Spread Betting vs CME Futures for Irish Traders: An Honest Comparison

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.

Ask around any Irish trading group and you will hear it inside three messages: spread betting is tax free, futures are not, so why would anyone bother with CME. It gets repeated with so much confidence that people pick a platform on the strength of it and never once read the section of law the whole argument rests on. Then they spend two years fighting a dealing desk on a product that has no public order book, and they call it a strategy problem.

This is the comparison done properly. What the exemption actually says, what it costs you when you lose, what the 33% on futures works out to in practice, and the part nobody prices: the difference between betting against a firm and trading on an exchange.

Why the tax free line is so sticky

It is sticky because it is broadly true, and because it is the only part of the comparison that produces a number you can say out loud in a pub. Thirty three per cent sounds enormous. Zero sounds like a cheat code. Nobody argues with zero.

The trouble is that the line is doing a lot of work it was never built for. It tells you how a profit is treated after it exists. It tells you nothing about how likely that profit is, what it costs to produce, or who is standing on the other side of your fill. Traders who lose money on spread bets pay no tax either. That is not a benefit, it is arithmetic.

There is also a quiet assumption buried in the claim: that your activity is a bet in the eyes of Irish law, and that it stays a bet no matter how you run it. Both parts deserve a look.

What section 613 actually says

The exemption is not a special rule for financial spread betting. It is a general betting rule that spread bets happen to sit under. Section 613(2) of the Taxes Consolidation Act 1997 puts it in one sentence: winnings from betting (including pool betting), lotteries, sweepstakes or games with prizes shall not be chargeable gains, and rights to winnings obtained by participating in any pool betting, lottery, sweepstake or game with prizes shall not be chargeable assets. You can read it yourself on the Irish Statute Book.

Two things follow from that wording and both matter.

First, the exemption works by saying a bet is not a chargeable asset. It is a carve out from capital gains tax, not a blanket declaration that the money is invisible to Revenue for every purpose. Capital gains tax is one tax. It is not the only one.

Second, read the sentence again with a loss in mind. If the right to winnings is not a chargeable asset, there is no chargeable asset to dispose of at a loss. A losing year on spread bets gives you nothing to carry forward, nothing to set against a gain somewhere else, nothing at all. The exemption is symmetrical and most people only ever describe one half of it.

The half of the exemption nobody quotes

Think about what that asymmetry does over a normal trading career rather than over one good quarter.

For a trader who is still learning, and that is most people who are asking this question, the loss relief on the futures side is worth more than it looks. The tax free side of the spread bet only starts paying you once you are consistently in profit, which is exactly the point at which the other costs of the product start to bite hardest.

What futures actually cost you in tax

Now the other column, with real figures rather than folklore. Gains on CME futures held by an Irish resident individual normally fall under capital gains tax. Revenue states the rate plainly: the current rate of CGT is 33% for most gains, set out on the Revenue page on transferring an asset.

Before the rate bites, every individual has a personal exemption. Revenue puts it at 1.270 euro each year on its page on calculating CGT. It is not transferable to a spouse and it does not carry forward, so if you never use it in a flat year, it is gone.

The payment calendar is the part that catches people, because it runs ahead of the return. Revenue splits the year into two windows:

• Disposals from 1 January to 30 November: tax due by 15 December of the same year.
• Disposals in December: tax due by 31 January of the following year.
• The return itself is filed on or before 31 October of the year after the disposal, on Form CG1 if you are not otherwise a chargeable person, or inside Form 11 if you are.

All of that sits on the Revenue page about when and how you pay and file CGT, and Revenue is explicit that a return is required even where relief or exemption means no tax is due. Paying in December and filing the following October feels odd the first time. Put both dates in your calendar the day you take your first profitable position, not in autumn when you go looking for the form.

So what does the headline number really mean? Take a trader who nets 12.000 euro of gains across a year on MES and MNQ. Knock off the 1.270 euro personal exemption and 10.730 euro is taxable, which at 33% is roughly 3.540 euro. The trader keeps about 8.460 euro. That is a real bill and nobody enjoys writing it. It is also not the 33% haircut on everything that the pub version implies, and it arrives only when there is something to tax.

When Revenue may treat it as a trade

Here is the wrinkle that turns the simple story upside down for a small number of people.

