Irish CGT at 33% on Futures: The €1,270 Exemption Explained

General information about tax rules, not tax or legal advice. Rules change and every situation is different: check with a qualified adviser in your country before you file.

It is the second week of December. You have had a decent year on the ES, you are still trading, and you have not thought about tax since January because in your head tax happens in October like it always has. Then someone mentions that your Capital Gains Tax on everything you closed between January and November is due on the fifteenth. Not next October. This month.

That is the first thing Ireland does differently, and it catches nearly everyone in their first year. The second thing is the rate: 33% on the gain, flat, regardless of how much or how little you earn elsewhere. And the third is the annual exemption, €1,270, which sounds like a rounding error until you understand that it is the only shelter you get and that you lose it every year you do not use it.

None of this makes Ireland a bad place to trade futures. It makes it a place where the arithmetic is very simple and completely unforgiving, and where the calendar matters more than in most countries.

What the 33% attaches to

Irish Capital Gains Tax is charged at 33% on chargeable gains for most assets. There are outliers, for instance 40% on certain foreign life policies and lower rates on some venture capital fund gains, but for a person closing futures positions the number you plan around is 33%.

What makes it different from an income tax is that it does not care who you are. There is no band structure, no allowance that scales with your circumstances, no lower rate for a lower earner. A nurse on a modest salary and a consultant on a large one pay exactly the same 33% on the same gain. That cuts both ways: it is harsh if your income is low, and it is comparatively kind if your income is high, because a higher earner in Ireland pays income tax, USC and PRSI on marginal income at a combined rate well above 33%.

The charge lands when you dispose of the asset, which for a futures trader means when the position is closed out. It is a self assessment tax. Nobody withholds it, your broker does not deduct it, and no statement arrives telling you what you owe. You calculate it, you pay it, and you report it.

Costs directly connected to acquiring and disposing of the asset come into the computation, which for a trader means commissions and exchange fees. What does not come off, and this is where people overestimate, is the general cost of running the activity. A data subscription, a platform licence, a second monitor or a VPS are not incidental costs of a specific disposal. Under CGT they are simply your money.

One more mechanical point. CME contracts settle in US dollars. Your computation has to be in euro, so every gain and loss needs converting, and the exchange rate movement between the day you opened and the day you closed is part of your real result whether you were watching it or not.

The €1,270 exemption and its three limits

Every individual gets an annual personal exemption of €1,270. The first €1,270 of your chargeable gains for a tax year, after deducting allowable losses, is exempt from CGT. Revenue is clear that it is for individuals only, so a company or a trust cannot claim it, and that you are entitled to it whether or not you are resident in Ireland.

At 33%, the exemption is worth a maximum of €419.10 of tax in any year. That is the whole of it. It is a small number and it is worth being unsentimental about that. But it has three characteristics that shape how you should plan the year, and they matter more than the size.

It is personal and it does not move. Revenue states plainly that you cannot transfer the exemption to your spouse or civil partner. Each of you has your own €1,270 and neither can lend it to the other. A jointly assessed couple where one person trades and one does not has exactly one exemption in play, not two. If both partners have their own gains, both exemptions get used. If only one does, half the household's allowance is dead.

It does not accumulate. The legislation grants an exempt amount for a year of assessment and contains nothing that lets you carry an unused part into a later year. Three quiet years followed by one good one does not give you €5,080 of shelter. It gives you €1,270. Use it or lose it, every single year.

Losses come off before it does. This is the one that quietly wastes the exemption for active traders. The exemption applies to your gains after allowable losses have been deducted. So in a year where you closed a lot of winners and a lot of losers and finished net €900 up, you pay nothing, and the exemption has effectively done nothing for you either. It only ever shelters the first slice of a net positive year.

The practical consequence is small but real. If you are sitting on an unrealised loss in December and you were going to close it anyway, the timing of that close interacts with your exemption. If you have realised almost nothing this year, closing something profitable before year end uses an allowance that otherwise vanishes. Neither is a reason to take a trade you would not otherwise take, and manufacturing trades for tax reasons is how people turn a €419 saving into a €3,000 loss.

Two payment dates, one filing date

Ireland splits the tax year into two disposal periods for CGT payment purposes, and this is the single most common thing Irish traders get wrong.

• Initial period, 1 January to 30 November. Tax on gains from disposals in this window is due by 15 December of the same year.
• Later period, 1 December to 31 December. Tax on gains from disposals in this window is due by 31 January of the following year.

Read that first bullet again. A gain you realised in February is paid for in December of that same year, months before you file anything. There is no assessment, no reminder and no statement. You work it out and you pay it.

The return is separate and later. You file a CGT return on or before 31 October of the year following the disposal, and Revenue requires the return even where no tax is payable because losses or reliefs covered the gain. Which form depends on your situation: Form CG1 if you are not otherwise a chargeable person, Form 12 if you are a PAYE employee who has to file, Form 11 if you are self assessed, with Form 11 going through ROS.

So the rhythm of an Irish trading year looks like this: pay in December for almost the whole year, pay again at the end of January for the last month, file the following October. Three dates, none of which line up with the way anyone naturally thinks about tax.

