Deemed Disposal: The Irish ETF Tax Rule You Can’t Ignore

In Ireland we have a rule called deemed disposal. Every eight years, the government pretends you have sold all your investments, even if you have not touched them. They then tax you on the “gains”, even though you have not received a single penny in cash. It is widely disliked: by investors, by product providers, even by Revenue, because it is a nightmare to administer.

To see how strange that is, look abroad. The Dutch government recently floated an even harsher version: a tax on unrealised investment gains every single year. Your investments grow, the government calculates the growth, then sends you a bill for more than a third of it. If you do not have the cash, you sell some of your investments to pay. It forces people to cannibalise their own future wealth just to stay compliant, before the money has had any chance to compound. Dutch investors pushed back hard and the plan was scrapped. But it shows how quickly the rules can move.

The lesson here is not really about the Netherlands. It is about something I see all the time: the assumption that the rules you start investing under are the rules you will finish under. They are not. Ireland is a perfect example.

When the Standard Fund Threshold was introduced in 2005, the maximum you could hold in a pension and still get tax relief was €5 million. Generous. Plenty of room. People planned accordingly. Then came the financial crisis. By 2014 that limit had been cut to €2 million, and it stayed there for over a decade. As inflation kept moving, the real value of that cap quietly shrank every year. Now it is finally going back up, from €2 million to €2.8 million by 2029, in steps of €200,000 a year. Good news, but only if you know about it. The people who did not? Some breached the old limit without realising. Others kept their pension contributions lower than they needed to, planning around a cap that no longer exists.

Governments do not change the rules to hurt you personally. They change them for their own reasons, usually in a crisis or under political pressure. But the people who understand what is happening can adapt. The people who do not end up with a surprise tax bill or a missed opportunity.

So here is something worth sitting with. Do you actually know the tax rules that apply to everything you currently own? Not roughly. Specifically. Because if the answer is “not really”, that is worth fixing before a letter from Revenue fixes it for you.

What you can do right now. If you are in Ireland, make sure you understand how deemed disposal applies to any ETFs you hold. Not all funds are treated the same way, and the difference can be significant. If you are contributing to a pension, check whether the increase in the Standard Fund Threshold changes what you should be doing. For some people, it opens up room they did not have before.

If you are not sure where to start with any of this, that is exactly what I help people with. Here is a short video on what I actually do: https://go.bamillionaire.com/watch-now. Or if you are ready, book a call: https://go.bamillionaire.com/apply

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