- Wednesday 15 October 2025
The Government’s recent decision to reduce the rate of Exit Tax on Irish investment profits from 41% to 38% has been presented as a move toward competitiveness. However, from our perspective, this change is largely cosmetic and fails to address deeper structural inconsistencies that continue to distort financial planning and investment behaviour.
A Nominal Change, not a Meaningful Reform
Exit Tax applies primarily to Irish-domiciled investment funds and life assurance products. When investors sell or are deemed to have sold these investments, gains are taxed — now at 38%, down from 41%. But despite the modest reduction, the core problems remain unchanged:
- Unequal treatment: Exit Tax investors still pay more than those under the Capital Gains Tax (CGT) regime (33%).
- No loss relief: Investors cannot offset investment losses, unlike those subject to CGT.
- Deemed disposal rules: Gains are taxed every eight years, even if the investment isn’t sold.
- Reduced flexibility: This structure discourages long-term, tax-efficient investing.
These disparities create a philosophical inconsistency in how Ireland treats different investment types — penalising collective investments and rewarding direct equity ownership. The 3% cut in rate does not fix what is essentially a systemic flaw that undermines efficient, fair, and transparent investment planning.
The Missed Opportunity for Harmonisation
What the investment community hoped for was true harmonisation between the Exit Tax and CGT systems — a single, coherent approach that simplifies compliance and supports portfolio diversification. This issue is particularly relevant for our clients, many of whom hold substantial single-company stock positions from their employers. A harmonised tax regime would have allowed these individuals to:
- Gradually diversify from employer shares into funds or ETFs without punitive tax consequences.
- Harvest losses strategically, offsetting them against gains as part of ongoing risk management.
- Hedge and rebalance portfolios over time, aligning with best practices seen in markets like the United States.
In the US, consistent capital gains treatment across investment vehicles enables efficient loss harvesting, diversification, and hedging. In Ireland, by contrast, fragmented taxation discourages prudence, leaving long-term investors caught between inconsistent systems.
The Ongoing Grey Area: ETFs and Offshore Classifications
The Government’s announcement also failed to address the lingering confusion around ETFs — particularly the distinction between UCITS and non-UCITS (offshore) structures. Key concerns remain:
- Irish-domiciled UCITS ETFs are subject to Exit Tax (now 38%).
- Non-UCITS or US-listed ETFs may fall under offshore fund rules, with complex reporting requirements.
- Platform inconsistency: Different providers interpret classifications differently, leading to uneven tax treatment.
This creates a regulatory grey area that leaves both advisors and investors uncertain. As a result, investors must exercise caution — and often seek professional advice — to ensure compliance and avoid misreporting.
The DIY Investor’s Dilemma
Ireland’s growing community of DIY investors using platforms like DeGiro, Revolut, and Interactive Brokers faces an even tougher landscape. While these platforms have opened access to global markets, the tax complexity remains prohibitive.
For self-directed investors:
- Tax reporting is cumbersome (Form 11, CGT calculations, and deemed disposal tracking).
- Fund classifications are unclear, particularly for ETFs.
- Administrative friction discourages consistent, long-term investing.
The 3% reduction offers no simplification or meaningful relief for this cohort — it’s a headline change with little practical benefit.
A Call for Real Reform
If Ireland genuinely intends to promote personal investment and long-term wealth creation, future reform must go further. The goal should be a unified capital gains framework — one that:
- Applies consistent tax treatment to all forms of investment (funds, ETFs, and direct shares).
- Allows loss offsetting across all investment types.
- Removes deemed disposal rules that penalise patient, long-term investors.
- Simplifies compliance for both professionals and DIY investors.
Such reform would bring Ireland in line with international best practice and support financial literacy, transparency, and fairness. Until then, investors — particularly those transitioning from concentrated stock positions toward diversified portfolios — must navigate a system that remains fragmented, outdated, and unnecessarily complex. The reduction from 41% to 38% may look like progress, but in reality, it is a headline without substance — a missed opportunity to modernise Ireland’s investment landscape.
Our View
At Curran Futures, we welcome any step that reduces investor taxation. However, this change falls short of genuine reform. Real progress would mean a consistent, transparent tax framework that empowers Irish investors to manage risk, diversify intelligently, and invest with confidence.
