Junior finance minister Robert Troy recently signalled that the Government was finally going to tackle Ireland’s deemed-disposal regime for exchange-traded funds (ETFs).
Deemed disposal, which requires investors to pay tax every eight years on gains in ETFs, even if they have not sold them, is “from a bygone era”, he said.
While he was “not putting words” into Minister for Finance Simon Harris’s mouth, “I think he recognises that it needs to be addressed”. This must happen, he added, “before any new savings and investment account is launched.”
Well, no. Days later, the Government confirmed that Budget 2027 would provide full details of the new Savings and Investment Account (SIA), with investments held within it exempt from the deemed disposal rule.
However, reform of the existing regime has been put off again, with the Government now saying that even reviewing deemed disposal can wait until Budget 2028 “and beyond”.
It’s a long time to spend considering a problem that successive governments have already spent years considering.
The Commission on Taxation and Welfare first called for a review in 2022. The Funds Sector 2030 review followed in 2023 and reported in October 2024, recommending the removal of deemed disposal and the introduction of limited loss relief.
Now, having spent four years considering the problem, government has decided to consider it a little longer, with further reform something to consider from 2028 onwards.
Additionally, delay is not the only problem. The Government’s new roadmap explicitly says it does not propose introducing loss relief.
An investor can therefore make €5,000 on one ETF and lose €5,000 on another, making no overall gain but still having to pay tax.
Investors will no doubt be watching the details of the new SIA closely, but many will be disappointed that reform of the wider regime has been kicked further down the road.