Looking for Advice on Investing in Ireland
By John McNicholas
Published on: October 12, 2022
Assuming you have no mortgage debt and are already making full use of your pension allowances, what is the most tax efficient option for an investor in Ireland today? Is it beneficial to buy an investment from a Life Insurance Company or a Stockbroker or attempt to DIY via an online platform like Degiro?
The answer, as with many things, is ‘it depends’.
Do you want to complete a self-assessment tax return?
If the answer to this is no, then the “best” or at least the least bad option for you is going to be a packaged life insurance bond where all the tax issues are taken care of for you.
The advantages of this approach are
- Simplicity – all the taxation issues are taken care of for you
The disadvantages of this approach are
- Lack of transparency and lack of investment choice
- A flat rate of tax of 41% applies to all income and gains which may be higher than your personal rates under general tax principles
Assuming you are happy to complete a self-assessment tax return then your options are as follows
- Invest in “offshore funds” including UCITS and ETFs in the EU
- Invest in UK Investment Trusts
- Invest in non-EU ETFs via a Discretionary Investment Manager
The good news is that though our investment consulting service we can facilitate all of these options for our clients and have completed a detailed analysis of the tax treatment of each option which can be found in our tax guide here
In summary the options are as follows:
| Investment | Tax on Income | Tax on Gains | Charges | Complexity |
| UCITS funds including EU ETFs | 41% | 41% | Passive funds and ETFs Can be very low but some UCITS are actively managed | Acquiring a material interest in an “offshore fund” can be extremely complex especially if making regular contributions |
| UK Investment Trusts | Generally marginal rates of income tax but some may be funds at 41% | Generally capital gains tax 33% but some may be funds at 41% | Can be very low but some trusts have higher charges. FX costs, dealing charges, spreads and stamp duty are additional costs | Can be relatively complex with discounts and premiums to net asset value to consider, some have gearing through bank debt and other considerations such as liquidity of smaller trusts |
| Non – EU ETFs | Can be general tax principles or Exit Tax depending on how the fund is structured | Can be general tax principles or Exit Tax depending on how the fund is structured | Generally very low compared to Irish funds | Require a discretionary investment manager to purchase if not a professional investor |
| Individual stocks | General tax principles | Capital gains tax | Depends on how purchased | No generally recommended as higher risk that using ETFs and funds |
Further information can be found in Our Guide to Investing in Ireland Download Guide
