ETF Tax Ireland - how Exchange Traded Funds are taxed in Ireland

What is an exchange-traded fund (ETF)

An Exchange Traded Fund (ETF) is a basket of securities/shares that trades on a public exchange like a share. ETFs can track virtually any asset class, including stocks, bonds, commodities, and currencies.

ETFs tend to bundle certain verticals of stocks together like energy stocks, green stocks, or travel stocks. They are attractive to an investor who might have expertise in the particular vertical but not the individual company. An ETF is often seen as a good hedge.

How are ETF(s) taxed in Ireland?

Since February 2023, ETFs are taxed in the following way:

• The gains from ETFs are taxable at 41% (taxed as income)
• Losses on funds cannot be written off against other capital gains

This is very important. ETFs are extremely popular investments and make a lot of sense from an investment perspective but they may not be tax efficient. The majority of people invest in ETFs via online brokerages like Dejiro or Interactive Brokers. These platforms make investing easy but they do not offer any meaningful tax advice.

Remember, when investing you need to consider both the potential for investment gains and how these gains are taxed. If you ignore the latter, then you will reduce your gain.

We can help you determine if you can avoid paying taxes on your ETF earnings. Click here to know more. 

How do I avoid taxes on my ETF?

If you are a Non-Dom and tax resident in Ireland then there are certain ETFs that do not trigger an Income tax activity in Ireland. 

You need to check this in the prospectus of each ETF. It tends be involve opaque and complex tax-type language so we strongly recommend that you consult with a tax expert before you purchase one of these EFTs.

How are ETFs taxed for Non-Doms in Ireland?

It depends. ETFs that are domiciled in the EU & OECD are not subject to remittance for Non-Doms. All gains are taxable and your Non-Dom status is not relevant. 

As the majority of ETFs owned by Irish tax residents are based in the EU, this means there is no tax advantage in being a Non-Dom and owning these types of ETFs. 

Discover how Non-Doms in Ireland can benefit from tax savings on ETF investments with Nathan Trust. Pay only €30 to get your ETF tax verified.

 

What is a Non-Dom and how do I know if I am one?

A non-dom is an individual claiming non-domiciled tax status; they may be tax resident in Ireland but are not planning on staying in the country permanently.  Typically, they are born and education in a different country. 

So, despite having lived in Ireland for many years, if their ultimate intention is to leave, they can potentially claim to be a non-dom on their annual Form11 tax return.

How long can you domicile in Ireland before this changes?

Unlike in the UK, there are no ‘deemed domicile’ rules in Ireland. Therefore, a person can continue to use the remittance basis even if they are resident in Ireland for several years – subject to them not acquiring an Irish domicile of choice of course.

Get your ETFs verified for tax savings from our experts in Nathan Trust. Minimise your tax burden and maximise your potential gains.