Tax on Investments: Exit Tax & CGT

For Irish-Resident individual investors, there are 2 distinct types of tax treatments on listed Investments. Please note that these taxes don’t apply to Pension funds or Charities

41% Exit Tax on Funds:

The rate of tax on growth and income from ‘Funds’ is 41%. This is irrespective of what rate of Income Tax you pay i.e. Standard Rate or Marginal Rate.

This rate of 41% is chargeable on the profits on the sale of the fund or after 8 years, whichever comes first.

• Domestic Funds (such as those available on Insurance Company platforms) are obliged to deduct the 41% at source on behalf of the Investor(s) after 8 years. They remit the 41% directly to Revenue on behalf of the investor.

• Offshore Funds, such as Luxembourg SICAV Funds that are bought through a domestic Stockbroker, are not obliged to remit the 41% Tax to the Irish Revenue, so it is incumbent on the Investor(s) to ‘self-assess’ for the 41% tax after 8 years

Capital Gains Tax Treatment:

Gains on the sale of shares in publicly listed companies and certain collectives are subject to 33% Capital Gains Tax (CGT) on sale. Income from these investments are taxable at the Marginal Rate of Tax.

Losses in CGT assets can offset against gains in other CGT assets.

Importantly, unlike 41% funds, there is no 8-year rule with CGT Investments, so the capital value can grow beyond 8 years without an 8-year anniversary tax