Tax on investments and pensions
Pension and investment tax planning
Pension tax planning
Taxes on pensions can be significant, in particular when pensions have yet to be drawn down or where pensions have been transferred to ARFs or PRSAs. With advise on minimising the impact of some of these tax charges. We have worked closely with a number of counterparts in other jurisdictions to avail of opportunities to transfer and realise the value of pensions in a tax efficient manner, in particular for clients who wish to retire abroad.
Investments
The rate of tax that can apply to income and gains from investment income can vary from 0% up to 55.2%. It is very important for clients to understand the tax treatment of investments at the time of purchase. For example, any gain arising on the disposal of certain assets can be liable to a special regime of taxation where the investment is considered a fund investment. We have considerable expertise in this area and have helped many of our clients reduce their tax bill on investments by advising on the tax treatment of various different types of investment products to facilitate tax efficient selection of investments.
Digital assets (including Cryptocurrency)
It is becoming more common to see clients investing in different types of digital assets and the taxation of such activities can be complex.
The Irish Revenue has stated that no special rules for digital assets are required, and the taxation treatment will depend on the activities and the parties involved in transactions, using the relevant legislation and case law to determine the correct tax treatment.
One of the first matters to consider is whether the individual/entity is carrying out a trading or an investment activity as this will impact the taxation treatment.
If it is an investment activity a further thorny issue that needs to be considered is the location of the digital asset for Irish tax purposes. This is not something that would be of concern for Irish resident individuals unless that individual is a non-Irish domiciled person chargeable to tax in Ireland on the remittance basis. The UK Revenue guidance indicates that the location of digital assets is linked to the tax residence status of the beneficial owner unless the asset is just a digital representation of an underlying asset. There is a conflicting opinion suggesting that the location of cryptocurrency should be linked to the location of the private key/digital wallet, etc. The Irish Revenue has issued guidance to say that the onus is on the taxpayer to prove where the digital asset giving rise to a gain is located. Revenue’s view is that where this cannot be shown by the taxpayer as being outside Ireland, that gain is chargeable to tax in Ireland. This is only relevant in the context of non-Irish domiciled individuals.
Routine activity by Irish tax residents in digital asset platforms could give rise to unexpected tax consequences, with individuals often unaware of the tax liabilities resulting from this type of activity. If there are tax exposures, dealing with this early can minimise interest and penalties.
UK HMRC have written to UK taxpayers in relation to unpaid tax on crypto asset activity after receiving information from crypto exchanges. Irish Revenue’s focus on digital assets will likely increase after the EU’s DAC8 Directive and the OECD’s CARF (Crypto Asset Reporting Framework) take effect in Ireland (in 2026 and 2027 respectively). Both of these extend existing frameworks for automatic exchange of tax information to apply to crypto-asset service providers.