Aren't you incurring avoidable transaction costs by doing this?I find the system very confusing so am considering selling at/before 8 years, paying the tax and reinvesting, possibly in different ETFs
What does this mean?I would like to even out the deemed disposal value on an annual basis.
Have you modelled illustrative numbers for this scenario versus a buy and hold scenario to sanity check your strategy?This seems like a "clean" plan to me but would like other opinions.
I bought some Vanguard via eToro and am assuming they handle the deemed disposal side when time arrrives. Or that Revenue automatically applies it - is that not the case or is it only done inside life co wrappers as you say above?I don't see what is confusing about the first deemed disposal (year 16 is confusing!). It's the difference between what you bought it at and the price in year 8 * 41% (Assuming there's a gain).
Regular investing outside of a life company is an administrative pain. I always advice client to make an annual payment instead of monthly payments.
No one in the Revenue seems to have any idea about the payment of deemed disposal or even actual disposal that is made outside of the life company wrappers.
Got it, thank you, do it’s one for the Form11. In that regard could this particular ‘deemed’ gain be offset against an unrelated ‘actual’ loss?No, you have to calculate your gain on the disposals and deemed disposals on all ETF investments held outside an Irish fund and report the figure to Revenue in your annual tax return
Luckily they will calculate the 41% of your gain, so you don't have to worry about that calculation
The Revenue guidelines on Investment Undertakings states you add the deemed disposal already paid to the year 16 value and calculate the deemed disposal at that rate, then deduct the year 8 payment paid.No, you cannot set unrelated losses against deemed gains.
There is some confusion around the calculation of deemed gains from year 16 onwards
Some documents seem to indicate that you calculate the deemed gain in year 16 by reference to the original cost in year 0, calculate the exit tax at 41% and then deduct the tax paid on the deemed disposal in year 8. This could give rise to a tax refund if the value of the funds has decreased between year 8 and year 16
I got a reply from Revenue stating that the deemed gain in year 16 is based on the change in value from the year 8 deemed disposal and this is what I now use
I think this interpretation is incorrect, but that's what I got in black & white from Revenue
If revenue themselves find the whole thing is extremely complex and burdensome and would prefer a simpler system that is easier to administer, who is it that is keeping this exit tax regime in place?you read the guidelines, it is extremely complex and I would say there is only a handful of people in the Revenue who understand them.
I blame gross roll up! Go back to either net roll up or pay tax on dividends each year and get rid of deemed disposal...and reduce the tax rate!!!
The Government sets tax policy, not Revenue.If revenue themselves find the whole thing is extremely complex and burdensome and would prefer a simpler system that is easier to administer, who is it that is keeping this exit tax regime in place?
It's a self-assessed tax so they probably don't care since burden of complexity falls on the punter.If revenue themselves find the whole thing is extremely complex and burdensome and would prefer a simpler system that is easier to administer, who is it that is keeping this exit tax regime in place?
You shouldn't realise gains unnecessarily.I find the system very confusing so am considering selling at/before 8 years, paying the tax and reinvesting, possibly in different ETFs
Related question. I hold a few ETFs myself. I sold one after one year, for valid reasons, and declared a minor gain which I paid 41% income tax on. I haven’t paid prsi or USC and am starting to understand I should have.
If there was an option for the product provider to manage the taxation and pay it to Revenue, I wonder would customers pay for that and if so how much.
Why? You think they'd leave the market rather than do it?Could you see the like of DeGiro doing this, even with a fee? I can't.
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