I propose to take Questions Nos. 265 and 266 together.
There is no separate taxation regime specifically for Exchange Traded Funds (ETFs). How returns on investments in ETFs are taxed will depend on the domicile and nature of the ETF.
Within the Taxes Consolidation Act 1997, there is a domestic fund regime which applies to all Irish domiciled funds, while the offshore funds regime applies to funds domiciled outside of Ireland.
It is not possible to segregate the tax paid in respect of investments in ETFs from that paid in relation to other funds. This means that the data requested is not available.
The rates of tax applicable to Irish investors’ income or gains arising in respect of investments in the different types of ETF are set out below:
Domicile and nature of ETF
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Rate of Tax
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An Irish domiciled ETF
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41% for individuals
25% for corporates
60% where the ETF is a Personal Portfolio Investment Undertaking
USC and PRSI do not apply
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An ETF that is domiciled in the EU, EEA or an OECD member state which is equivalent to an Irish domiciled ETF.
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41% for individuals
25% for corporates
60% where the ETF is a Personal Portfolio Investment Undertaking
USC and PRSI do not apply
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An ETF that is domiciled in the EU, EEA or an OECD member state which is not equivalent to an Irish domiciled ETF
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Individual investors who receive income payments (dividends) will be subject to income tax at the standard (20%) or higher rate (40%) as appropriate, and PRSI and USC may apply; CGT at 40% will apply to gains.
Corporate investors who receive income will be taxed at 12.5% or 25%, depending on their facts and circumstances, and at an effective rate of 33% on gains.
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An ETF that is not domiciled in the EU, EEA or an OECD member state and which is a Distributing Fund (broadly, a fund that distributes its profits to unitholders from year to year)
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Individual investors who receive income payments (dividends) will be subject to income tax at the standard (20%) or higher rate (40%) as appropriate, and USC and PRSI may apply; CGT at 33% will apply on gains.
Corporate investors will be taxable at 25% on income and 40% on gains.
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An ETF that is not domiciled in the EU, EEA or an OECD member state and which is not a Distributing Fund
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Income payments (dividends) and gains will be subject to income tax at the standard (20%) or higher rate (40%) as appropriate for individuals. USC and PRSI may also apply.
25% on income and gains for corporates
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Where the units are in an Irish domiciled ETF and are not held in a clearing system, the ETF must operate the tax as outlined above. In all other cases, the Irish investor must account for any tax arising under the self-assessment system.
Further information on the taxation of ETFs is available on the Revenue website at: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-27/27-01a-03.pdf
It should also be noted that on 22 October 2024, I published the Report of the Funds Sector 2030 (Review). The Review Team has developed a set of recommendations, including recommendations specifically related to ETFs. The Report of the Review is available at: www.gov.ie/en/publication/da341-funds-sector-2030-a-framework-for-open-resilient-and-developing-markets/