Don't like how Ireland taxes investments? Now's your chance to do something about it!

[undecided00]

@gardenlady So you're proposing that ETFs should be taxed exactly like ITs, with 33% exit tax, no DD, and no accumulation of dividends (and hopefully also allowing loss deduction)?

I thought you meant simply replacing DD with dividends, in which case the calculation will be different.

 

[gardenlady]

@undecided00

you're proposing that ETFs should be taxed exactly like ITs, with 33% exit tax, no DD, and no accumulation of dividends (and hopefully also allowing loss deduction)?

Exactly.

 

[undecided00]

@gardenlady I'm all for that. But I'd like to have the ability to automatically reinvest dividends (DRIP), and get an easy to use report of dividends earned in a year so I can fill out form 11 and pay taxes once a year without too much hassle. Having to inform of each individual ETF purchase so they can check if I paid DD 8 years later is exhausting, and I don't like that it incentivises me to invest in fewer ETFs or DCA less frequently because of that.

*: If they make this change, I'd move from DeGiro to IBKR to avail of their DRIP feature.

 

[jeremy444777]

@gardenlady I'm a bot, bleep, bloop. Someone has linked to this thread from another place on reddit:

• [/r/irelandonreddit] [r/irishpersonalfinance] Don't like how Ireland taxes investments? Now's your chance to do something about it!

[sup]If you follow any of the above links, please respect the rules of reddit and don't vote in the other threads.[/sup] [sup](Info[/sup] [sup]/[/sup] [sup]Contact)[/sup]

 

[utookmyname]

@gardenlady Increase the vat threshold, currently too low at €37.5k turnover.

 

[shyamolishah1]

@gardenlady Abolish DD.

RothIRA type account where investments are shielded from Tax and can be withdrawn after 60, anything before that you have to pay tax and a penalty.

€10,000 CGT Allowance.

€1000 DIRT Allowance.

 

[andramaxy]

@gardenlady

Deemed disposal's affect on compounding ultimately leads to smaller returns for the investor and as a result a smaller tax take for the government.

I think you'd be better off leaving this out of your submission. What you're effectively asking is that the government become an investment partner with you in the hopes of them raising more tax revenue in the much longer-term. A sovereign wealth fund with Joe Public as the investment manager . I really don't think that's a compelling/serious argument.

An ISA style system (where €X could be invested each yield and be shielded from tax, withdrawable at any time) would be a huge assistance to those saving for housing and would mean that lower earners wouldn't have to worry about tax at all

I know DD is hated around here, but the topic of taxing unrealised gains is being discussed by lots of governments at the moment, I really don't see it being rolled back in Ireland, if anything I think 10-20 years from now it will be broader and applied in other countries. I think DD may be unwinnable and will put your submission in the "DD Hate" pile. To me your suggestion of an ISA scheme is the answer though. Not only does it avoid the average person without an accountant having to worry about DD, it also makes it easier for them to invest in other assets as well (taxation on ITs and regular shares is no cakewalk either!).

My view would be to come up with a single response we could all use that is concise, avoids trying to fight unwinnable battles and does not argue for obvious gifts to the wealthy that the government could never go for heading into an election against parties that are gaining traction claiming the government is in the pockets of the wealthy or wealthy themselves.

I would make the argument that wealth inequality is on the rise and allowing the less well off make returns on their investments close to what the wealthy can achieve is one way to combat this inequality. An ISA scheme would facilitate this and reduce the reliance on property investment, which has badly distorted that market.

 

[gardenlady]

@andramaxy I agree that it is a bit hard to know what the winable battles are here.

I think most individual investor wants DD to be abolished, but it is hard to see an argument for doing so apart from "I want to make more money". However I do think there is potential for it to be abolished. They want to simplify tax (DD isn't simple to understand for the average Joe) and they want to harmonize treatment across all investments (which would mean having to apply DD to illiquid investments like property).

I agree that an ISA style scheme would be great, however I do wonder how politically palatable it would be. I could see the left wing politicians claiming it as massive tax breaks for those that can invest while much of the country is living paycheque to paycheque.

My view would be to come up with a single response we could all use that is concise

If someone wants to put together such a proposal then I would be happy to row in behind it.

 

[lorrainekat]

@gardenlady Just copy the UK's policies. Our rates are ridiculous.

 

[andramaxy]

@gardenlady

I could see the left wing politicians claiming it as massive tax breaks for those that can invest while much of the country is living paycheque to paycheque.

Which it is to be fair. But suggestions to reduce DIRT, reduce CGT, reduce Exit Tax to CGT rates etc. would all be much bigger gifts to the better off who earn very significantly more in these tax regimes than the average person tends to. I think an ISA scheme is a good compromise though, if you're going to do anything. Even somebody who only had €50 a month to save could benefit from better returns with an ISA scheme in-place, but the complexity of stock market investing and any of the tax regimes currently put people like this off.