Set a calendar reminder for the first week of December with an hour blocked out. Total your closed positions for the year to date, convert to euro, net off the losses, deduct the exemption, apply 33%, pay it. An hour in early December is cheaper than interest and penalties, and Revenue charges interest on late CGT the same as on anything else.

Losses, where Ireland is more generous than you think

The rate is high and the exemption is small, so it is worth knowing that the loss rules are one of the better parts of the Irish system.

Same year first. Allowable losses are deducted from chargeable gains made in the same tax year before anything else happens.

Carried forward indefinitely. Revenue's position is explicit: unused losses are carried forward and used against the next available capital gains in later years. There is no expiry. A bad first year is not wasted, it is a credit against every profitable year that follows, for as long as it takes.

Transferable between jointly assessed spouses, unlike the exemption. This is the asymmetry that surprises people. The €1,270 cannot move between spouses or civil partners, but allowable losses can. Where a couple is jointly assessed, losses are automatically applied against the other person's gains. Either party can instead apply, before 1 April of the following year, to keep their own loss. So a household where one partner is deep in a drawdown and the other has a gain on shares or a property is not stuck with two separate silos.

No carry back, with one exception. You cannot generally set this year's loss against last year's gain. The exception is the year a person dies, when unused losses can be deducted from that person's gains for the previous three years.

The practical instruction that falls out of this: claim your losses even in a year where they do you no good at all. A first year trader who loses €6,000 and files nothing because there was no tax to pay has thrown away a €6,000 credit that would have covered nearly €2,000 of tax later. The return is required anyway. File it.

The arithmetic per trade

Strip the year down to a single number and it becomes easy to reason about. On net gains above €1,270, one third of what you make goes to Revenue.

Turn that around and it changes how you think about a target. If you want €30,000 in your hand from your own futures account in a year, you need roughly €45,000 of net gains before tax, allowing for the exemption. If you want €50,000 net, you need about €75,000 gross. That is before commissions, exchange fees, data and platform costs, which do not come off the CGT computation but very much come off your bank balance.

Two consequences that are worth acting on rather than just noting.

Costs hurt twice. A €200 monthly data and platform bill is €2,400 a year of after tax money. To fund it out of trading you need about €3,600 of gross gains. Anything you are paying for and not using is more expensive than it looks.

When Revenue might call it a trade

Everything above assumes you are within the capital gains regime. There is a scenario where you are not: where the activity amounts to carrying on a trade, in which case profits are charged to income tax rather than CGT.

That matters enormously, because income tax in Ireland comes with USC and PRSI on top, and the combined marginal cost of income for a higher earner sits well above 33%. On the other side, trading treatment brings full deduction of business expenses, the ones CGT will not give you, and losses that can be used far more flexibly than capital losses.

There is no bright line and no election. It turns on the facts, assessed against the long established badges of trade: frequency and volume, organisation, whether you are operating in a business like way, the length of ownership, financing, and how the activity fits with the rest of what you do. An individual speculating on their own account with their own money is normally within CGT. Something that looks like a business, with structure, scale and other people involved, may not be.

Do not try to reason your way to a conclusion on this from a website, including this one. If your activity has grown beyond one person and one account, put it in front of an Irish tax adviser and get a view in writing before you file, not after Revenue asks.

The CME session from an Irish clock

Ireland is in a good time zone for US futures, which is the underrated part of trading from here.

CME equity index futures open Sunday at 5:00 pm US Central time and run through to Friday at 4:00 pm Central, with a one hour break each afternoon from 4:00 to 5:00 pm Central. The US cash session, where the volume concentrates, runs 8:30 am to 3:00 pm Central.

In Irish time, for most of the year, that works out as:

• Week opens Sunday at about 11:00 pm.
• The cash session runs from about 2:30 pm to about 9:00 pm.
• The daily break falls around 10:00 pm to 11:00 pm, and the week closes Friday at about 10:00 pm.

Ireland and the United States change clocks on different dates, so for a few weeks in March and for about a week between late October and early November those times shift by an hour. Check rather than assume in those windows.

The practical shape of that is you can hold a job and still trade the New York open, which is why so many Irish traders start part time. The cost is that your evenings belong to the market, every weekday, and the first hour after 2:30 pm is the part you cannot skip. A method with defined setups and a hard finish time is what makes that sustainable past the first six months.

The Irish position is unusually easy to hold in your head. One rate, 33%. One small exemption, €1,270, personal, non transferable and gone at the end of every year. Two payment dates, 15 December and 31 January. One filing date, 31 October the year after. Losses that carry forward forever and can move between jointly assessed spouses even though the exemption cannot.

So do three things. Put the December date in the calendar now, with an hour beside it. File a return in every year you trade, including the losing ones, because that is how the loss credit gets banked. And keep a running spreadsheet of closed positions in euro from January, rather than reconstructing a year of fills in the second week of December.

capital gains tax ireland trading 33%

Educational content, not investment advice. Trading futures involves substantial risk of loss and is not suitable for every investor. Any reference to Algomyth results is hypothetical, simulated over historical data, and shown in full on the performance page; past performance does not guarantee future results.