It would indeed, however back in 2018, new regulations (PRIIP regime requiring all funds to come with a Key Investment Document (KID)) came in that stopped retail investors from being able to buy US or Canadian-domiciled ETFs. This has not changed as far as I know.

Would it not make more sense to buy US or Canadian domiciled ETFs and simply pay 30% CGT rather than 41% at the higher rate of Income tax?

HI Prateesh, Unfortunately, I don’t have a clear answer on this. If you look at the form 11 there is a place to inform them of your acquisitions/purchases of stocks as well as a place to input purchases of offshore ETFs but no specific place for Irish domiciled ETFs. Revenue themselves I think are still figuring this out so it’s hard to get a clear answer. I have heard of Revenue telling people to calculate their taxes due, make the payment and write them a note telling them what it’s for as there is no clear place to enter it on the current tax forms – so it’s all a bit up in the air. The best steer I could give is to call Revenue directly and ask them to make sure you are covered and compliant.

Hi Daire, My understanding is that the 41% exit tax on gains and dividends is all that’s due on withdrawal or as deemed disposal every 8th anniversary (as you’ll already have paid income tax+PRSI+USC on the initial contribution), so in a way the silver lining of the deemed disposal is that you pay the taxes due along the way so that when you withdraw you just file and claim back the credit for taxes already paid on every 8th anniversary.

Hi Meagan,
Im reconsidering my allocation to pension v taxable and was wondering would you have any idea what the tax treatment of an ETF held with Degiro is once you start taking it as income? Would the exit tax still be due as well as income tax, prsi and usc? Thank you.

If you are investing in ETFs they are subject to something called exit tax which is currently at 41%. ETFs also currently have an 8 year deemed disposal where you pay taxes on the 8th anniversary of each purchase. On the other hand, stocks and investment trusts are subject to income tax rates for dividends and capital gains tax for gains. Definitely, a lot to consider but for me the simplicity of ETF investing keeps outweighing all the other investment options even if I will pay more tax in the long run.

Hi Kirsten, yes if you don’t have the money to hand, you may need to sell your ETFs to pay the tax bill, which could result in taking a loss that you can’t carry forward unfortunately.