Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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289. To ask the Minister for Finance if he will provide an update on the Government’s position regarding the deemed disposal rule for Irish-domiciled investment funds; if he plans to reform or abolish this measure in line with recommendations from the Tax Strategy Group and the Oireachtas Joint Committee on Finance, Public Expenditure, Public Service Reform and Digitalisation, and Taoiseach ; and the timeline for the proposed roadmap on investment taxation reform announced in Budget 2026. [56655/25]

Eoin Hayes (Dublin Bay South, Social Democrats)
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303. To ask the Minister for Finance the position regarding reforms to the deemed disposal tax in respect of exchange traded funds; and if he will make a statement on the matter. [57102/25]

John Lahart (Dublin South West, Fianna Fail)
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321. To ask the Minister for Finance the reason the Government took no actions to address the long-standing issue of deemed disposal for Irish investors; and if he will make a statement on the matter. [57306/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 289, 303 and 321 together.

The Deputies have asked about deemed disposal and Exchange Traded Funds (ETFs).

Deemed disposal rules apply to investments in Irish domiciled investment funds and life assurance products, as well as equivalent offshore funds and certain foreign life assurance products. For Irish domiciled investment funds and life assurance products, the gross roll up regime applies, and taxation occurs upon the occurrence of a chargeable event, including deemed disposal. Under the deemed disposal rules, and regardless of whether a disposal in fact occurs, tax is levied eight years after an investment is made, and every subsequent eight years. The tax is levied on any gain in the value of the investment from the date of acquisition to the date of the deemed disposal. On the ultimate disposal of the investment, any tax paid because of a deemed disposal is allowed as a credit against the final tax liability. Deemed disposal was introduced as an anti-avoidance measure.

The taxation of ETFs depends on the domicile of the ETF. Irish domiciled ETFs invested by Irish residents are subject to the tax regime that applies to equivalent offshore funds in the EU, EEA or in an OECD member state with which Ireland has a double taxation agreement, and are therefore subject to deemed disposal as a result of the deemed application of the offshore rules.

As the Deputies may be aware, the final report of the Funds Review, ‘Funds Sector 2030: A Framework for Open, Resilient & Developing Markets’ was published in October 2024 and included recommendations to support and encourage retail investment, including the removal of deemed disposal. A focus on retail investment is also a key aspect of the European Union Savings and Investment Union.

Recognising the complexities of the current system, I am committed to taking the necessary action to support retail investment in Ireland. The way forward needs to be carefully planned and considered so that the overall approach is consistent and coherent, supporting retail investment while retaining important and necessary anti-avoidance protections, taking account of potential Exchequer impacts. Therefore, my officials are developing a roadmap for the taxation of retail investment, which will set out the intended approach to simplify and adapt the tax framework to encourage retail investment in future Finance Bills. The roadmap will also take account of developments at EU level in respect of the Savings and Investments Union and is expected to be published by early 2026.

While work on the roadmap is underway, I have taken action in Budget 2026, announcing changes to the relevant applicable tax rates. Finance Bill 2025 provides for a reduction in the rate of Investment Undertaking Tax (IUT), Life Assurance Exit Tax (LAET) and the rate of tax applicable to investments in equivalent offshore funds and certain foreign life assurance policies from 41% to 38% from 1 January 2026.