Ireland considers changes to deemed disposal investment tax

Finance Minister Simon Harris has indicated that the Irish government may make progress regarding the controversial ‘deemed disposal’ tax in the upcoming budget. The tax, an anti-avoidance measure introduced nearly 20 years ago, currently applies a 38% rate to notional or unrealized profits on certain investments, such as exchange-traded funds (ETFs) and life assurance-based products, every eight years.

Critics argue the mechanism acts as a deterrent to savers by treating investments as if they have been sold even when no cash has been realized. This process can erode compound gains and increase complexity for investors. While Harris stated that Ireland needs to ‘move beyond’ the current system, he maintained that both tax reforms and a promised new personal investment account are necessary.

The proposed changes come as Irish households face rising living costs and increased scrutiny over the value of long-term savings and pension planning. The new retail investment scheme scheduled for rollout next year will not be subject to deemed disposal rules.