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Tax Implication of Company buy back of shares

  • 05-06-2012 8:24pm
    #1
    tigerlily01
    Registered Users, Registered Users 2 Posts: 51 ✭✭


    Hi

    Not too sure if Im in the right forum but Im just looking for some guidance on tax implicaion for a company on buy back of it's own shares ( in a family business) from a retiring father
    I should indiciate I will be availing of retirment relief for CGT purposes and the amount received will be less then €750k .....

    I wonder what the tax impact it will have on the Company - Will there be stamp duty due by the company or any CAT due ? I have an idea that CAT is just due on receipt on gifts or inheritances but not on this ... right ?? ....:confused:


Comments

  • #2
    Shane732
    Registered Users, Registered Users 2 Posts: 4,998 ✭✭✭Shane732


    tigerlily01 wrote: »
    Hi

    Not too sure if Im in the right forum but Im just looking for some guidance on tax implicaion for a company on buy back of it's own shares ( in a family business) from a retiring father
    I should indiciate I will be availing of retirment relief for CGT purposes and the amount received will be less then €750k .....

    I wonder what the tax impact it will have on the Company - Will there be stamp duty due by the company or any CAT due ? I have an idea that CAT is just due on receipt on gifts or inheritances but not on this ... right ?? ....:confused:

    Please don't tell me this is something you're trying to do yourself?

    In the absence of relief a company buy back is within the scope of Income Tax and therefore liable to taxation at your marginal rate of tax. In certain instances it is possible to have a company buy back come within the scope of Capital Gains Tax. The Revenue have issued various tax briefings on company buy backs (Tax Briefing 25 comes to mind).

    The potential exposure on these is significant (potentially 50% versus 0%). You'd be absolutely nuts to try and do a company buy back/retirement relief structure yourself.

    Your also wrong in relation to your comment about the CAT treatment. I assume you're looking at a buy-back and gift to family member structure?

    There are also a number of returns that must be submitted to the CRO to do with the buy back and company law restrictions etc...

    I'm closing this thread as your query is far beyond the scope of the forum.

    Seek professional advice.


This discussion has been closed.
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