Barry Ward (Dún Laoghaire, Fine Gael)
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280. To ask the Minister for Finance his views on whether the existing level of deposit interest retention tax acts as a disincentive to investment in the stock market; and if he will make a statement on the matter. [66054/25]

Simon Harris (Wicklow, Fine Gael)
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Deposit Interest Retention Tax (DIRT) is a withholding tax that is deducted by Irish financial institutions on deposit interest paid or credited on the deposits of Irish residents. Since 1 January 2020, the DIRT rate is 33%. DIRT is a final liability tax. This means that an individual has no further tax liability in respect of the deposit interest earned. Deposit interest is specifically excluded from the Universal Social Charge. Individuals may however have a liability to Pay Related Social Insurance (PRSI) in certain circumstances. There are various exemptions from the obligation to deduct DIRT on deposit interest paid or credited by financial institutions.

Individuals can invest in the stock market by directly acquiring shares in a company or by investing in an investment fund which includes an Exchange Traded Fund.

Where an Irish resident individual invests directly in a company by acquiring shares in the company, any income payments received (e.g. dividends) from the company are subject to income tax at the individual’s marginal rate of tax and gains from the disposal of shares are subject to capital gains tax at a rate of 33%. Irish resident investors account for this tax through the self-assessment system.

In relation to investments in investment funds, the domicile of the investment fund will generally determine the applicable fund regime, specifically whether the domestic funds regime or the offshore funds regime applies.

Investment funds generally make multiple acquisitions and disposals of assets over the lifetime of the fund and will be in receipt of income and gains in respect of fund assets. Where the relevant fund is an Irish domiciled investment fund, or an investment fund located in the EU, EEA or an OECD member state and which is substantially similar to an Irish domiciled investment fund, the gross roll-up regime applies and there is no annual taxation of the income and gains of the fund. Instead, exit tax arises in respect of payments made to certain unit holders in that fund or on the sale of units by those unit holders. To prevent indefinite or long-term deferral of this exit tax, a disposal is deemed to occur every 8 years. The taxable gain arising on the 8-year deemed disposal (the chargeable event) is the value of the units at the time less the amount invested. Provision is made in Finance Bill 2025 to reduce the rate of exit tax from 41% to 38%.

In respect of investment funds domiciled in the EU/EEA or in another OECD member state, but which are not substantially similar to an Irish investment fund, the applicable tax treatment in respect of income and gains arising will follow general principles of taxation in Ireland. That is, any income payments will be subject to income tax at the individual’s marginal rate of tax, USC and PRSI may apply. Gains on disposals will be subject to capital gains tax at 33 percent.

Funds that are not located in an OECD member state or the EU/EEA are taxed differently depending on whether they are distributing or non-distributing funds. Further information is available on the Revenue website.

The need to grow retail investment in Ireland, and across the EU, is recognised, including in the Funds Review. As set out in the Funds Review Implementation Plan published on Budget Day, and as noted by my predecessor, Paschal Donohoe, in his Budget 2026 speech, a roadmap will be published in early 2026 which will outline how the current system of taxation for retail investment will be simplified and adapted. The roadmap will take account of the recommendations of the funds review in relation to retail investment and developments at an EU level in respect of the Savings and Investments Union.

Barry Ward (Dún Laoghaire, Fine Gael)
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281. To ask the Minister for Finance his views on whether the existing level of capital gains tax acts as a disincentive to investment in the stock market; and if he will make a statement on the matter. [66055/25]

Simon Harris (Wicklow, Fine Gael)
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Capital Gains Tax (CGT) is chargeable on a gain arising on the disposal of an asset, including a residential property, at the rate of 33%. The first €1,270 of chargeable gains of an individual in any year are exempt from CGT.

The existence of a 33% rate of CGT can help maintain a balance between the rate of taxation of capital assets and the higher rate of income tax. There are a number of targeted reliefs including principal private residence relief, retirement relief and revised entrepreneur relief. Exemptions often requires a higher rate in order to generate an appropriate yield.

The Programme for Government commits to maintaining a broad tax base to guard against the need for counter-cyclical fiscal policy in the event of a downturn and to prepare for future budgetary challenges relating to population aging. Capital Gains Tax (CGT) is part of a system to ensure taxation is not focused solely on income tax and that those who benefit from gains in the value of their assets are included within the tax net on an equitable basis.

While Ireland's headline rate of CGT appears high compared with our European counterparts, in order to carry out a fair comparison, account has to be taken of the specific details of various CGT systems in different jurisdictions. This includes examining special rates, and reliefs and exemptions, rather than focusing solely on the applicable headline CGT rates for the purposes of comparison.

While I do not think the existing level of CGT acts as a disincentive to investment in the stock market, CGT as with all taxes, is subject to ongoing review, which involves the consideration and assessment of the rate of CGT and the relevant reliefs and exemptions from CGT. CGT policy and legislation is reviewed as part of the annual Budget and Finance Bill process and as part of wider tax policy considerations.