Dáil Éireann Debate, Tuesday - 10 October 2023
122. Deputy Fergus O'Dowd asked the Minister for Finance to consider proposals (details supplied) in respect of exit tax applicable to life insurance investment arrangements; and if he will make a statement on the matter. [43945/23]
View answer123. Deputy Ged Nash asked the Minister for Finance if he is reviewing the position as regards the exit tax applicable to life insurance investment arrangements in the context of the forthcoming Finance Bill; his views on a matter (details supplied); and if he will make a statement on the matter. [43970/23]
View answerI propose to take Questions Nos. 122 and 123 together.
As the Deputies are aware Life Assurance Exit Tax (LAET) is payable on the gain made on a life assurance policy. The Finance Act 2000 introduced the gross roll up taxation regime for life assurance policies. The general rule for an investment subject to a gross roll up scheme is that no annual tax is applied to the income or capital gains arising. Instead, exit tax is required to be deducted on the occurrence of a “chargeable event”. The Finance Act 2006 introduced a new chargeable event. This provided that a disposal is deemed to occur on the ending of an 8 year period beginning from the creation of the investment undertaking and then each subsequent 8 years. This means that any growth in the life assurance policy is not subject to an annual tax, instead a chargeable event arises every 8 years. LAET is payable on any gain in value at the date of the chargeable event.
LAET is being considered by the Department as part of the wider review currently being carried out on Ireland’s funds sector. I published the Terms of Reference for a Review of the Funds Sector in Ireland ("Funds Sector 2030: A Framework for Open, Resilient & Developing Markets") on 6 April 2023. As per the Terms of Reference, and following on from the recommendation of the Commission on Taxation and Welfare, the Funds Review will examine, inter alia, the taxation regime for funds, life assurance policies and other related investment products.
A public consultation, launched as part of the Funds Review, closed on 15 September 2023. The Funds Review Team are now reviewing and analysing the submissions received and will continue to engage with stakeholders to explore issues raised in responses.
The Review Team will report to me in Summer 2024 and I look forward to considering its findings. It would not be appropriate to speculate on the outcome of the review in advance of its completion.
