·         Budget 2017 broke the historical link between the Exit Tax and DIRT thereby giving preferable treatment to certain savings & investment types

·         630% increase in the amount collected from the Exit Tax from 2010-2016 (€31.2 million to €228 million)

·         Exit Tax rate of 41% Is almost double the historical tax rate for life policies (23% for the period 2001 to 2008)

Issued 20 September 2017. Insurance Ireland is calling for a reduction in the Life Assurance Exit Tax (Exit Tax) in line with DIRT to ensure fair treatment for all and to incentivise long-term financial planning for middle income earners.

Until the last budget, the Exit Tax applied on gains from life policies was linked to the rate of DIRT on savings so neither option was given preferential treatment. However, the last Budget broke this link and DIRT will be reduced from 41% to 33% by 2020.

In addition, life policies also pay a 1% levy on all new contributions and this gave a further €25.7 million to the Exchequer in 2016. Insurance Ireland believe the Exit Tax rate needs to be reduced in line with DIRT to 33%.

Kevin Thompson, CEO of Insurance Ireland stated, “Life insurance customers are mostly middle-income individuals and families who try to secure a better life for themselves. They should be encouraged to engage in sound financial planning and not be unduly taxed for choosing an investment policy over bank savings. The Government expects to take in an additional €10 million this year from the tax and it’s time for these policy holders to be given an even break.”

“The Exit Tax is also far higher than the Capital Gains Tax paid on investment classes available to wealthier investors. Higher income investors tend to own individual equities and property and they are subject to Capital Gains Tax at 33% versus the 41% paid by smaller investors. It is our view that all savers and investors should be treated fairly and equally and the upcoming budget should commit to reduce the Exit Tax in line with DIRT.”

Notes to Editors:

·         Capital Gains Tax is 33%, has annual allowances, an ability to offset losses, and no 1% levy

·         The Government’s own Tax Strategy Group, which assesses budgetary proposals, stated in July that the Exit Tax could be reduced by 1% each year up to 2020 to bring it to 37%. Each 1% reduction would equate to €6.9 million less paid by those with life policies

·         Budget 2017 outlined the planned reduction in DIRT from 41% to 33% by 2020

·         Insurers contribute significant amounts to the Exchequer by way of the Exit Tax:

·         The Exit Tax is referenced on pages 15 & 16 of the 2017 Tax Strategy paper, which can be accessed here: http://finance.gov.ie/wp-content/uploads/2017/07/TSG-17-11-Capital-and-Savings-Taxes-Final-PL.pdf 

Ends.

Media contact:

John Byrne

Communications Manager, Insurance Ireland

Tel: 01 644 7781 / 087 938 3852

Nuala Buttner

Q4 Public Relations

Tel: 01 475 1444 / 085 174 4275