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Review backs 33% tax rate on funds

A review of the funds industry in Ireland has recommended changes in the way some investment products are taxed.

It calls for the tax on Irish-domiciled investment funds and life-assurance products to be changed to 33% to align it with the current rate applying to equities.

The Funds Sector 2030 report, published by the Minister for Finance Jack Chambers, also calls for the removal of deemed disposal for Irish-domiciled funds and life products.

Roadmap ‘not straightforward’

Under the current regime, disposal of assets is deemed to occur every eight years, when investors must pay tax on any gains in that period, even if they have not sold their fund.

The Department of Finance described these proposals as “big changes” that could help many people to save or invest for major life events or for retirement.

It warned, however, that the roadmap to simplification was “not straightforward” and could take a few years to implement, if agreed by the next Government.

On property investment, the report recommends replacing the current system of taxing Irish Real Estate Funds (IREFs) with an entity-level tax, to enable greater certainty and stability over the taxation of rental income arising in Ireland for both industry and the authorities.

Section 110

It does not suggest any substantive change to the system governing Real Estate Investment Trusts (REITs).

The review calls for legislative change to allow Revenue to collate data on large landlords and share that information with relevant parties in the civil and public service involved in policymaking on property.

It also makes recommendations aimed at improving transparency in the section 110 regime, which covers companies that are formed to securitise, or trade, assets. 

These include legislation to enable Revenue to publish a list of SPEs (special-purpose entities) availing of the section 110 regime – including the name of the entity.