Roadmap For The Taxation Of Retail Investment Published: Funds Perspective

Introduction

The Irish Department of Finance today published “Taxation of Retail Investment: A New Path Forward for Ireland”, a roadmap setting out how the tax framework for retail investors in Ireland could be simplified and adapted over forthcoming national budgets. The objective is to encourage greater participation by Irish savers in capital markets and support the development of the EU Savings and Investment Union (“SIU”).

New Investment Account

The centrepiece of the roadmap is a new “investment account” intended to make investing simpler, more accessible, and tax-efficient for Irish retail investors, with the Government committing to introducing the legislative framework in this year’s Finance Bill and making the accounts available from 2027. The proposal reflects the European Commission’s 2025 recommendation that Member States introduce tax-advantaged savings and investment accounts to encourage greater retail participation in capital markets.

Key features of the investment account will include:

• A taxed model with a tax-free threshold: tax will be applied annually, at a flat rate, only on the account value in excess of the threshold, calculated using average valuations (potentially based on daily Net Asset Value data); the so-called “deemed disposal” rule will not apply, and the tax charged will be final.
• Annual contribution limits, the tax-free threshold, and the applicable tax rate will be confirmed in Budget 2027.
• Eligible providers will include MiFID-authorised firms and regulated fund managers, including non-Irish EEA-authorised providers, who will be responsible for operating the taxation for investors.
• Qualifying products are expected to include listed shares and bonds, retail investment funds (including ETFs), and insurance-based investment products. Direct investment in derivatives and crypto-assets will be excluded.
• Cash holdings will be restricted to facilitating investment transactions.
• No minimum holding period is proposed and the Government intends to facilitate tax-neutral transfers between providers, subject to operational feasibility.
• Fees will be subject to existing transparency requirements, with a policy expectation that fees remain minimal and internationally competitive.

Wider Reform Agenda for Irish Retail Investors

Beyond the new investment account, the roadmap signals that the Government will continue to examine broader reform of the taxation of investment funds for Irish retail investors from Budget 2028 onwards, focusing on tax rates, deemed disposal and administrative simplification.

Points to note:

• The roadmap indicates that IUT could move closer to the 33% capital gains tax (“CGT“) rate.
• The Government remains open to changes to the deemed disposal rule but has not committed to its removal.
• Simplification measures under consideration include a bespoke regime for the taxation of Irish retail investors who invest in ETFs and other funds held through recognised clearing systems, together with changes to offshore fund reporting requirements.

Budget 2027 and the forthcoming Finance Bill will be key milestones, with the detailed design of the investment account likely to have important implications for retail fund distribution and product development.