THE GOVERNMENT HAS released new details of the state-backed investment accounts it plans to introduce next year. 

Tánaiste and finance minister Simon Harris described the Investment Account as “a simple and accessible” way for people to make investments in capital markets. 

He said the accounts will give people greater choice in how they manage their savings and investments.

“My ambition is to build a system that is simpler and easier to understand, where people know what their options are and can make informed decisions based on their own circumstances,” Harris said. 

So what do we know so far?

Who can open an account?

The Investment Account will be available to Irish tax-resident individuals aged 18 and over who have a PPS number.

It will only be possible to open one account per person. 

How much tax?

The exact tax rate has yet to be set, but it will be a “low” flat rate, the government said. 

There will also be a threshold before which no tax will need to be paid. 

The accounts, once the value is over the threshold, will be taxed annually.

The tax rate will be announced as part of the budget on 6 October. 

One major benefit for people who have one of these investment accounts is that they will not have to pay the deemed disposal tax that is applied to other investments.

Every eight years, certain investments are treated as if they have been sold, even if they haven’t been. 

Those investments are taxed at 38%, but the new investment accounts will not be taxed in this way. 

What can I invest in?

The kinds of investments that will be permitted include listed shares, listed bonds, financial instruments traded on a regulated market and a range of investment funds suitable for retail investors, including exchange-traded funds (ETFs).

There will be no minimum contribution or lock-in period for the accounts. There will be a limit though, which will be annouced with the budget in October.

The government has said that “highly complex and risky products”, including derivatives and cryptocurrencies, will not be eligible.

The provider of the investment account will calculate, report and pay any tax due on behalf of the account’s owner, which the government said would make the process more straightforward.