Paschal Donohoe Expresses Caution Over Scrapping Tax on Unrealised ETF Gains Amid Ongoing Uncertainty
The discussion surrounding the taxation of unrealised gains in exchange-traded funds (ETFs) continues to evolve. Recent assessments have raised the prospect of abolishing the eight-year deemed disposal rule. This rule currently taxes unrealised gains every eight years. However, the latest budget has opted for a more conservative approach by reducing the exit tax from 41% to 38% instead of scrapping the rule entirely.
Minister Paschal Donohoe’s Remarks
During a recent session in the Dáil, Minister for Finance Paschal Donohoe urged caution regarding any potential changes to tax regulations on unrealised gains. He emphasized that any major modifications to deemed disposal are far from certain, stating, “I am not giving any indication as to what will be dealt with in next year’s Finance Bill.” His comments signal that investors should remain vigilant.
Future Considerations for ETF Investors
Donohoe indicated that there will be a focus on simplifying tax treatments for smaller investors. He pointed out that the removal of the deemed disposal rule could incur a cost of approximately €142 million, which may increase. This signifies a considerable budgetary decision with potential implications for tax receipts.
- Current exit tax on ETFs reduced from 41% to 38%
- Deemed disposal rule remains in effect for now
- €142 million estimated cost to remove the rule
- Significant implications for small investors and tax policy
Irish households currently hold a remarkable €168 billion in low-interest bank deposits. The potential abolition of the deemed disposal rule could lead to higher overall tax receipts by encouraging greater investment in ETFs.
In conclusion, investors considering ETFs should continue to operate under the current regulations regarding deemed disposal. The Minister’s remarks leave uncertainties, indicating that the future of tax treatment on unrealised ETF gains is still being evaluated.
