The Government has decided to defer a decision on the future of deemed disposal and exit taxes on investment funds until Budget 2028.The decision was announced by Tánaiste and Minister for Finance Simon Harris on Monday as he outlined how the State’s new savings and investment account will operate. Most of the detail announced on Monday about the personal investment accounts has already been flagged on several occasions by the Minister.A new paper published by the Department of Finance on taxation of retail investment, which included details of the new savings accounts, also outlined the next phase of work on taxation of retail investment.It said a reduced rate of taxation for retail investment and the deemed disposal rule are “key areas for consideration in reforming the existing taxation regime from Budget 2028 and beyond”.Collective investments, such as exchange-traded funds (ETFs), face a tax every eight years under an anti-avoidance regime that treats such investments as if they have been sold even if no sale has occurred.Last year, as part of Budget 2026, the deemed disposal tax rate was reduced from 41 per cent to 38 per cent. In 2024, a report by the Department of Finance into the funds sector advised the deemed disposal rule should be ended for ETFs and investment funds.Harris said the new personal savings investment account marked “an important first step”, but acknowledged further work is required on retail investment taxation.“The current system is complex and that complexity can itself act as a barrier to people who choose to invest. We will now continue the work on the wider regime, including the rate of taxation, deemed disposal and the administrative burden facing investors.”Irish residents who are aged 18 and over and hold a personal public service (PPS) number will be eligible to open one investment account.As previously flagged, the account will have a tax-free threshold, with a low flat rate of tax applying annually to the value of the account above that threshold. Where the value of the account is below this threshold, no tax will be due. There will be no minimum contribution requirement and an annual maximum contribution limit will apply.The specific tax-free threshold, flat tax rate and annual contribution limit will be announced as part of Budget 2027. Under the plan, which will form part of October’s budget, banks and financial providers will calculate and handle any tax due on behalf of the investor.Eligible investments will 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).Investors will not be permitted to invest in what are deemed highly complex and risky products, including derivatives and crypto assets.There will be no minimum holding or lock-in period and moving investment accounts between providers will be allowed, where possible, on a tax-neutral basis.About €170 billion is on deposit in Irish bank accounts and Harris has described it as “sitting idle”.Irish households hold just 2.3 per cent of their financial assets in direct investments such as listed shares and debt securities, compared with an EU average of approximately 7.5 per cent.The new tax-advantage scheme has been designed to encourage people to move their savings into market investments. The Department of Finance has confirmed the existing investment tax regime, including the deemed disposal rule, will not apply to investments held within the investment account. .The plan prepared by the Department of Finance said there has been some interest in the concept of an investment account specifically for children.“This concept will be given consideration as part of future finance Bills,” the plan stated. “This will give providers an opportunity to become more familiar with the operation of the accounts and to develop the necessary IT systems before expanding the availability of the account.”The accounts are set to become available next year.Harris said that while Irish people were good at saving,: “we have comparatively low levels of direct retail investment, and as such people are not getting the benefits of greater returns. For people who decide that investing is right for them, I want to make sure they have a simple and accessible way to do so.” – Additional report, PA.