Paul McAuliffe (Dublin North-West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

53. To ask the Minister for Finance his plans to review and reform deemed disposal tax for Irish domiciled funds and life products. [5008/25]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Finance Act 2000 introduced the gross roll-up taxation regime for investments in domestic funds and life policies. 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”, which originally included –

- the making of relevant payments,

- 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; including investments in Irish funds and life policies. This was introduced as a new category of ‘chargeable event’, designed specifically to prevent the avoidance of tax by way of indefinite deferral of tax.

In October 2024, my predecessor published the ‘Funds Sector 2030: A Framework for Open, Resilient & Developing Markets’, a wide-ranging review of the funds and asset management sector. The Review fulfilled certain recommendations of the Commission on Taxation and Welfare 2022 report which called for, among other things, an examination of the taxation regime for funds and life assurance policies, with the goal of simplification and harmonisation where possible.

The Report arising from the Review sets out a series of recommendations to ensure that, in pursuit of continued growth in the funds and asset management sector, Ireland’s funds sector framework remains resilient, future-proofed, supportive of financial stability and a continued example of international best-practice. Recommendations 22 and 23 included consideration of the removal of the eight-year deemed disposal requirement for Irish domiciled funds and life products.

The 2025 Programme for Government has committed to progress and publish an implementation plan taking into consideration the Funds Review recommendations to unlock retail investment and opportunities to grow this sector in Ireland and I, working with my officials, will consider next steps in this regard over the coming months.