John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context

298. To ask the Minister for Finance whether the recommendations contained in the report on the review of the fund sector, published last year, have been considered by him or the Government; if the several recommendations around changing the tax regime will be implemented; the cost to the exchequer of abolition of the 1% stamp duty, the reduction of the LAET from 41% to 33% and the abolition of the eight-year deemed disposal rule; and if he will make a statement on the matter. [33715/25]

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

As you are aware, in October 2024 my predecessor published “Funds Sector 2030: A Framework for Open, Resilient & Developing Markets.” That report set out 42 recommendations to cement Ireland’s position as a leading global hub for funds and asset management.

This report 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 of the Fund Review Report include consideration of the removal of the eight-year deemed disposal requirement for Irish domiciled funds and life products and alignment of tax rates across different investment choices.

The 2025 Programme for Government has committed to progress and publish an implementation plan for consideration in Budget 2026 taking into consideration the Funds Review recommendations to unlock retail investment and opportunities to grow this sector in Ireland. This is a complex area of taxation that encompasses a wide breadth of tax legislation on domestic funds, life assurance products and offshore funds. Detailed consideration is therefore being given to the best way to bring about the necessary reforms and to support a greater level of retail investment in capital markets. It is likely given the breadth of the Funds Sector 2030 review that the delivery of any agreed associated tax measures will take place over multiple Finance Bill cycles. This work will also take account of developments at an EU level in respect of the Savings Investment Union.

Turning to your questions regarding costs, the Funds Review Report included an estimated costing for implementing recommendations 22 and 23, noting that on a strictly static basis, the cost (excluding the abolition of the life assurance levy) could range from €256 million to €377 million. However, I note you have requested the cost to the exchequer of implementing only specific elements of these recommendations.

I am informed by Revenue that the estimated cost of abolishing the 1% life assurance levy, based on the 2024 yield, is €40 million.

I am also informed by Revenue that in relation to costing the other specific elements of the two recommendations, the cost is not readily available. While it is possible to identify the amounts of tax paid by funds in respect of unit holders, the tax paid by life companies in respect of policy holders (being Life Assurance Exit Tax (LAET)) and income tax accounted for by individuals in respect of their investments in Irish domiciled funds, offshore funds and life products, it is not possible to provide a breakdown of the tax as between the amount relating to the eight-year deemed disposal and the amount relating to the other types of chargeable events.

The table below provides an estimated amount of overall income tax arising in respect of investments in life products and funds, including Investment Undertaking Tax (IUT), LAET and income tax on certain offshore investments.

*Total gross tax liability on income / gains from offshore funds and foreign life policies per Form 11 return. Form 11 data for 2023 and 2024 is not yet available.

** IUT figures are inclusive of both Investment Undertaking Tax and Irish Real Estate Fund Withholding Tax (IREF WHT) receipts. IREF WHT is also regarded as an exit tax.

*** IUT and LAET represent the amount of tax paid to Revenue. In addition to the IUT figure including IREF WHT, it is not possible to identify whether the figures for IUT and LAET represent amounts taxed at 25% in respect of corporate investors or 41% in respect of individual investors.

Roderic O'Gorman (Dublin West, Green Party)
Link to this: Individually | In context

299. To ask the Minister for Finance the tax certification regime that is to be put in place for vaping products and if he will address the concern that using a self-certification process rather than a tax stamp will increase opportunities for black market products; and if he will make a statement on the matter. [33716/25]

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

Chapter 1 of Part 2 of Finance Act 2024 legislates for the introduction of E-liquid Products Tax (EPT). Under the new law, EPT will apply to both nicotine-containing and non-nicotine-containing e-liquid products. Essentially e-liquids are liquids used in e-cigarettes including refill cartridges for refillable devices. Similar to the approach for other national excises, the taxing point will be the first supply of e-liquid product in the State and the tax will follow Revenue’s standard model of self-assessment. Suppliers of e-liquid product will be required to register with Revenue in advance of making a first supply of e-liquid products in the State. These suppliers will be liable to account for and pay the tax. The tax is subject to commencement by Ministerial Order and arrangements are underway to enable the new tax to come into effect later this year.

Ireland currently operates a tax stamp system in accordance with section 73 of Finance Act 2005 (as amended) in respect of two specified tobacco products: cigarettes and roll-your-own tobacco. Ireland’s tax stamp is part of the control regime for the taxation of these particular products. The taxation of tobacco products generally (including cigarettes and roll-your-own tobacco) is harmonised across the EU, which makes the products subject to the strict control and movement system for excisable products (EMCS). The control regime also applies to mineral oils and alcohol. The EMCS is an EU-wide system, administered by national tax authorities, under which the movement of the product is tightly controlled through authorised tax warehouses with duty suspension arrangements. The charge to tax on a harmonised excisable product (such as tobacco) arises when the product is ‘released for consumption’ from the tax warehouse, and in the case of the specified tobacco products, this is the point at which the tax stamps are applied.

As a non-harmonised national excise, the operation of EPT has to be compatible with the EU Single Market rules which preclude the use of cross-border movement controls. These rules mean that e-liquid products coming into the State from other Member States or Northern Ireland (which is part of the Single Market for goods) cannot be subject to the type of cross-border movement controls that are integral to the regime for the existing EU-harmonised excises, such as tobacco.

During the design of EPT, serious consideration was given by Revenue and my Department to the appropriate charging point for the tax. Approaches to other Irish excises were considered as were approaches to similar taxes in other countries. It was concluded that charging EPT at the point of first supply of the product in the State is, on balance, the most appropriate approach. In particular, the alternative model of a ‘released for consumption’ approach to charging EPT would require the development and operation of a complex national (non-EMCS) system of tax warehousing and controls; crucially, these could only have very limited effectiveness in a non-harmonized regime - given that they could only operate on a national basis and without recourse to cross-border controls - and the cost of setting up and operating such a system could not be justified given such limitations on its potential effectiveness.

Ireland’s existing tax stamp is closely integrated to the ‘released for consumption’ tax model used for tobacco. Having regard to the different tax model (‘first supply’) that has been legislated for EPT, it is not clear at this stage that a tax stamp would be a useful tool in securing the collection of the new tax. However, this could be reviewed in the future, in light of the actual experience of operating EPT when it is up and running.

The Deputy raises some issues related to regulation of the vaping industry, including effective restriction of the sale of illegal products. Policy and legislation regarding e-liquid and e-cigarette products, including regulation of their content, and of their sale and promotion is dealt with by my colleague the Minister for Health and her Department, and enforced principally through the network of Environmental Health Officers operating under the Health Service Executive. This will remain the case following the commencement of EPT.