Simon Harris Explores Swedish Savings Model for Irish Scheme

The Irish government is moving forward with plans for a new savings scheme, as Finance Minister Simon Harris expressed interest in the Swedish model during an event at the Embassy of Ireland in Paris. Harris described Sweden’s approach to low-tax savings accounts as “very interesting,” highlighting its potential to incentivise investment among Irish citizens.

This initiative is part of a broader strategy that aims to encourage investment by eliminating existing barriers. Plans for the savings scheme are expected to be approved in the first half of this year and will form a key component of the proposals for Budget 2027. Harris indicated that he is also looking into savings schemes currently implemented in the UK and Canada.

The government plans to hold a forum next month, gathering stakeholders to discuss the proposed savings scheme. Harris noted that many hardworking individuals in Ireland are currently excluded from investment opportunities, stating, “I think we need to do a form of saving and investment account because it makes sense, and people aren’t making any money on their deposits.”

Understanding the Swedish Model

The Swedish savings account, known as the ISK (Investeringssparkonto), allows savers to invest in various products linked to the stock market, including exchange-traded funds (ETFs). Users of the ISK benefit from a low flat tax rate, typically just under 1% of the fund’s value, which is tied to the yield of Swedish government bonds. Notably, no tax is applied to the first 300,000 SEK (€28,000) in an ISK account.

This model not only simplifies the investment process by eliminating the need to track transactions for tax purposes but also encourages compounding returns, a feature often hindered for Irish investors due to the concept of deemed disposal. Under current Irish tax law, gains from ETFs are taxed at 38% every eight years, creating a significant barrier for long-term investment.

When asked about the possibility of scrapping the deemed disposal tax, Harris refrained from making any commitments before the upcoming budget discussions. He acknowledged the concerns surrounding deemed disposal, stating, “People rightly highlight the unfairness of it and the barrier that it presents.”

Looking Ahead: Economic Implications

In Budget 2026, the tax rate on investment returns was reduced from 41% to 38%, but Harris believes more reforms are necessary. He stated, “I think there’s much more that needs to be done in that space,” indicating that the government is considering various options to enhance the investment landscape for average citizens.

Despite facing challenges such as high property prices and a rising cost of living, Harris pointed out that Ireland is among the best savers in the European Union. He asserted that the new savings scheme could empower “middle Ireland” to invest in a manner that aligns with their risk appetite, emphasizing the importance of making investments accessible.

On the same day, Harris met with Roland Lescure, France’s Finance and Energy Minister, to discuss increasing energy prices and Ireland’s upcoming presidency of the EU. They also focused on the Savings and Investment Union (SIU), which aims to create better financial opportunities for EU citizens while enhancing the financial system’s capability to connect savings with productive investments.

Harris remarked, “There’ll always be money on deposit in Ireland, but if a portion of that could be converted to investment, it’s really good for the country, it’s really good for individuals.” This sentiment underscores the potential benefits of the proposed savings scheme, which could bolster economic resilience and support the banking sector.

As the Irish government prepares to roll out this savings initiative, the focus remains on creating a system that not only meets the needs of its citizens but also fosters a more robust investment culture within the country.