoid the deemed disposable tax this way.
You would think that would be a sensible approach. The Revenue were giving out about the gross roll up system and their lack of income from long term investments. But people who invest in a dividend paying fund/ ETF, are treated the same as those who operate under the gross roll up regime. You're better off just letting the funds accumulate and paying tax every 8 years.

Steven
www.bluewaterfp.ie
 

jpd

Frequent Poster
Messages
1,843
He was specifically asking about ETFs not Irish-based funds

But if you want to invest in this way, then yes, using an Irish-based fund is the way to minimise the administrative hassle - but I don't think he can do this on the Degiro system.
 

Iamyourfriend

Registered User
Messages
10
ETFs that accumulate have a more complicated tax structure. I think you might be getting mixed up.
So you disagree with this article?

"However, in the EU accumulation ETFs can be found and under Irish tax law the dividends are reinvested tax free. "

 

landlord

Frequent Poster
Messages
898
ETFs that accumulate have a more complicated tax structure.

So you disagree with this article?

"However, in the EU accumulation ETFs can be found and under Irish tax law the dividends are reinvested tax free. "

[/QUOTE]

My comment that ETFs that accumulate (UCITS) have a more complicated tax structure agrees with the article?????

EU ETF‘s that accumulate are subject to 41 % exit tax, 8 year deemed disposal etc....

This to me seems far more complicated than a US ETFs (33% CGT) which distributes dividends?
 

money_man

Registered User
Messages
27
Why not just invest in Vangaurd fund VWCE. Its a global Large and Mid cap fund. Since you cant offset losses in one etf against gains in another are you not better off limiting the number of ETFs you invest in?
 
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