Section 613 exempts winnings from betting from capital gains tax. It does not say that a person who carries on a trade is outside the income tax code. Irish tax law has a long standing distinction between a capital transaction and a trade, and where an activity amounts to a trade, the profits are charged to income tax rather than capital gains tax. The question is decided on the facts: organisation, frequency, systems, whether the activity is run like a business and whether it is your main source of livelihood.

Two consequences are worth holding on to. If your futures activity were ever treated as a trade, the 33% is the wrong rate and income tax rates, plus USC and PRSI, come into the picture instead, which for most people is a worse outcome, not a better one. And if a spread betting operation were ever treated as a trade, the section 613 comfort blanket is not obviously the end of the argument either.

This is not a reason to panic. The overwhelming majority of part time traders running a personal account are nowhere near that line. It is a reason to stop treating the tax free claim as a law of physics, and to ask a tax adviser in Ireland once your volumes get serious, especially if trading is your only income.

One more thing on the tax side, for completeness: betting in Ireland does carry duty, but it is charged on the bookmaker and on remote betting intermediaries, not on the customer. Revenue explains the structure on its betting duty pages. You never see it as a line on your statement. That does not mean it is not in your price.

Execution, the part the tax argument hides

Now the half of the comparison that decides whether there is a profit to tax in the first place.

When you place a CME futures order, it goes to a central limit order book. Every participant in that contract, from a pension fund hedging to the person sitting in Galway with one MES, queues in the same book against the same resting orders. The price on your screen is the price the whole world sees. Volume is real, exchange reported volume. Depth is real. Time and sales is a record of trades that actually happened, not a feed one firm chose to show you.

A spread bet is a private contract between you and the provider. There is no central book. The provider derives its price from an underlying market, adds its own spread, and takes the other side. The firm is your counterparty. That is not a scandal and it is not an accusation, it is simply the structure of the product, and it has consequences you feel every single day:

• You cannot see genuine market depth, because there is no book to see. Whatever ladder you are shown is the firm quoting you.
• The spread is the product. It can widen around news, at the open, and in thin hours, and that widening is not an exchange event you can verify against a tape.
• Order flow analysis, in the strict sense, does not really exist. Cumulative delta, absorption at a level, an iceberg refilling on the bid, all of that needs exchange trade and quote data. On a derived quote you are analysing a firm's pricing model.
• Your position size is in pounds or euro per point, which feels friendly and quietly detaches you from the actual contract you are exposed to.

On futures you get the opposite trade off. You get a real book, real volume, a tick by tick tape, the same data professionals use, and complete transparency about what one tick is worth. You also get an instrument that will not soften the blow for you. Leveraged futures can lose you more than you put in. That is true of leveraged spread bets too, though negative balance protection applies to retail clients of regulated providers. Neither product forgives a position that is too big for the account.

A side by side that is not marketing

Structural differences only. Commissions, financing and spreads vary by provider and by contract, so check your own statement rather than trusting any table, including this one.

Read the last two rows together. That pair is the honest version of the tax argument, and it is a genuinely different conversation from the one that starts and ends with the word free.

How to decide without kidding yourself

Four questions, in this order.

Are you consistently profitable yet? If not, the exemption is worth nothing to you this year and the loss relief on the futures side is worth something. Decide on execution, not on tax.

Do you need real order flow data? If your method depends on reading the book, on delta, on absorption at a level, on volume at price, then the decision is made. That data comes from an exchange. It does not exist on a derived quote, and no amount of chart software manufactures it.

What does your all in cost per round turn look like? Add commissions, exchange and data fees, and the spread you actually pay rather than the advertised one. Do the same for the spread bet, where everything is inside one number. Then compare that total against the tax difference on the profit you realistically expect. For many part time traders the execution cost gap is not far off the tax gap, and it is paid on every trade rather than only on the winners.

How complicated is your life about to get? Futures mean a CGT return, two payment windows, records of every disposal in euro, and contract rolls in your history. It is bookkeeping, not rocket science, but it is real work. Price it honestly rather than discovering it in October.

The point is not that spread betting is bad and futures are good. It is that a comparison built on one word is not a comparison. Section 613 is real, and so is the 33%, and so is the fact that only one of those two products shows you the order book you are trading into.

This article is general information, not tax or legal advice. Irish rules change and your own position depends on facts a blog cannot see, so put anything that matters in front of a tax adviser qualified in Ireland before you file or restructure how you trade.

spread betting ireland tax vs futures

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.