An Ode to Capital Gains Tax

Hello All,

As we settle into 2025, I’m sure taxes are on everyone’s mind. Here in Ireland, we’re fortunate to have a relatively straightforward tax system compared to, say, the United States. 

But one of Ireland’s greatest shortcomings remains the lack of a strong investment infrastructure for everyday people.

Blast from the Past: Ireland’s Capital Gains Tax

Ireland’s Capital Gains Tax (CGT) sits at a hefty 33%, the sixth highest in Europe. And don’t even get me started on the convoluted ETF tax rules (deemed disposal and a 41% exit tax).

Now, I’m not arguing for the elimination of CGT. It plays a vital role in preventing extreme wealth concentration. However, many countries have built mechanisms to help middle-class individuals invest efficiently. The U.S. has the Roth IRA, the U.K. has the ISA, but here in Ireland, we have a meagre €1,270 annual exemption—an amount that hasn’t been updated since 1999. Not exactly a lifeline for anyone looking to grow their savings for retirement.

Tax-advantaged accounts aren’t just good for individuals, they’re good for the economy. Encouraging long-term investing could help shift money out of housing speculation and into productive markets. Right now, our tax system makes property investment easier than investing in ETFs. That’s a problem.

Infographic of the Week 

From The Financial Times

Do What the Swedes Do

If you need a case study on how tax-advantaged investing can drive broad economic prosperity, look no further than Sweden.

In the past decade, 501 companies have been listed in Sweden, more than in France, Germany, the Netherlands, and Spain combined. This surge in IPOs is a direct result of policies that encourage retail investment, creating a dynamic ecosystem where businesses can access funding more easily. 

Since 2012, Sweden has had ISKs (investment savings accounts), which allow individuals to invest without worrying about CGT or dividend tax. Instead, the account value is taxed at a minimal rate, about 1% annually. 

For individual investors, this is a great deal and its impact extends far beyond the stock market. 

Sweden’s investment-friendly environment has fueled entrepreneurship, job creation, and corporate innovation, making it easier for companies to grow and thrive. A flourishing investment culture doesn’t just benefit investors—it strengthens the entire economy by providing businesses with the capital they need to expand and compete globally.

Ireland’s New Money Needs to Act Like Old Money

To be fair, we all have to remember Ireland’s relative youth when it comes to wealth accumulation. For many of our grandparents, CGT wasn’t even a consideration. Wealth creation only became a reality for a broader portion of the population in the late 1990s, as economic growth took off.

When we compare Ireland to the U.S. or the U.K., we must recognize that their financial systems have had a much longer runway. America was building a sophisticated stock market ecosystem in the early 1900s, while Ireland was still decades away from widespread prosperity. But that’s exactly why we need to act now—so that in another 20 or 30 years, Ireland has an investment landscape that empowers individuals, fosters economic growth, and strengthens the broader economy.

I fully acknowledge my privilege in being able to have this discussion at all. The fact that we can even debate capital gains tax means we’ve come a long way as a country. But that doesn’t mean we should settle.

If we want to encourage responsible, long-term investing, we should be making it easier for people to grow their wealth. 

Happy investing,

Emmet