Investment funds and life assurance products

Irish exchange-traded funds

Finance (No. 2) Bill 2026 proposes to address the complexity of Ireland’s fund rules for investors by introducing new self-assessment rules for Irish investors in Irish exchange-traded funds (ETFs).

These rules are modelled on the existing tax regime for Irish funds but will be operated on a self-assessment basis by the investor.

Chargeable events

Currently, a special tax regime applies to Irish regulated funds under which the fund is liable to account for investment undertaking tax (IUT), also known as exit tax, when a chargeable event occurs in respect of Irish resident investors, other than certain classes of exempt Irish investors, such as Irish pension funds.

Chargeable events include:

• Dividends and distributions
• Cancellation, redemption or repurchase of units
• Transfer of units
• Each eight-year period for which the investment undertaking is held by an investor, commonly referred to as an eight-year deemed disposal event

The exit tax is a liability of the fund, but the relevant legislation allows the fund to recoup the tax from the unitholder by withholding tax from payments made to the investor when a chargeable event occurs.

Exit tax exceptions

By way of exception, Irish funds whose units are held in a recognised clearing system, such as Clearstream or Euroclear, do not need to operate exit tax in respect of Irish tax resident investors.

This is because administering exit tax where fund units may be traded frequently would be overly burdensome for the fund. Under current legislation, Irish investors in such ETFs are required to self-assess for exit tax.

This is achieved by applying the rules for Irish investors in qualifying offshore funds to Irish ETFs. Ireland’s offshore fund regime is complex and can be difficult for the average investor to navigate.

It also includes some less favourable treatments than those applying to funds where exit tax is collected by the fund.

Self-assessment

Under the new rules proposed in the Finance Bill, Irish resident investors in Irish funds whose units are held through a recognised clearing system (i.e. ETFs) will self-assess for exit tax in their income tax return.

Tax will be payable when a chargeable event occurs, including on the eight-year anniversary of ownership of the units. The new rules closely follow the equivalent provisions applying to other Irish funds, including:

• For individual investors (and other non-corporate investors), exit tax applies at a rate of 35% on all chargeable events. By way of exception to this, a rate of 60% applies to investments in Personal Portfolio Investment Undertakings ("PPIUs") which are funds in which the investor or certain connected people can influence the investment choices made by the fund.
• For corporate investors, the exit tax rate is 25% except where the investment is held as part of an Irish resident company's trade, in which case the rate is 12.5%.
• There is a mechanism to ensure an investor can claim credit for any tax paid on an eight-year deemed disposal event, when the units are ultimately disposed of.
• Where an investor switches units between funds (or sub-funds of an umbrella fund), there is a relief from exit tax (essentially rolling over the investment so exit tax only applies on a chargeable event arising in respect of the new investment).
• Irish individual investors (and other non-corporate investors) in Irish funds are not able to use tax losses arising on these investments to shelter other taxable income or gains (including income or gains in respect of other funds) with those losses, nor can they shelter fund income or gains with losses from other investments.

Where a chargeable event occurs, the relevant investor is treated as a chargeable person and is required to file a return of income for the relevant period, disclosing details associated with the chargeable event, including the name of the investment undertaking, the relevant chargeable event and the amount of any resulting gain.