Fund Sector 2030
Fund Sector 2030
The outgoing Irish Government published a white paper review of Ireland’s asset management and investment funds industry on 22nd October, "Funds Sector 2030". An important part of this included a discussion of the taxation aspects of encouraging retail investment in Ireland as an adjunct to encouraging savings and investment for Irish citizens and residents, as a complement to the encouragement of international financial services in the funds industry. Given that these may well feature in the new Programme for Government, can you highlight and discuss some of the key tax suggestions in the 'Funds 2030' Report?
Lee Kavanagh, Manager, Financial Services Tax: "The Final Report on the Funds Sector 2030 review was published on 22 October 2024. The purpose of the review was to examine Ireland’s funds sector framework to ensure it is up-to-date, taking account of the significant developments in recent years to support the long-term growth in the sector. The report makes 42 recommendations across nine areas, including legal structures and products, the regulatory and supervisory regime for funds, harnessing technology, enabling retail investment, structured finance and sustainable finance, i.e. the role of the sector in supporting the green transition.
One key aspect of the review was the discussion on the taxation aspects of encouraging more retail investment in Ireland as an adjunct to encouraging savings and investment for Irish citizens and residents. One of the fundamental recommendations from this discussion calls for the reform of the taxation of Irish domiciled funds to align the treatment with the treatment of equivalent products offered in EU, EEA and OECD territories. In order to help this alignment, the final report proposes to remove the 8-year deemed disposal requirements, align the tax rates for Investment Undertaking Tax and Life Assurance Exit Tax with the current CGT rate of 33% and to allow for a limited form of loss relief.
The proposed removal of the 8-year deemed disposal is welcome as by removing this rule, the government aims to simplify the holding of investments for the long haul without the burden of a tax hit every 8 years, even if the investment has not been disposed of and for retail investors, this should make investing in Irish funds more attractive.
There are similar proposals for changes to the taxation of Irish domiciled life products along with the proposed removal of the 1% life assurance levy. This would be a welcome change as the levy added extra costs to life assurance products which are often used by retail investors for long-term savings. Some other key suggestions to enable more retail investment from the final report are to prioritise work to simplify and consolidate the tax regime for offshore funds and to establish an annual savings and investments forum which is to be led by the Department of Finance and supported by the Central Bank of Ireland and Consumer Protection Commission.
Overall, we welcome the report’s recommendations set out above aimed at encouraging more retail investment in Ireland and look forward to seeing these proposals hopefully introduced in the near future to make retail investment a more attractive option in Ireland."
Lee Kavanagh, Manager, Financial Services Tax: "The Final Report on the Funds Sector 2030 review was published on 22 October 2024. The purpose of the review was to examine Ireland’s funds sector framework to ensure it is up-to-date, taking account of the significant developments in recent years to support the long-term growth in the sector. The report makes 42 recommendations across nine areas, including legal structures and products, the regulatory and supervisory regime for funds, harnessing technology, enabling retail investment, structured finance and sustainable finance, i.e. the role of the sector in supporting the green transition.
One key aspect of the review was the discussion on the taxation aspects of encouraging more retail investment in Ireland as an adjunct to encouraging savings and investment for Irish citizens and residents. One of the fundamental recommendations from this discussion calls for the reform of the taxation of Irish domiciled funds to align the treatment with the treatment of equivalent products offered in EU, EEA and OECD territories. In order to help this alignment, the final report proposes to remove the 8-year deemed disposal requirements, align the tax rates for Investment Undertaking Tax and Life Assurance Exit Tax with the current CGT rate of 33% and to allow for a limited form of loss relief.
The proposed removal of the 8-year deemed disposal is welcome as by removing this rule, the government aims to simplify the holding of investments for the long haul without the burden of a tax hit every 8 years, even if the investment has not been disposed of and for retail investors, this should make investing in Irish funds more attractive.
There are similar proposals for changes to the taxation of Irish domiciled life products along with the proposed removal of the 1% life assurance levy. This would be a welcome change as the levy added extra costs to life assurance products which are often used by retail investors for long-term savings. Some other key suggestions to enable more retail investment from the final report are to prioritise work to simplify and consolidate the tax regime for offshore funds and to establish an annual savings and investments forum which is to be led by the Department of Finance and supported by the Central Bank of Ireland and Consumer Protection Commission.
Overall, we welcome the report’s recommendations set out above aimed at encouraging more retail investment in Ireland and look forward to seeing these proposals hopefully introduced in the near future to make retail investment a more attractive option in Ireland."