Michael Healy-Rae (Kerry, Independent)
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38. To ask the Minister for Finance the reason persons are expected to pay such a high rate of tax (details supplied) when they are exiting from investments; and if he will make a statement on the matter. [23492/23]

Michael McGrath (Cork South Central, Fianna Fail)
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Individual investors who are tax resident in Ireland may be subject to exit tax at a rate of 41% on the following types of investments under what is known as the “gross roll-up” taxation regime:

• Investments in Irish funds,
• Investments in life policies,
• Investments in offshore funds, and
• Investments in offshore life policies.

The general thrust of the gross roll-up regime is that there is no annual tax on income or gains arising within the investment. However, exit tax must be deducted on the occurrence of a “chargeable event”.

With respect to an investment in Irish funds, exit tax applies to the profit element of each chargeable event, and such chargeable events include –

• the making of relevant payments (which includes any dividend),
• the redemption of the investment,
• the transfer by an investor of their investment,
• the appropriation or cancellation of units by a fund to discharge tax payable on a gain arising from a transfer of units by a unit holder; and
• on the ending of an 8-year period beginning with the acquisition of a unit in a fund, and each subsequent 8-year period beginning when the previous one ends. This is commonly referred to as a deemed disposal.  The purpose of the deemed disposal is to prevent indefinite roll-up within the fund.

• the maturity of the life policy,
• the surrender in whole or in part of the rights conferred by the life policy,
• the assignment in whole or in part of the life policy, and
• the ending of an 8-year period beginning with the inception of the life policy and each subsequent 8-year period beginning when the previous one ends. Again, the purpose of the deemed disposal is to prevent indefinite roll-up within the policy.

The rate of exit tax applied is generally 41% in the case of an individual (or 60% in certain instances where the investment is under the personal control of the taxpayer). A rate of 80% applies where a payment from a personal portfolio life policy is not correctly included in the taxpayer’s tax return.

USC and PRSI do not generally apply where exit tax applies.  The fund or life company is responsible for operating exit tax and paying it over to Revenue.

Review of the taxation of investments

On 6 April 2023, I published the Terms of Reference fort a review of Ireland’s funds sector and produce a report ‘Funds Sector 2030: A Framework for Open, Resilient & Developing Markets’. This review will look at a range of issues including taxation (on foot of the recommendations of the Commission on Taxation and Welfare). The Terms of Reference are available at  www.gov.ie/en/publication/153a5-funds-sector-2030-a-framework-for-open-resilient-developing-markets-terms-of-reference/

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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39. To ask the Minister for Finance the estimated full-year cost of reversing the 2023 carbon tax increase and postponing the 2024 increase; and if he will make a statement on the matter. [23527/23]

Michael McGrath (Cork South Central, Fianna Fail)
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I am advised by Revenue that the Revenue Ready Reckoner can be used to estimate the effect of changes to the tax code, including on page 23, the estimated full year cost or yield of potential changes to the Carbon tax rates. The Ready Reckoner is available at the following link:

www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf