Unlock the Hidden Financial Services Secrets KPMG Doesn’t Want You to Know—Are You Ready to Dominate the Market?
So, Ireland’s throwing a curveball with Budget 2027 — chopping down the tax rate on certain investment funds and life assurance products from 38% to 35%. On the surface, a modest trim, right? But here’s what’s fascinating: it’s part of a bigger gambit to make retail investing less of a labyrinth and more user-friendly for everyday investors. Let’s be honest, when tax codes look like they were drafted in another universe, who really knows what’s going on? The Government’s edging towards clarity, promising simpler rules, especially for things like exchange-traded funds, which have long been the Bermuda Triangle of retail investments. That said, the road to full reform is still unfolding — with the tax juggernaut reviewing everything from rates to pesky administrative hurdles. Curious how these changes might shake up your portfolio or your business? Let’s unpack what this all means from the trenches of tax law to your wallet. LEARN MORE
Budget 2027 reduces the tax rate applied to specified investment funds and life assurance products. The measure forms part of a broader Government agenda to make retail investment simpler and more accessible, while further reform of the existing regime remains under consideration, writes Gareth Bryan, Tax Partner, KPMG
Key measures
- Investment Undertaking Tax
The rate of Investment Undertaking Tax applying to investors in Irish and certain equivalent offshore funds will reduce from 38% to 35% from 1 January 2027
- Life Assurance Exit Tax
The rate of Life Assurance Exit Tax applying to Irish and certain foreign life assurance products will also reduce from 38% to 35% from 1 January 2027
- Retail investment tax
The Minister for Finance announced that the legislation underpinning the existing retail investment tax regime will be simplified, with a particular focus on providing clarity on the taxation of investments such as exchange traded funds
- Taxation regime for retail investors
The Government will continue its wider review of the taxation regime for retail investors, including the tax rate, the deemed disposal rule and the administrative burden facing investors
Separately, the minister unsurprisingly confirmed that the bank levy will be extended in its current form for 2027, targeting a yield of €200 million. The liable institutions will continue to be AIB, EBS, BOI and PTSB, and as in 2026, it will be apportioned based on the level of eligible deposits held by each liable institution at the end of 2024.
KPMG Insights – our view
The reduction in tax rate from 38% to 35% is a welcome and tangible improvement for investors holding products within the existing funds and life assurance regimes. It should increase the proportion of a taxable investment return retained by an affected investor from 1 January 2027.
The change also reverses part of the tax-rate gap between the taxation of those products and the standard capital gains tax rate, although a material difference remains.
The announcement is one element of a wider reform programme for the taxation of investment and savings. Complexity has been a persistent feature of the taxation of retail investment products.
Different rules can apply depending on the legal form, location and tax classification of an investment, and this can make it difficult for individuals to understand their obligations.
In his speech, the Tánaiste acknowledged the need to reform the broader retail investment framework.
The commitment to simplify the legislation and clarify the treatment of investments such as exchange-traded funds is therefore particularly welcome.
Clear and accessible rules will be essential if the Government is to achieve its stated objective of making investment simpler and more widely available.
Get in touch
The measures unveiled in Budget 2027 will have far-reaching implications for businesses across Ireland. If you have any enquiries, comments, or wish to explore further, we are here to assist.
Contact Gareth Bryan of our Tax team today.
For more insights, visit KPMG
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