Tom Brabazon (Dublin Bay North, Fianna Fail)
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230. To ask the Minister for Finance if his Department will abolish the deemed disposal regime as it applies to investments in Exchange Traded Funds and align the taxation of gains on ETFs with the capital gains tax regime at 33%, with tax payable only upon an actual disposal.; and if he will make a statement on the matter. [50928/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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An “Exchange Traded Fund” or “ETF” is an investment fund that is traded on a regulated stock exchange. There is no separate taxation regime specifically for ETFs. ETFs, being collective investment funds, generally come within the regimes set out in the Taxes Consolidation Act 1997 for such funds. The domicile of the ETF will generally determine the applicable fund regime, specifically whether the ETF falls within the domestic fund regime or the offshore fund regime.

Under the domestic fund regime, a ‘gross roll-up’ applies such that there is no annual tax on income or gains arising to a fund, but the fund has responsibility to deduct an exit tax in respect of payments made to certain unit holders in that fund. To prevent indefinite or long-term deferral of this exit tax, a disposal is deemed to occur every 8 years. For ETFs while the fund is not required to apply an exit tax, the Irish resident unit holder will be subject to tax on income and gains arising and must self-assess and include details of income and gains in a timely filing on their income tax return to Revenue.

In October 2024, my predecessor Minister Chambers published the ‘Funds Sector 2030: A Framework for Open, Resilient & Developing Markets’, a wide-ranging review of the funds and asset management sector. The Funds Review 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.

The Funds Review Report includes eight recommendations to promote increased retail participation in capital markets. Recommendations 22 and 23, which concern taxation, include consideration of the removal of the eight-year deemed disposal rule for Irish domiciled funds and life products.

In the Programme for Government, there is a commitment to progress and publish an implementation plan taking into consideration the Funds Review recommendations related to enabling more retail investment. Recognising the complexities within the current regime for the average retail investor, Department officials are actively reviewing options for measures that could be taken to promote increased retail participation in capital markets. It is likely, given the breadth of the Funds Review Report and the work involved, that where appropriate tax measures are identified, the delivery of those measures may 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.