A state-backed investment account specifically for children could be made available in the future, following plans to roll out a savings and investment scheme for over-18s.
Tánaiste and Minister for Finance Simon Harris will publish details of how the savings and investment account will operate this week.
There are approximately 170 billion euro on deposit in Irish bank accounts, which Mr Harris previously said is “sitting idle”.
Encouraging market investments
The tax-advantage scheme is designed to encourage people to move their savings into market investments.
Irish households hold just 2.3% of their financial assets in direct investments such as listed shares and debt securities, compared with an EU average of approximately 7.5%.
A significant proportion of Irish household financial assets is instead held in cash and deposits, at 38% compared with an EU average of 30%.
Eligibility and account details
Irish residents who are aged 18 and over will be eligible to open an investment account.
Under the plans, as prepared by the Department of Finance, it 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 investment account is intended to help broaden participation in capital markets while giving individuals greater choice in how they manage their savings and investments.
The new investment account will be available to Irish tax-resident individuals who hold a personal public service number (PPSN), with one account permitted per person.
Tax and investment rules
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.
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.
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).
The existing investment tax regime, including the deemed disposal rule, will not apply to investments held within the investment account.
There will be no minimum holding or lock-in period and portability of investment accounts between providers will be facilitated, where possible, on a tax-neutral basis.
Highly complex and risky products, including derivatives and crypto assets, will not be allowed.
Minister’s comments and availability
The accounts are set to become available next year.
Mr Harris said: “Irish people are good at saving. Every week and every month, people work hard to put something aside to build financial security for themselves and their families.
“But while we are 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.
“Capital markets should not feel remote or like something that is only for people with significant wealth or financial expertise. Equally, nobody should feel that investing is something they have to do. We know that enhancing financial literacy and greater transparency and simplicity has a role to place in better informing people.
“The investment account is about giving people another practical option.
“It will bring different types of investments together in one account, take the tax administration away from the individual and give people flexibility to access their money when they need it.”
