My Ideal Investment Taxation for Ireland

Some Context First.

Ireland has the highest Dividend Taxes in Europe



Ireland has the joint 5th highest Capital Gains Taxes in Europe.

My Ideal Investment Taxation for Ireland​

Capital Gains 25%
Dividends 25%
DIRT 25%

Annual Capital Gains Exemption increased from 1,270 to 2000
No other exemptions. CGT still due on death.
Exit tax replaced with CGT.

A brief explanation of my rational.

1. Ireland has the highest rate of Tax for Dividends and joint 5th highest rate for CGT in Europe. The rates chosen are to move Ireland closer to (albeit still slightly above) the European Average. Our very high tax rates are a barrier to wealthy people moving to, or staying in, Ireland.
2. All 3 Tax rates set at the same level. Tax is no longer a consideration when choosing the best investment. Tax no longer discourages people from taking Dividends. Tax no longer discourages people from investing instead of saving in a bank account
3. Annual Capital Gains Exemption increased from 1,270 to 2000, to account for inflation
4. CGT still due on death. So now who cares whether you take dividends or not, we get the tax in the end

Why should I pay 52% on my income when I make an extra few bob if some passive investor doing nothing productive can pay 25% on a dividend?

Gordon Gekko said:

Why should I pay 52% on my income when I make an extra few bob if some passive investor doing nothing productive can pay 25% on a dividend?

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Firstly, you're not paying 52% on your income. You're likely paying around 30%.

That dividend is coming from taxed income already. 25% dividend tax after 15% corporation tax is likely higher than your level of income tax.

Fortune said:

Firstly, you're not paying 52% on your income

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I hate to break it to you, but pretty much everyone around here is paying 52% at the margin! Marginal rates are all that is relevant for decisions about how much to work and how much to invest.

AJAM said:

Dividends 25%

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Ireland’s entire industrial strategy for the last 40 years has basically been having low corporation tax. It’s fantasy to think that it will be changed.

In general radical changes to tax bases and rates never occur for various reasons. Nonetheless I think tax on investment is too high in Ireland and there are things that could be done.

My preferences are around tweaks to existing bases and rates. In no particular order, I would:
1) re-introduce consumer price indexation for capital gains
2) Lower the group A threshold and reduce the rate to 30%
3) Give some kind of limited income tax credit for dividends and deposit interest already paid
4) give a capital gains tax exemption for residential property bought and held for 10 years and let continuously

Fortune said:

Firstly, you're not paying 52% on your income. You're likely paying around 30%.

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I never said that I was. I said ‘make an extra few bob’, i.e. incremental, so the marginal rate of tax is what’s relevant. I couldn’t have been more explicit.

Gordon Gekko said:

I couldn’t have been more explicit.

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You could've avoided using a euphemism

Except plenty of those other countries have dividends allowances f.ex. UK of 500 pound, and 0 on dividends from ISA held shares (up to 20k in there). So its not only Ireland being the WORST rate in Europe it also has ZERO allowances.

This is also a big consideration in attracting high skilled people to the country like doctors, when they see our taxation they run a mile