'Investors to welcome investment account'
Lawyers at McCann FitzGerald say that investors are likely to welcome the budget announcement of a new Irish Investment Account (IIA), given the favourable tax treatment.
As previously announced, the IIA will be available to Irish tax-resident individuals aged 18 and over who hold a PPSN, with one account permitted per person.
In his Budget 2027 speech, Tánaiste and Minister for Finance Simon Harris said that the regime would take effect from 1 July 2027 and would be legislated for in the forthcoming Finance Bill.
Long-term investing
In a note on the firm's website, the McCann FitzGerald lawyers say that the initiative aims to unlock up to €170 billion currently held in low-yield household deposits and is designed to encourage greater participation in long-term investing through a range of favourable tax measures.
The Tánaiste had already announced that eligible investments would include listed shares, listed bonds, financial instruments traded on a regulated market, and a range of investment funds suitable for retail investors, including ETFs.
Investors will not be able to invest in crypto or derivatives under the IIA.
The firm's lawyers point out that investors availing of the accounts will not be able to hold cash on deposit in the accounts, except for where the account holder is purchasing further investments or in circumstances where they have just sold their holdings in the accounts.
1% flat tax
Investors can contribute up to €1,000 a month or €12,000 a year, with a tax-free threshold of €50,000.
The value of the account over the tax-free threshold will be subject to a 1% flat-rate tax.
McCann FitzGerald notes that capital-gains tax, dividend-withholding tax, investment-undertaking tax, life-assurance exit tax, and the deemed-disposal rule will not apply to investments held within the account.
The firm's lawyers add, however, that there may be charges and fees imposed by providers, who are expected to include banks, investment firms, and insurers.
Providers will have to report and pay the relevant tax on behalf of the account holder on an annual basis.