Before you begin
What the comparison depends on
Split the return you expect into growth and income rather than entering one total. That split is what the comparison turns on: income is taxed every year outside a fund and not at all inside one.
An accumulating ETF pays you nothing, but the underlying holdings still generate income and it still compounds inside the fund. Enter the yield of what the fund holds, not zero.
The holding period is until you sell everything. Stopping at year seven and stopping at year nine are very different answers, because the first eight-year charge falls between them.
Your income figure is only used to find the rate on your next euro of dividend income. Nothing about it is kept.
Put the fund's real ongoing charge in rather than leaving the default. It is on the key information document, and over twenty years it usually moves the answer further than the tax difference does.
PRSI on unearned income turns on the total, not on this holding alone. If you have rent or deposit interest, enter it, because it decides whether the dividends here are liable from the first euro.
Reading the answer
Reading the gap between the two routes
The headline is the difference between two after-tax outcomes for identical money. Treat a gap of a few hundred euro over twenty years as noise: it is smaller than the effect of a modest difference in ongoing charges.
The break-even income yield is the number worth remembering. Above it the fund's shelter on distributions is worth more than the eight-year charge; below it the annual dividend bill outside a fund is small enough that paying 33% once wins.
The eight-year charge is a prepayment, not an extra rate. What it costs you is the compounding on money handed over early, which is why the tool prices it against the same fund charged only at exit.
Regular contributors get a staggered series of charges rather than one, because the rule runs from each purchase. That spreads the cost but does not reduce it.
None of this is affected by the Investment Account yet. When its three figures are published it becomes a third column here, and the two routes below stay exactly as they are, because the Roadmap defers any change to the existing regime to Budget 2028 at the earliest.
Losses do not behave symmetrically. A loss on one fund cannot shelter a gain on another, and no loss relief is available inside the fund regime at all, so a comparison built on positive returns flatters the fund route less than it appears to.
If you would pay the eight-year charge from savings, the section on what the rule costs is the one to read. Leaving the units alone means every euro of it comes back as credit at disposal, so in cash terms the rule costs nothing and its whole cost is having handed the money over years early.
Read the charges section beside the tax one. Where the difference in ongoing charges is bigger than the difference in tax, the charges are deciding the comparison and the tax arithmetic above them is the smaller half of the answer.
Boundaries
Assumptions and limitations
Working assumptions
- Contributions are treated as made at the start of the year they belong to. The same convention is applied to both routes, so it moves both totals in the same direction and leaves the comparison between them intact.
- Each year's contributions form one acquisition for the eight-year rule. In reality twelve monthly purchases start twelve clocks within the year; grouping them shifts individual charges by months, not the total.
- Dividends paid on the share route are reinvested net of tax into the same holding, which lifts the acquisition cost so the same money is not charged twice.
- The whole holding is sold once, at the end. Selling part of a shareholding brings in CGT share-matching rules that would change the gain.
- Where the charge is met from savings rather than by cashing units, the fund route's figure has the cash taken off it at face value. Money found in year eight costs more than the same figure in year twenty, so that subtraction understates the real cost and the option flatters the fund route rather than the reverse. The result says so on the page.
- PRSI is applied at the Class S rate that takes effect on 1 October 2026, and only in years where total unearned income reaches the €5,000 threshold. Increases announced for later years are not projected forward, and one PRSI status is held for the whole period rather than switching at pensionable age.
- Ongoing charges are taken as a flat annual percentage of the value held, on both routes. The fund's charge comes out of the fund and so reduces the gain the exit tax is charged on. A platform charge on the share route is paid out of the holding and is not an allowable cost for CGT, so it reduces the value without reducing the acquisition cost.
- Rates are held flat for the whole period. The Roadmap flags the exit tax rate and the deemed disposal rule for review from Budget 2028, so a long horizon is a projection under today's rules rather than a forecast.
Where to be careful
- This compares tax and nothing else. Ongoing charges, dealing costs, currency conversion and diversification frequently matter more than the gap shown here.
- It is not investment advice and does not recommend a route, a product or an amount.
- A minimum annual Class S contribution of €650 can apply where someone's only PRSI-liable income is unearned. The tool charges the percentage rate and does not model that floor, so a small dividend on the share route may be understated for a person in that position.
- Dividends are charged band by band on top of the income you state, for income tax and USC alike, so a dividend that crosses a band is split rather than charged at one rate. Where a dividend lifts a total income under €13,000 above it, USC becomes payable on the whole income rather than on the dividend alone, and the tool charges the difference that arises.
- Funds outside the gross roll-up regime are out of scope, including non-equivalent offshore funds and funds domiciled outside the EU, EEA and OECD treaty states, which are taxed under different rules again.
- The Investment Account announced in August 2026 is not modelled. Its tax-free threshold, flat rate and annual contribution cap are set in Budget 2027, and until then any figure for it would be invented.