 

[mslady63]

@andramaxy There's multiple people calling for a template response in the thread but no one took a stab at it yet, would you by any chance rephrase this as something we could all copy paste in ? Plus or minus minor edits for people with strong feelings on something particular I'm sure.

You certainly sound like you know what you're talking about, at least it sounds reasonable to me

 

[serenity19]

@mslady63 Copy the link UKs main policies. Simples. Our current taxation polices are ridiculous compared to the UK.

 

[resjudicata]

@gardenlady We see all these claims about tax cuts in the next budget will cause inflation, and while they’re not wrong, we still have inflation with excess taxes clearly. What’s the best way the government can give this back to the population at the best benefit? Tax incentivised savings accounts. Either more relief on pensions or UK ISA / Roth IRA equivalents. Government can still collect some tax but let us grow tax free then. Some of that surplus can go towards reducing state pension liabilities in the future through people having better savings / investments for retirement. It’s the most logical conclusion without stoking inflation now through tax cuts and the government having better balanced books overtime.

 

[louistra]

@gardenlady For those looking to make a simple submission just on the topic of deemed disposal. My current understanding is that you

1. On the webpage, click Submissions and create an account
2. You need to add a title to your submission and choose your stakeholder group
3. I believe (but would appreciate confirmation) that you need to choose Section 5. Taxation of investment products and Question 27.

Or does someone thing that DD needs to be submitted under another section?

 

[jpete]

@gardenlady In the context of the products that Life Assurance Exit Tax (LAET & DD @ 41%) applies to, but which no one appears to have referenced already, even though savers/investors are heavily invested in:

• The 1% Goverment Levy is adding circa 0.15% per annum to the TER
• You cannot move from an expensive 1.5% AMC contract to a 0.65% AMC contract without it having a detrimental effect on you via LAET, so it's anti-competitve
• You cannot 'plan' for the future (think children's education) where the tax rate can increase by 78% from the day you set the plan up to 6+ years down the road. A defined rate of 25% +/- 3% might give savers/investors some solace in their planning.
• You can offsest losses against gains within the same contract across different funds but you cannot do this across products
• You don't get an annual exemption of €1,270
• It's not self-asssesed. The provider takes care of all the tax for you so there's zero tax evasion. This is a cost on the provider but of huge benefit to Revenue. It's a cost to the plan holder (passed on) and again the Government are making the products more expensive.
• Yes, to a gross roll-up type savings/investment product for circa €10,000/€15,000 pa
• One cannot help but think that LAET is a penal tax on the industry (passed on to the customer) because 'someone' else has to pay for the healthy tax relief at 40% for a lot of pension policy holders.

 

[mintmemory]

@gardenlady Get rid of DD. That’s it. Get rid of DD

 

[covered4god]

@gardenlady I encourage everyone to make a submission! I have just made a submission regarding simplifying and reducing the ridiculously high taxation rate on ETFs, it only took 5 minutes. This is a good chance to make your views heard by the Department

 

[xsmbthu3hoa]

@gardenlady In addition to the points raised above, I would be nice if the Government added some consideration for inflation (even temporarily) on capital gains, given current high inflation rates. In particular, as capital gains tax on your assets is treated differently depending on what the asset is.

This didn't make a big difference when inflation was 1-2% per annum. However, if its 5-8%, then it does.

For instance, if you invest in stocks, and the stocks gain 5% while inflation runs at 7%. In real terms, you didn't actually have a capital gain, you had a loss. However, the Government still wants to increase that loss to inflation by taking a cut of your 5% "gain".

Conversely, had your money locked up in your primary residence, and prices kept up with inflation, when you sell the house, you don't pay capital gains tax on the increase.

That's a bit of a kick in the teeth if you don't currently own a house, but have a chunk of money tied up in the market while you were waiting to buy a house.

Some countries apply a lower CGT rate if the investments were held for a certain period of time. That could also work.

 

[call_me_tom]

@gardenlady I think the main issues have been mentioned already except for one.

Ireland should have a self-directed personal pension scheme, similar to the SIPP in the U.K.

It may face headwinds because I’m sure Aviva, Irish Life et al have lobbied the government over the years. However, it would allow people to save and invest for their retirement in a tax efficient way. Those of us who are interested in investing could do so whilst minimising the amount of active management and other fees payable to Ireland’s pension fund managers.

Maybe it should be linked to the ISA suggestion I.e. an evolution of the introduction of an ISA style scheme in Ireland.

 

[kayzforgod]

@call_me_tom There's self directed PRSA like Davy Select. Doesn't that do the same thing?