Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Finance Act 2000 introduced the gross roll-up taxation regime for investments in domestic funds (in section 58) and for investments in life policies (in section 53). While Finance Act 1990 had introduced anti-avoidance rules that are known as the “offshore funds” regime, Finance Act 2001 (section 72) amended the offshore funds regime to provide for gross roll-up in certain offshore funds that were similar to the Irish funds within the gross roll-up regime.

The general thrust of the 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”. Exit tax applies to the profit element of each chargeable event, and chargeable events originally included –

- the making of relevant payments (which includes any dividend),

- the redemption of the investment, and

- the transfer by an investor of their investment,

Finance Act 2006 introduced the eight-year deemed disposal for all investments that benefited from gross roll-up: that is, investments in Irish funds, investments in life policies and investments in offshore funds that were similar to Irish funds. The eight-year deemed disposal was introduced as a new category of ‘chargeable event’. This amendment was designed specifically to prevent the avoidance of tax by way of indefinite deferral of tax.

My Department has commenced a review of the funds sector - “Funds Sector 2030: A Framework for Open, Resilient & Developing Markets” which, in line with the Terms of Reference, includes the taxation regime for funds, life assurance policies and other related investment products. A public consultation was held from 21 June 2023 to 15 September 2023 and the review is now well advanced. A report is to be presented to me by Summer 2024.