Tax on fund and ETF gains at 41% on encashment.
Exit tax due
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Taxable gain
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Net proceeds
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Your breakdown
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Why funds dodge CGT and pay exit tax instead
If you sell shares in a company at a profit, you pay Capital Gains Tax. If you cash in a fund, a life assurance policy, or most ETFs, you do not. Those products fall under a separate regime called exit tax, charged at 41 percent on the growth when you encash, switch, or reach an eight-year deemed disposal. The label matters because the two systems behave very differently, and confusing them leads to nasty surprises at sale time.
This tool keeps it simple. It takes what you invested, what the holding is now worth, applies 41 percent to the gain, and shows your net proceeds. You can also model a partial sale, which taxes the same fraction of both the cost and the value.
No annual exemption, no loss relief
Here is where exit tax is harsher than CGT. Capital Gains Tax gives every individual a 1,270 euro annual exemption and lets you offset losses on one asset against gains on another. Exit tax gives you neither. Every euro of growth is taxed at 41 percent with no tax-free slice, and a loss on one fund cannot be netted against a gain on something else. So even a small gain on a fund is fully in charge, while the same gain on a direct share might be wiped out by the exemption.
There is one feature that softens the blow slightly. Exit tax is a flat 41 percent regardless of your income, so a top earner who would otherwise pay 40 percent income tax plus USC and PRSI on the same money is not pushed any higher by the fund gain. For a high earner that flat rate can actually undercut the marginal rate on ordinary income, which is part of why life-wrapped savings still appeal to some investors despite the lack of an exemption. The tool keeps the rate fixed at 41 percent, so the result does not change with your salary.
Cashing in a €32,000 fund
Suppose you put 20,000 euro into a fund some years ago and it is now worth 32,000 euro, and you encash the lot. The gain is 12,000 euro, exit tax at 41 percent is 4,920 euro, and you walk away with 27,080 euro.
The chart shows the 32,000 euro of proceeds split into the 27,080 euro you keep and the 4,920 euro that goes to Revenue.
Switching funds counts as a disposal
A trap worth flagging: moving from one fund to another inside a life policy or platform is usually a disposal for exit tax, even though no cash reaches you. The growth to that point is taxed at 41 percent, then the new fund starts with a fresh cost base. People often assume a switch is free because it feels like a reshuffle, but Revenue treats it as a sale and rebuy. Check with your provider before switching, because some arrangements crystallise the charge and others do not.
Can I use my 1,270 euro CGT exemption against a fund gain?
No. The annual CGT exemption only applies to assets within the CGT system, such as shares and property. A fund or ETF gain taxed under exit tax gets no exemption at all, which is why a 12,000 euro gain here is taxed in full rather than reduced by 1,270 euro.
Who actually pays the exit tax to Revenue?
For an Irish-domiciled fund or life policy, the provider deducts the 41 percent and pays it over for you, so the net figure lands in your account automatically. For an offshore ETF you buy through a broker, there is usually no deduction at source, so you must self-assess and pay the exit tax yourself through your tax return, including on any eight-year deemed disposal.