Find everything you need to know about Ireland’s new SIA from the Business Post team, who will provide as-they-happen updates on the proposed tax rates, launch date, political debates, eligible assets and how it compares to deposits and pensions.
This hub will be updated regularly. It was last updated at 5.29pm on September 1.
Everything we know so far:
The government is going to announce a new Savings and Investment Account, or Personal Investment Account, in the Budget on October 6.
Simon Harris, the finance minister, has spearheaded the scheme and said he wants to unlock some of the around €170 billion sitting in deposit accounts and create incentives to make it more attractive – and less expensive – for average people to invest.
Such schemes are common in other countries and Harris has considered the benefits of the UK ISA and Swedish ISK in designing the Irish SIA.
The final shape of the accounts has not yet been announced.
What we do know is that the structure of the accounts will borrow from different examples around the world. The government is adopting the annual contribution limit of the UK’s ISA accounts, along with the annual tax above a threshold seen in Sweden’s ISK accounts.
As part of the plan, the deemed disposal rule which disincentives investing in ETFs like the S&P500 will be abolished within the accounts. Scroll down for more details on that.
The Business Post has been covering the plan from the start and this hub will be updated with our team’s reporting and releases from respected sources such as the Department of Finance, Banking & Payments Federation Ireland (BPFI), and other trade bodies and expert groups.
Here is why the finance minister Simon Harris believes they are important
Here’s a general overview based on what we know at the moment.
The accounts will feature:
• A tax-free threshold under which no tax will be paid. A “low flat” rate of tax will be applied to the value of the account over this limit.
• No minimum contribution, but a maximum contribution limit
• The existing tax regime, including the deemed disposal rule, will not apply to the accounts. Providers will be required to report and pay tax on behalf of the investor.
• Eligible investments include listed shares, bonds, regulated financial instruments, and funds including ETFs. Crypto and derivatives will not be permitted.
• Investors will not be able to hold cash on deposit in the account, other than for purchasing investments or cash resting temporarily after selling an investment.
• There will be no holding or lock-in period, while moving accounts between providers will be facilitated “where possible” on a tax-neutral basis.
Is this the best option?
There has been a lot of debate about what shape the accounts should take.
The Banking and Payments Federation has made a detailed submission calling for clear and attractive tax incentives based on an annual contribution threshold, and to allow access to funds in a way that is not overly restrictive to first-time investors.
The plan is that regulated banks, platform brokers, and financial institutions will directly administer the tax obligations, removing the burden of manual filing from individual investors.
You can read the banking group’s proposals here. More views on the plan are linked to in the sections below.
The 30-page government official publication Taxation of Retail Investment: A New Path Forward for Ireland is available here.
What trading platforms will support it?
The Business Post has asked banks, digital trading platforms and stockbrokers if they will offer it. There is a lack of certainty ahead of the final details being released, but some of the key answers are below.
We will update this list as we learn more.
The main pillar banks, AIB and Bank of Ireland, are likely to offer the product through their respective investment services, Goodbody and Davy.
Revolut, which has more than 3 million users in the country, said that while there would be “no technical limitations” to offering the products, the need for additional tax administration and “integrations” with Revenue would add to more “operational and regulatory complexities”. It appears the final shape of the accounts may mean they can be offered through Revolut.
IG Group, the FTSE 100-listed trading platform which launched a commission-free investing product in Ireland last year, has said the administering of tax would not be a problem for it in Ireland.
Etoro said it is still assessing whether it can commit to offering the new investment accounts. It does not currently offer ISK accounts in Sweden but does offer ISAs in the UK.
N26, the German neobank, said it had “no immediate plans to participate”.
Trading212 has confirmed that it will offer the accounts. Read details here.
Trade Republic does not offer either ISAs or ISKs.
Monzo said its “focus right now is bringing free everyday banking to Ireland for individuals and businesses”.
You can read more about what the big platforms have to say here.
What does it mean for deemed disposal?
Deemed disposal means that Irish investors are charged a 38 per cent exit tax after eight years on gains made from investing in ETFs, investment funds and life assurance policies – even if they have not sold them.
This is hated by many investors as it damages the compounding interest of holding investments in the long terms.
New investments through the SIAs will not be subject to the deemed disposal rule but it seems that current investments will be.
We will be updating this hub as we learn more about what the changes will be for existing ETF holders in Ireland.
What are investing experts saying about the plan?
Fordel’s Stephen Felle: Finance industry needs to pull on the green jersey for investment accounts
Irish Life’s CEO: wants the government to steer clear of Swedish-style investment accounts
Fidelity International: Ireland needs investment accounts for ‘viable industry’
Deloitte’s Daryl Hanberry: Ireland should make the most of its second mover advantage when it comes to a state savings scheme
What else do you need to know
Revealed: Savers’ investment taxes slashed under Harris plan
Four in five Irish adults want government’s new investment accounts
