680. Deputy Darren O'Rourke asked the Tánaiste and Minister for Finance if he plans to address the inequity between the treatment of exchange-traded funds for tax purposes, and the taxation of other gains from the disposal of financial instruments; and if he will make a statement on the matter. [55130/26]

An exchange-traded fund (ETF) is an investment fund that is traded on a regulated stock exchange. There is no separate taxation regime specifically for ETFs. ETFs, being collective investment funds, generally come within the regimes set out in the Taxes Consolidation Act 1997 for such funds.

The domicile of the ETF will generally determine the applicable fund regime, specifically whether the ETF falls within the domestic fund regime or the offshore fund regime.

For domestic investment funds the gross roll-up regime applies and there is no annual tax on income or gains arising to a fund. However, the fund has responsibility to deduct an exit tax when certain chargeable events occur. Chargeable events include:

• the making of relevant payments;

• the redemption of the investment;

• the transfer by an investor of their investment; and

• the ending of an eight-year period following the acquisition of the investment and then every eight years thereafter (deemed disposal).

This exit tax, known as Investment undertaking Tax (IUT), applies at a rate of 38% from 1 January 2026 in respect of Irish resident individual investors. To prevent indefinite or long-term deferral of this exit tax, and the associated loss of tax to the Exchequer, the deemed disposal rule was introduced in 2006.

In the case of a regulated offshore fund located in another EU or EEA state, or in an OECD Member State with which Ireland has a double taxation agreement (an ‘OECD/DTA country’) known as an equivalent offshore fund, the tax treatment of an investment in such a fund is similar to that which applies in respect of an investment in an Irish domiciled regulated fund. However, not being Irish domiciled, these funds cannot apply Irish exit tax. Therefore, Irish investors in such funds are required to account for the 38% tax through the self-assessment system. Similar treatment applies in respect of payments in respect of a foreign life policy with a life assurance company located in an EU or EEA state or in an OECD/DTA country.

Budget 2026 introduced a reduction in the taxation rate that applies to Irish and equivalent offshore funds and Irish and certain foreign life assurance products, from 41% to 38%. Budget 2026 also included a commitment to publish a roadmap on the taxation of retail investment, setting out an approach to simplify and adapt the tax framework to further support retail investment, while retaining necessary and important anti-avoidance protections, in a proportionate manner. The roadmap will take the European Commission's Savings and Investment Account Recommendation, and the Funds Review recommendations, including the issue of the deemed disposal rule, into consideration.

As I announced at the first annual Savings and Investment Forum, on 31 March, a key aspect of the roadmap is the development of a new investment account that aims to reduce the complexities related to retail investment taxation and allow individuals to grow their savings more efficiently.