Foreign Funds and Irish Tax

B

BIG

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Hi,
I was wondering if anyone had an experience of buying US mutual funds or EFT's, do they have the same tax as irish funds (i.e. 23% on gain and 41% on dividend)?
The revenue website mentions that some foreign funds have different taxes?
 
Tax on gains on disposal or part-disposal is at 23%, assuming that you report them in a timely fashion. Tax on income is at your marginal rate - could be 41% but could also be less or more if you don't report them in time.

I don't think that the capital gain or loss on disposal or part-disposal is calculated as for shares ie first in, first out but on a pro-rata basis. I have asked for clarification and am awaiting a reply on this. Capital losses (God forbid!) can not be offset against gains on shares or other assets. Alsdo remember that the 8 year deemed redemption rule now applies as well.

This has all the making of a tax nightmare for those you hold foreign ETFs (as I do) but I suppose some pain has to be paid to avoid the high brokerage charges here.
 
Thanks,
Sounds like they are treated much the same as irish funds then from atax point of view.
 
Yes, but you have to do the calculations and tax payments yourself.
 
There isn't any specific document but you can get details in the Finance Bills sections or use the search function on the revenue site -"foreign funds"
 
This is a really dangerous one! The problem lies in the meeting of the complex Irish Offshore rules and the foreign tax treaties. Specifically, in the case of US ETFs, these are treated by the Irish-US tax treaty as producing dividends which entitle you to a 15% tax credit in Ireland. In this case the Revenue seems to treat them as securities (i.e. 41%+health levy on dividends and 20% disposal rate) if you wish to claim your credit.

Irish / EU ETFs are all treated under the 20% income /23% disposal regime. By the way, at the present moment, contrary to the comments of many, the securities treatment is far more beneficial if you plan to invest over the longer-term. This is primarily due to the 8-year deemed disposal rule which does not apply to securities as was introduced by the Finance Act 2006.

Naturally the above is only my opinion and I would like to hear whether anyone has had any real clarity from the Irish authorities on this!
 
so ETF's are not always treated by revenue the same way shares directly owned would be treated ?
 
Some of the discussion in this thread may be of interest in relation to the current discussion-although tax rules may have changed in the meantime
 
Sign,

Yes - in general ETFs are treated as investment funds are are taxed under the 20%/23% regime. The only question relates to US-domiciled ETFs e.g. ETFs trading on the NY or AMEX stock exchanges. My belief based on interactions with the Revenue is that the latter are treated as individual shares would be. However, I cannot find any legislation that supports the Revenue's decision i.e. technically even US ETFs are funds not securities according to the Revenue's own definition.
 
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