Jim O'Callaghan (Dublin Bay South, Fianna Fail)
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277. To ask the Minister for Finance if the taxation of exchange traded funds is being reviewed; if such funds will continue to be taxed differently than individual stocks; and if he will make a statement on the matter. [7471/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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The term “Exchange Traded Fund” or “ETF” is a general investment industry term that refers to a wide range of investments. ETF investments can take many different legal and regulatory forms even where they are established within the same jurisdiction.

An ETF is an investment fund that is traded on a regulated stock exchange. A typical ETF can be compared to a tracker fund in that it will seek to replicate a particular index.

There is no separate taxation regime specifically for ETFs. Being collective investment funds, they generally come within the regimes set out in the Taxes Consolidation Act 1997 for such funds. The domicile of the ETF will generally determine the applicable fund regime, specifically whether the ETF falls within the domestic fund regime or the offshore fund regime.

Where the domestic fund regime applies, a ‘gross roll-up’ applies such that there is no annual tax on income or gains arising to a fund but the fund has responsibility to deduct an exit tax in respect of payments made to certain unit holders in that fund. To prevent indefinite or long-term deferral of this exit tax, a disposal is deemed to occur every 8 years. Where the offshore fund regime applies, the applicable tax treatment depends on the location and nature of the fund.

To assist taxpayers in determining the appropriate tax treatment for investments in ETFs, Revenue has published guidance which is available at www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-27/27-01a-03.pdf.

Where an Irish resident individual invests directly in a company by acquiring shares (rather than investing in an ETF), any income payments received (dividends) are subject to income tax at the individual’s marginal rate and gains from the disposal of shares are subject to capital gains tax (CGT).

There are currently no plans to review the taxation of Exchange Traded Funds.