We're a nation of savers. Plenty of us have money sitting in deposit accounts earning very little, partly because investing here has always come with complicated rules and some hefty tax rates.
Budget 2027 sets out to change that. The new Irish Investment Account lets you invest up to €50,000 without paying any tax on it at all, and it does away with the dreaded deemed disposal rule.
For anyone who's ever thought about investing but been put off by the tax, this could be the most interesting announcement of the day. Here at Gilheany & co , we've pulled together everything we know so far.
How it works
The account is refreshingly simple, which is exactly the point.
- The first €50,000 is tax-free. As long as your account is worth €50,000 or less, there's no tax to pay.
- A flat 1% above that. Once your account is worth more than €50,000, you pay 1% a year on the amount above the threshold, and nothing else.
- Put in up to €12,000 a year. There's no minimum, so you can start small and build up at your own pace.
The numbers are kind. If your account is worth €52,000, the tax for the year is just €20, and at €60,000 it's €100. With a €12,000 annual limit, most people won't pay a cent in tax for the first few years, even if they put in the maximum.
One thing to be aware of: the 1% is charged on the value of the account above €50,000, not on your profits. So it applies in a year when your investments fall as well as in a year when they rise.
Why no deemed disposal is such a big deal
If you've ever invested in an ETF or an investment fund, you'll know the rules can feel stacked against you. Gains are taxed at 38%, and under deemed disposal you're treated as if you sold everything every eight years, so you can face a tax bill on profits you haven't actually taken.
Inside the new account, none of that applies. There's no deemed disposal, no capital gains tax, no dividend withholding tax, no investment undertaking tax and no life assurance exit tax, just the 1% above €50,000.
The paperwork is lighter too. Your provider looks after the tax, so you won't need to deal with Revenue for the normal running of your account.
You'll also have plenty of choice. You can hold shares, bonds, ETFs and other funds, through banks, investment firms or insurers, and that competition should help keep fees down.
Already investing? There's good news for you too
If you hold investment funds, ETFs or life assurance investment policies outside the new account, the tax on your gains is coming down. The rate drops from 38% to 35% from 1 January 2027.
The Minister also plans to simplify the legislation behind the current system, including making it clearer how ETFs are taxed. The Government has also said work will continue on the wider rules, including deemed disposal itself.
Things to keep in mind
- It opens on 1 July 2027. The account will be set up in the Finance Bill, and some of the finer details are still to come.
- It's not a pension. No tax relief was announced on money going in, so for retirement saving a pension may still work out better, especially if you pay tax at 40%.
- Investments can go down as well as up. Deposit accounts and State Savings will still be the right home for your rainy-day fund and money you'll need soon.
Thinking about opening one?
If you've been sitting on savings and wondering what to do with them, the new account is well worth a look. The team at Gilheany & co can help you work out how it fits alongside your pension, your savings and the rest of your tax affairs. And when it comes to choosing the investments themselves, it's worth talking to a regulated financial adviser too.
