Aoife, a self-employed investor, realises a €10,000 capital gain on a Luxembourg-based ETF; as a higher-rate taxpayer, what is the tax liability on this gain?

• A. €4,000
• B. €4,100
• C. €4,500
• D. €5,200

Answer: (B)

The main concept is that for a resident investor in Ireland, capital gains are taxed at the CGT rate, and for higher earners there is an additional charge on investment income that increases the effective tax on gains.

Aoife realizes a €10,000 gain. The capital gains tax rate is 33%, which would be 3,300. In addition, high earners pay the Universal Social Charge (USC) on gross income, and on the top band this adds 8% on the gain, amounting to 800. The combination gives an overall tax on the gain of 33% plus 8% = 41%, so €4,100.

The Luxembourg-domiciled ETF status doesn’t change the Irish treatment for a resident investor—the gain is taxed in Ireland. If Aoife weren’t in the higher rate band, the USC might not apply in the same way, and the liability would be different (3,300).