Model the 8-year rule on a fund or ETF holding.
Total exit tax over the period
—
Final value (gross)
—
Net after all tax
—
vs taxed once at end
—
Deemed disposals
| Year | Value | Deemed gain | Tax at 41% |
|---|---|---|---|
| Fill the form. | |||
Your breakdown
Updates live as you type| Event | Value | Gain taxed | Tax at 41% |
|---|
The rule that taxes you before you sell
Most investments are only taxed when you sell. Irish and EU funds, and the great majority of ETFs, break that pattern. Under the deemed disposal rule, Revenue pretends you sold and immediately repurchased the holding on every eighth anniversary, then charges 41 percent exit tax on the growth at that point. You have not actually sold anything, but the tax bill is real and it falls due. This catches a lot of long-term ETF investors by surprise, because nothing in their broker account changes on that date.
This calculator projects a holding forward, applies the 41 percent charge at each eight-year mark, lifts the cost base by the amount already taxed, and then taxes only the later growth when you finally sell. That basis step-up is what stops you being taxed twice on the same gain.
Stepping up the basis every eight years
The mechanics matter because they decide how much tax you really pay over a lifetime. When a deemed disposal happens, the gain taxed at that moment is added to your cost base. So at the next event, and at the final sale, only the growth since the last reckoning is in charge. Tax already handed over is effectively credited. Without the step-up you would pay 41 percent on the same euros of growth more than once, which the rule is specifically built to avoid.
€20,000 left to grow for sixteen years
Take a lump sum of 20,000 euro invested in an accumulating ETF, growing at 7 percent a year, held for 16 years with no further top-ups. Two deemed disposals fall inside that window, at year 8 and at year 16.
At year 8 the fund is worth 34,957 euro, the gain of 14,957 euro is taxed at 41 percent for 6,132 euro, and the cost base resets to 34,957 euro. By year 16 the fund reaches 61,098 euro, so only the 26,141 euro of growth since the reset is taxed, giving 10,718 euro. The total is 16,850 euro.
One detail in the results panel needs explaining. The calculator assumes you pay each bill from other savings rather than selling units, exactly as the page note and FAQ describe, so the fund itself keeps compounding untouched. That is why the year 16 figure is treated as a deemed disposal with no separate final sale tax, and the net value shown equals the gross value. In this particular case you are not taxed twice on the same growth, so the real penalty is timing: you part with 6,132 euro eight years earlier than a simple sell-at-the-end approach would have demanded.
The catch most investors miss
The sting is liquidity. The year 8 charge arrives whether or not you have spare cash, and selling units to pay it crystallises even more tax and shrinks the pot that compounds. There is no annual exemption to soften the blow and no loss relief against other gains, which is the opposite of how Capital Gains Tax works. A common mistake is forgetting the eight-year date entirely and then facing interest and penalties from Revenue for a late return. Set a calendar reminder for the anniversary of each purchase, and keep enough cash aside to settle the bill without touching the fund.
Does the eight-year clock apply to individual shares?
No. Direct holdings of company shares, such as a single listed stock, sit under Capital Gains Tax at 33 percent and are only taxed when you sell. The deemed disposal rule is specific to funds, life policies, and most ETFs. That difference in treatment is one reason some Irish investors prefer investment trusts or direct equities for very long horizons.
What happens at the eight-year mark if the fund has fallen?
There is no deemed gain if the value has dropped below your cost base, so no tax is due that year. The clock simply runs on to the next eight-year point. A paper loss at a deemed disposal date cannot be banked or set against other income, which is another way this regime is less forgiving than CGT.