RaboDirect offers investors capital growth investment funds. Growth investment funds reinvest any income earned back into the fund.  Any gains made from the buying and selling of units in RaboDirect's funds are taxed on a gross-roll up basis.  This means that the funds grow free of tax until the investor decides to sell their investment.  When an investor sells their investment the investor is liable to pay tax* on the total increase in value of the investment.

Investors should note that a lower tax rate* only applies if they have declared the tax liability to the Revenue Commissioner within a specified time period; otherwise, for investors who do not make valid returns within the correct period, the tax rate applicable may be each investor's marginal rate of tax (which could be up to 41%*, plus PRSI and levies). However this is only a general tax summary and individual circumstances may differ.

RaboDirect is not be responsible for making any tax deductions on investments. RaboDirect customers should declare any tax liability they owe by submitting their tax return to the Revenue. Investors should make the return on or before the 31st October in the year following the tax year in which they sold their RaboDirect investment fund.  For example, if a RaboDirect customer sold an investment fund in 2009 and made a gain, then the investor should submit this on his / her tax 2009 form due on or before the 31st October 2010.

The acquisition of an investment in an offshore fund brings, to the extent not already, an individual within the self assessment regime and in this regard, they would have an obligation to make a tax return for the tax year in question. Details of the acquisition including the name and address of the offshore fund, the date the interest in the fund was acquired, the amount of capital invested in acquiring the interest and the name and address of the intermediary - RaboDirect - through whom the investment was acquired) should be made on Form 11 under Section 318 (g) - (j). For further information see Learn how to make  Annual Tax Returns to the Revenue.

*Based on current tax legislation, any gains made on investment funds will be taxed at 30% on sales concluded up to 31 December 2011. From 1 January 2012 onwards, any gains made on investment funds will be taxed at 33%.

First In First Out (F.I.F.O) is the method of calculating the tax charge where a person holds units in the same fund which have been purchased at different dates.  F.I.F.O is where the units bought at the earlier date are considered to be disposed of first. The example below explanes how F.I.F.O works:

For example:

2008 bought 100 units in X fund @ €1 per unit

2009 bought 100 units in X fund @ €2 per unit

2010 sold 150 units in X fund at @ €3 per unit

Total Gain =

150 units @ €3 (sold in 2010)= €450

So following the FIFO rule

100 units (bought first in 2008) @ €1= €100

Then

50 units (of the 100 units bought in 2009) @ €2= €100

Total amount liable for tax is the gain made from the transaction so

€450-€200= €250

Therefore the investor is liable to pay tax on the €250 gain he/she made

This example is for illustrative purposes only.

This is only a general tax summary. Individual circumstances may differ. The tax situation may change in the future. Taxation is a complicated issue and we recommend that you seek advice from a tax adviser.

On each eighth anniversary of acquisition the investor is deemed to dispose and reacquire their investment in the fund. Tax is payable on any deemed gain arising*. This tax is available for credit against the tax liability when the investment in this fund is ultimately disposed of. If the investment has not increased in value, then no tax is due. Each investor must make the necessary timely returns to the Revenue in order to avail of the necessary tax benefits outlined above.

Three of the funds available through RaboDirect are Irish UCITS. Irish UCITS are usually taxed at source. This means that the fund administrator collects and pays over any tax liability to the Revenue on behalf of the investor. However there are a number of exceptions to this rule and one of these is where the funds are held in a recognised clearing system. The units in the Irish UCITS offered by RaboDirect are held in a recognised clearing system. In a clearing system the details of the underlying investor (customer) are not available to the administrators for the purpose of making tax deductions at source. As a result, the investor must again self-assess themselves for Irish tax in respect of any increase in value on the investment on the disposal of the investment or on the eighth anniversary of the investment. Each investor must make the necessary timely returns to the Revenue in order to avail of the necessary tax benefits.

