James Geoghegan (Dublin Bay South, Fine Gael)
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344. To ask the Minister for Finance if he will consider reviewing the current rate of tax on managed funds; and if he will make a statement on the matter. [25822/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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For the purpose of this response, I understand ‘managed funds’ to be a reference to collective investment vehicles. Irish collective investment vehicles (investment funds), which are authorised and regulated by the Central Bank of Ireland, generally operate under what is known as the “Gross Roll-Up” regime. This means that monies invested in such funds can grow on a tax-free basis within the fund. Taxation only occurs at the level of the investor upon receipt of distributions from the fund. This is standard international practice for collective investment funds.

To ensure that the appropriate tax is collected from Irish residents, funds are generally obliged to operate an exit tax regime, which means that the fund deducts the appropriate tax from the distribution to the Irish resident investor and remits the tax deducted to Revenue on behalf of the unitholder. The exit tax deducted by Irish regulated funds under the Gross Roll-Up Regime is called Investment Undertaking Tax (“IUT”). In general, IUT does not apply to unit holders who are non-resident provided that the relevant declarations are in place with the investment undertaking, and the taxation of such investors, if any, is a matter for their country of residence.

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 reforms to the taxation of Irish domiciled funds and to the taxation of Irish domiciled 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. My officials are considering next steps in this regard and these will be brought for my consideration in due course.