Officials recommend scrapping deemed disposal and lowering tax on investment funds

yellowmoose said:
why can't the dividends be taxed at the marginal rate regardless of whether they are distributed or rolled up?
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They can be, but it doesn't really achieve the aim of simplification of the tax regime. You'd have to find and separate out the rolled-up dividend amounts from your ETF and report them annually which isn't straightforward. And then remove the amounts already taxed from your gain at final disposal.

Is that what happens in the UK?
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Yes, but the average UK investor will have their ETFs in a tax-free ISA and not have to worry about it.
 
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In my submission I told them... ETFs are the same as equities.
Being a submission from the industry,
I explained that everyone in the industry globally knows they are recorded, listed, traded on exchanges as equities.
At anytime, we are holding 25% of all financial assets globally.

Further I said, retail investors should not be trading individual shares or similar instruments... they are being exposed to unreasonable market risks.
Only a larger investor can replicate the portfolio effect of a fund or ETF.
 
I disagree with you.
If you are talking about BH.. you would be exposed to significant FX risk.
Or a UK trust ... more FX risk.
Trying to replicate a portfolio, similar to a fund... it would be costly and time-consuming.
Thats the whole point of ETFs.. to make investing accessible to small investors.

If someone wants total return.. I know of 2 ETFs straight off.
In fact, one is treated as an equity in Revenue's eyes.
 
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Corola said:
Funds have the same exposure to FX risk if they hold equities denominated in a foreign currency. The only way to avoid FX risk would be to invest in something that exclusively holds Eurozone equities, or to buy euro-hedged funds which are more expensive.
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And this would arguably hamstring your potential returns.
 
yellowmoose said:
why can't the dividends be taxed at the marginal rate regardless of whether they are distributed or rolled up? Is that what happens in the UK?
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Ireland has the highest Dividend Taxes in Europe

1727604757548.png


Dividend Taxes
Average20%
Max51%
Min0%
Average excl 0%22%
Min excl 0%5%
 
As dividends are treated like other income, then there is no one single "tax rate" on dividend income in Ireland.

It could be zero %.

It could be 20%.
 
This chart could equally say "Ireland has the most progressive dividend taxes in Europe".
 
yellowmoose said:
why can't the dividends be taxed at the marginal rate regardless of whether they are distributed or rolled up? Is that what happens in the UK?
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Yes - life companies won't like this as the simplicity of funds being taxed at source at a composite rate with no further requirement to pay tax is key to their offering, it was always so. They would much prefer the current regime with the Exit Tax reduced from its "emergency" rate of 41% to the DIRT rate.
 
The Report talks of replacing Deemed Disposal with "guard rails". The older officials may remember that the reason for DD was when with the ink not even dry on the introduction of gross roll up a stockbroker circulated all its private clients with a leaflet entitled "Put a Life Belt around your assets". The theme was that by putting all your assets in a gross roll up life policy you might never have to pay any investment tax until death and then only at 23% - the rate aimed for the great unwashed not the Irish Elon Musks. Charlie McCreevy was not a happy camper and immediately announced that DD would be introduced even retrospectively for the few "life belts" already in place.
The report also reminds us that the aim is that any change should at least preserve the the current tax take. It makes a big play of "horizontal equity" and seems to interpret this as collective vehicles should be broadly aligned with individual direct investment.
 
www.irishtimes.com

Is an SSIA-style scheme for equity investors in prospect after the election?

New policy could remove barriers to fund investment such as tax treatment, or provide a tax break to move savings into equities
www.irishtimes.com www.irishtimes.com

Policy on savings is not usually noted as a general election winner. But a number of parties are believed to be looking at the issue for their manifestos. With more than €150 billion of household savings sitting in bank accounts, according to the latest Central Bank figures, there are policy reasons for trying to attract some of it into equity-type investments – both to provide a better return for investors and to channel money into Irish businesses.
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