* Based on current tax legislation, any gains made on investment funds will be taxed at 30% on sales concluded up to 31 December 2011. From 1 January 2012 onwards, any gains made on investment funds will be taxed at 33%.

All funds offered through RaboDirect are sold as either Undertakings for Collective Investments in Transferable Securities (UCITS) or  SICAVs, a  UCITS set up in Luxembourg.  A UCITS is a type of fund structure that is freely marketable within the European Union. 54 of the funds available through RaboDirect are Luxembourg based SICAVs. In these circumstances, the investor must self-assess themselves for Irish tax in respect of any increase in value on the investment on the disposal of the investment or on the eighth anniversary of the investment. Each investor must make the necessary timely returns to the Revenue in order to avail of the necessary tax benefits outlined above.

Three of the funds available through RaboDirect are Irish UCITS. Irish UCITS are usually taxed at source. This means that the fund administrator collects and pays over any tax liability to the Revenue on behalf of the investor. However there are a number of exceptions to this rule and one of these is where the funds are held in a recognised clearing system. The units in the Irish UCITS offered by RaboDirect are held in a recognised clearing system. In a clearing system the details of the underlying investor (customer) are not available to the administrators for the purpose of making tax deductions at source. As a result, the investor must again self-assess themselves for Irish tax in respect of any increase in value on the investment on the disposal of the investment or on the eighth anniversary of the investment. Each investor must make the necessary timely returns to the Revenue in order to avail of the necessary tax benefits as outlined above.

Investor is liable to pay tax on the increase in value of the investment when they are selling one RaboDirect fund and investing in another. There is no exemption on the tax payment if investors decide to buy another RaboDirect fund. From a tax point of view they are considered separate transactions.

All Irish resident individuals receive the standard tax credits and relief, which will vary from individual to individual.  In the case of an offshore funds individuals must pay tax at the prevailing rate* provided the individual has included the correct details on his/her return of income and has made that return by 31st October following the year in which the gain was made. An investor cannot offset the gains made in one funds against the losses incurred in another. Also, if an investor has made a loss on the sale of a fund, there is no tax relief available for that loss.

* Based on current tax legislation, any gains made on investment funds will be taxed at 30% on sales concluded up to 31 December 2011. From 1 January 2012 onwards, any gains made on investment funds will be taxed at 33%.

In addition to the obligation to make a tax return, the self-assessment system also requires an individual to account for preliminary tax on non-PAYE income. To avoid interest charges, the preliminary tax due for the tax year 2009 must be paid by the 31 October 2009. 

The tax paid must represent 90% of the individual's final liability for 2009 or 100% of the ultimate liability for the previous tax year, 2008. 

Alternatively, for the 2009 tax year:

A taxpayer can elect to make a preliminary tax payment equal to 105% of the ultimate liability for 2007 (except where the liability was nil). The tax is payable in equal monthly instalments, the final instalment of which is due in December 2009. Any balance of tax due for 2009 must be paid by 31 October 2010,

Under current Revenue practice, an individual with non-PAYE income (from one or more sources) in excess of €3,174 in any tax year is obliged to account for preliminary tax through the self assessment system. Where your income exceeds €3,174 in a particular tax year we would recommend that you seek appropriate tax advice as to your tax payment obligations.

Where an individual's total non-PAYE income is less than €3,174 in any tax year, it is not necessary to account for preliminary tax through the self-assessment regime; in this case any tax on non-PAYE income would be paid when making the return of income for the tax year concerned (i.e. by 31 October following the year in which the gain arises).

RaboDirect Investment Funds are exempt From New 1% Government Levy.

The Irish Government introduced a new 1% tax levy across numerous personal protection, savings, investments and pension products from the 1st August 2009 but we just wanted to reassure our investment customers that the levy will not apply to any of the funds offered by RaboDirect.

All our funds are Luxembourg based SICAV's and therefore subject to tax under the Irish Offshore Fund Rules.