- Only Irish dividends are modelled, where withholding tax is credited in full. Revenue taxes a UK dividend on the net amount received with no credit for UK tax, and a foreign dividend on the gross with relief depending on the treaty, so a portfolio held outside Ireland will differ.
- A fund that falls after a deemed disposal is entitled to have the excess tax repaid. The tool projects one growth rate for the whole term, so it cannot produce a rise followed by a fall and never shows that refund.
- A capital loss on the share route is left unrelieved here, though in reality it could shelter gains elsewhere. That understates the share route in a losing scenario, while the fund route genuinely has no loss relief at all.
- Deposit interest is not compared. DIRT is straightforward but a fair comparison needs real deposit rates, which this tool does not maintain.
Worked example
The same question, answered end to end
A higher-rate taxpayer puts €10,000 in and adds €500 a month for twenty years, expecting 5% growth and 2% income.
What was entered
- €10,000 at the start and €500 a month, so €130,000 contributed over twenty years
- 5% growth plus 2% income, a 7% total return
- €55,000 of income, so each year's dividend sits in the 40% income tax band and the 3% USC band
- No other unearned income and no ongoing charges on either route, so the example isolates the tax. Entering the fund's real ongoing charge moves both figures, and usually by more than the gap between them
- Class S PRSI joins once the yearly dividend reaches €5,000, which takes about half the term, so the charge works out at an effective 43.5% across the twenty years rather than one flat rate
- The annual CGT exemption is still available in the year of sale
How it is worked out
Fund route: everything compounds at 7% with nothing taken out, and each year's contribution starts its own eight-year clock.
The year-one money reaches its first deemed disposal in year eight, the year-two money in year nine, and so on, so a charge falls every year from year eight.
Each charge is 38% of that tranche's unrealised gain, met by cashing units. The base cost carried forward is unchanged and the tax paid becomes a credit, which comes to the same thing as charging only the growth since the charge before it.
At year twenty the whole holding is sold, 38% is charged on the gain measured from the original cost, and every credit already paid is set against it.
Share route: growth is 5%, and the 2% dividend is charged band by band every year with only the net reinvested. Early dividends escape PRSI because total unearned income falls under the €5,000 threshold.
Reinvested net dividends lift the acquisition cost, so the final gain is charged at 33% once, after the €1,270 exemption.
What the tool returns
- Fund or ETF, after tax
- €225,341
- Shares, after tax
- €233,124
- Difference
- €7,783
- Cost of the eight-year rule
- €11,230
Common questions
Questions about this tool
What is the new Investment Account, and will it change this?
It is the Investment Account set out in the Department of Finance's retail investment Roadmap on 31 August 2026. Inside it, tax is charged annually on the average value of the account above a tax-free threshold rather than on gains, deemed disposal does not apply, and the provider handles the tax rather than you. It is expected to be available during 2027, and when the figures behind it are published it becomes a third route in this comparison.
Why does this tool not include the Investment Account yet?
Three numbers decide whether it is worth using and none of them has been published: the tax-free threshold, the flat rate charged above it, and the annual contribution cap. They are set in Budget 2027 on 6 October 2026. Any figure before then would be a guess, and a guess in a tax calculator is worse than an absence.
Does the Investment Account get rid of deemed disposal?
Inside the account, yes. The Roadmap is explicit that the existing regime, deemed disposal included, will not apply to it. Outside the account nothing changes yet. Reducing the exit tax rate and reviewing the eight-year rule for ordinary holdings are listed for Budget 2028 and beyond, and are described as areas for consideration rather than commitments.
Why is 38% not simply worse than 33%?
Because the two rates are charged on different things at different times. The 33% route also charges every dividend as it arises, at up to the combined marginal rate, and that money never gets reinvested. The 38% route charges nothing until it has to, so distributions keep compounding. Which is worse depends on how much of your return arrives as income.
Does the eight-year rule mean I pay tax twice?
No. It is a prepayment of the tax that would fall due when you sell, and it is credited against that liability, with any excess refundable. What it costs is the compounding on money paid over years before you had to.
I contribute monthly. Do I get one deemed disposal or many?
Many. The rule runs from each purchase rather than from the holding, so a regular contributor faces a charge on a different tranche in most years once the first eight years are up. The tool shows the year each one falls.
How do I know which regime my ETF falls under?
Revenue withdrew the blanket confirmation that ETFs domiciled in the USA, the EEA and OECD treaty states follow share treatment, with effect from 1 January 2022. Its ETF manual now points to a different manual for each domicile and expects the investor to establish equivalence for the specific product. Check the fund's own documentation and take advice if it is not clear.
Is dividend withholding tax an extra charge on top?
No. It is deducted at source and credited in full against your final liability, so it changes when you pay rather than how much. If your combined liability is higher you pay the difference, and if it is lower you can be due a refund.