The Finance (No. 2) Act 2013 changed the tax rates applicable to Irish resident investors in life assurance policies.

The occurrence of any of the following events triggers a charge to tax (though certain exceptions still apply):

  • The maturity of the life policy
  • The surrender in whole or in part of the rights conferred by the life policy
  • The assignment in whole or in part of the life policy
  • The ending of an 8-year period beginning with the inception of the life policy and each subsequent 8-year period

Since 1 January 2013, the rate of taxation on any gains made by Irish resident individuals who invest in life assurance policies has increased to 41%. The rate of tax applicable to Irish resident individuals investing in personal portfolio life policies (where the policyholder can influence the choice of the underlying assets) has increased to 60%.

Obligations on Insurers

The insurer is liable to account for these taxes by withholding the relevant tax from the gain made by policyholder.

Where the insurer is liable to account for Irish tax on gains made by Irish resident companies, the rate of tax remains at 25% provided a declaration is in place by the Irish company.

Lisa Dunne