Exchange Traded Funds: Taxation

marcopolo

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Can anyone clarify the full tax implications of Exchange traded funds (domestic or foreign registered) that are bought by Irish residents?
1: the Iseq 20, as I understand it, is a Ucits fund, and subject to income tax on dividends at the standard rate 20% only,and a capital gains tax on sale of 20% plus 3 per cent (23%). It is a gross roll up fund.

But is it also subject to the new provision of the 2006 Finance Act, whereby after holding the shares for eight years, there is a deemed disposal of the holding which is subject to the 23 per cent tax on the nominal gain over that eight year period ?

And what of the tax treatment of foreign – say US registered – ETFs, such as the Nasdaq (QQQQ): are these regarded by Revenue as just like any other share, where dividends are taxable at the marginal rate of tax, and where the CGT rate is 20%?
 
I think that ETF registered in the EU will be treated as UCITS in a similar manner to the ISEQ 20 ETF. Not sure about the US ETFs, though presumably they are treated like US funds
 
Thanks for your help. I am wondering whether those ETFs that do no have UCITS 3 approval - foreign ETFs - such as the Nasdaq QQQQ are regarded as non-qualifying offshore funds. In which case, it would seem, they would be liable for a 40 per rate of CGT based on the 1997 Tax Consolidation Act (Section 747A). Or are such foreign ETFs treated for tax purposes like UK investment trusts, and taxed as ordinary shares are: at 20 per cent.
 
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