ETFs - When do you pay the Deemed Disposal Tax?

S

Slippers

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If i buy an ETF today (Jan 6th, 2025), the deemed disposal tax becomes due on Jan 6th, 2033.

How long from Jan 6th, 2033 do I have before I must pay the tax? Is it 30 days, or is it, you must file a return no later than November 2033?
 

What is preliminary tax?

This page utlines what preliminary tax is.
www.revenue.ie

Assuming you are currently a PAYE taxpayer, then beginning in 2033 you will become a chargeable person and must register for self-assessment.
Your preliminary tax payment will be due by 31st October 2033, but since this is your first year of self-assessment the amount will be nil.
Your 2033 tax return must then be filed the following year by 31st October 2034 and the tax payment will be due on the same date.
 
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Is the taxation on the disposal of an ETF different when you reach over 67 and have retired?
 
PRSI doesn't apply to the disposals so it doesn't make a difference. It's taxed at 41% regardless of age.
 
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If I held EFT's and trimmed accordingly, I assume that the tax is liable on the encashment of the trim. What happens if I die and leave the remaining ETF's as part of my estate? Does the same tax liability fall on the encashement of the ETFs as part of my estate or will the inheritance tax allowances come into play ?
 
Yes death is a chargeable event so tax at 41% on gain is payable. The beneficiaries are subject to inheritance tax on the gross amount (ie before exit tax) but can claim a credit against inheritance tax for the exit tax paid
 
Although I believe it can be a bit more complicated than that depending on things like the domicile of the fund, relationship to the beneficiary and whether the funds are disposed of within 2 years of the inheritance. So probably one for proper tax advice if that were to occur…
 
MikeM said:
Is there a different taxation of the disposal of a mutual fund?
Click to expand...
Most mutual funds or other similar collective investments are subject to the same 8 yearly deemed disposal and exit taxation as ETFs but this is usually handled automatically by the fund managers unlike ETF tax liabilities which must be dealt with by the investor.
 
It's primarily the executor's responsiblity to pay the tax and the executor, of course, has or should have access to all the deceased's financial records, including the records needed to compute this tax liability.

Not sure what happens if the deceased has failed to keep proper records, but this is a specific example of a general problem that executors may face — the deceased's records prove not to be in order and so they have difficulty in identifying and paying the deceased's liablities, including outstanding tax liabilities. I suspect the answer is that the executor retains a tax adviser to assist them in dealing with the Revenue to agree the liability.

Tl;dr: Keep your records in good order, folks. You're doing your dependants no favours if you leave them a mess to sort out.
 
Can I get some help on this table.



My uneducated read on this is that if I buy say a US based ETF, say for example Invesco QQQ Trust, Series 1 because its a US ETF the 8 year rule does not apply and I'm subject to CGT as oppose to exit tax at 41% ? So only Irish domicle ETFs are subjec to the 8 year rul and 41% exit tax. Is this correct ?

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No - all ETF's marketed in the EU, or their equivalents, are subject to the deemed disposal and 41% Exit tax

The US-based ETFs are not legally available in the EU as the providers do not provide the documentation required by EU law . So normal retail investor are prohibited from purchasing such products

If you search the forum you will find this discussed at length across multiple threads over the last 10 or more years
 
Well I can't be certain, but the format looks a lot like the ChatGPT-4o output (example below I just ran...). Note how it just ignores the accessibility issue and no mention of the equivalence test etc for offshore funds. This is a danger of using these models ... you do need to know the right questions to ask and sometimes the info looks right but isn't. But they are getting better fast.

Apologies for taking thread off topic.
 
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