Annex 1: List of Questions

What policy supports have been most impactful in attracting the funds sector to Ireland and/or the EU in recent decades? 

What characteristics set Ireland apart from other jurisdictions when selecting a fund’s domicile?

What are the most important trends evident in the sector? 

What are the key risks and challenges for the sector in the medium- to long-term and how can they be managed?

How best can Ireland position itself in the future as a location of choice for EU and international firms? 

How can Ireland best support the growth and development of the market for ESG products and the transition to carbon neutrality?

Taking account of the European and international aspect of the Irish framework and key EU files such as Capital Markets Union (CMU) and the Retail Investment Strategy, what improvements could be made to the legislative, regulatory and supervisory framework? 

Are there investment or financing vehicles that are currently unregulated but that should be regulated in the future?  If your answer is yes, please explain how these entities should be regulated and the rationale for doing so.

Where relevant, detail how your organisation, or the wider sector, contributes to the economy with particular reference to employment, revenues and regional development.

For an Irish investor, as set out above, tax legislation separately classes investments as:

1. Irish bank accounts
2. EU/EEA bank accounts
3. Other bank accounts
4. Dividends from companies
5. Capital gains on the sale of shares in companies
6. Irish life products (new basis)
7. Irish life products (old basis)
8. Foreign life products
1. Irish funds
10. EU/EEA/OECD equivalent funds
11. EU/EEA/OECD non-equivalent funds
50. Other distributing funds
1000. Other non-distributing funds
14. Personal Portfolio Investment products

Taking account of the different nature of the investment products, is this an appropriate way to class investments for the purposes of taxing the returns on those investments? Does the differing tax treatment of different investments drive investor behaviour, and if so how? Do you propose an alternative method / methods of classifying investment products?

The return on certain investments is taxed through the operation of a withholding tax at source, while others must be self-assessed by the investor. In either case, the tax may be a final liability tax, or it may be an amount against which reliefs and credits are allowed.

1. Is it desirable that, where possible, taxes are:
   1. deducted at source; and
   2. final liability taxes? Or
2. Is it desirable that:
   3. taxes are self-assessed; and
   4. taxed at a marginal rate with reliefs and credits available against investment returns, meaning taxpayers would have to file a tax return each year.

Do the answers to a) and b) differ for different types of investment product or different types of taxpayer?

If any investment returns continue to be taxed on a final liability basis what link, if any, should there be between the rate of DIRT and the rate of tax applied to other investment products? Should consideration be given to reintroducing a “non-standard” rate to any products?

Are there places where the taxation of investment income and gains need to be simplified or modernised? For example in relation to the taxation of ETFs, the old basis of taxation for life products, or harmonising the exemptions from IUT and LAET.

Given the differences in the data reported to the Revenue Commissioners under international reporting standards when compared to domestic reporting obligations, should additional reporting be introduced to, for example, facilitate the pre-population of tax returns where tax liabilities are to be self-assessed?

Where investments in investment undertakings, life policies or offshore funds give rise to a loss, no relief is available against other income.  Where an individual has a gain on one such product and a loss on others, that loss may not be offset against the gain on a similar product.  Is it desirable that loss relief, or a limited form of loss relief, be introduced for investments in these products?  Note that reliefs cannot be given where the tax is a final liability tax deducted at source.

Are there differences within the regimes (e.g. in relation to who can make a declaration under LAET compared to those who may make a declaration under IUT) which should be addressed?

How should derivative products which mirror the performance of regulated investment products be taxed?  Should they be taxed at the same rate as the investment product they mirror or should they be taxed under first principles?

Are any additional anti-avoidance rules required for any of the measures suggested in answer to previous questions?

Are there aspects of the way in which property funds are taxed, or defined, that could be aligned with other existing standards, for example, the recent changes in the Central Bank of Ireland’s macro prudential measures for property funds?

IREFs invest in property of all descriptions, as developers, financiers and landlords. Do IREFs, and the regime as it is currently designed, support investment in housing policy objectives?

How does the IREF regime compare to property fund regimes in other comparable EU jurisdictions?

Are there aspects of the IREF regime that are not operating as intended or that are acting as an impediment to investment?

We invite comment in relation to the tax position of IREFs, in particular in relation to the following:

• The tax rate applicable to both resident and non-resident investors
• The tax exemptions that apply to certain categories of investors
• The tax rate applicable at the level of the fund
• The overall tax treatment of IREFS – should an alternative mechanism be considered

REITs invest in property as landlords and as developers of property to hold for rent. Do REITs, and the regime as it is currently designed, support investment in housing policy objectives?

While REITs are a structure used in many jurisdictions for collective investment in property, Ireland now has only one remaining REIT. Are there aspects of the REIT regime that are not operating as intended or that are acting as an impediment to investment?

How does Ireland’s REIT regime compare to REIT regimes in other jurisdictions?

We invite comment on the tax position in relation to REITs, in particular in relation to the following:

• The standard REIT structure, common internationally, of exemption for qualifying property profits within the REIT subject to a range of conditions including a requirement that a high proportion of the profits (85 per cent in Ireland) be distributed annually for taxation at the level of the shareholder
• The tax exemptions that apply to certain categories of investors
• The tax rate applicable at the level of the REIT

Should the IREF and REIT regime continue to exist in tandem?

Is there an appetite for retail investors to invest in property, if so, what is the best type of vehicle to accommodate such investment?

What policy objectives should section 110 be supporting? 

What changes are needed, if any, to ensure the section 110 regime meets those policy objectives?

In addition to the matters covered in this public consultation, are there other issues relevant to the Terms of Reference, which you wish to bring to the attention of the Department? Yes / No

If you have answered “yes”, please provide a brief summary of those issues, providing any information or references to material that you consider relevant to the Terms of Reference and the Department’s work.

This consultation is necessarily wide-ranging. As we would not be able to take forward all proposals immediately, what do you think the top 3 priority proposals should be for government implementation and why?