Moving abroad to reduce tax liability

Grecco

Ok none of us like to pay taxes, worse still is paying the huge capital gains tax we have here in Ireland on share profits. What is really unfair about this is the amount of risk you have to burden when investing in shares then only to have the Government waiting to grease their paws with your profits (That if you are fortunate to have any)

So heres the thing, I`m now sitting on excess of 700k unrealized profit from shares bought during the stock market fall "aka dash for the trash which wasn't really trash with some of the stocks that got hammered". Now if I was to cash in today then i`d be sitting on a huge tax liability.
So now theirs redundancies going where i`m working which I think its time for me to take, I`m thinking of moving abroad for a year or so, can I do this and avoid paying Tax here and maybe pay tax elsewhere at a lower rate??

(I know this subject is going to upset a few but it is what it is and I know Tax avoidence is a touchy subject but F-em, I need a break from paying through the nose all the time!!)

robp

Grecco wrote: »

Ok none of us like to pay taxes, worse still is paying the huge capital gains tax we have here in Ireland on share profits. What is really unfair about this is the amount of risk you have to burden when investing in shares then only to have the Government waiting to grease their paws with your profits (That if you are fortunate to have any)

So heres the thing, I`m now sitting on excess of 700k unrealized profit from shares bought during the stock market fall "aka dash for the trash which wasn't really trash with some of the stocks that got hammered". Now if I was to cash in today then i`d be sitting on a huge tax liability.
So now theirs redundancies going where i`m working which I think its time for me to take, I`m thinking of moving abroad for a year or so, can I do this and avoid paying Tax here and maybe pay tax elsewhere at a lower rate??

(I know this subject is going to upset a few but it is what it is and I know Tax avoidence is a touchy subject but F-em, I need a break from paying through the nose all the time!!)

From my limited knowledge yes and perhaps no tax if you move to the right country but I think you would need to be abroad for three years to avoid capital gains tax. People going abroad can remain ordinarily resident here for tax purposes for three years although not actually resident in the country.

ixus

You'd need to be resident in a place like Isle of Man, Cyprus, Gibraltar or some such for 3 years.

You would be best advised to consult a tax specialist/advisor on this though. You may already be liable for CGT on any gains before you relocate.

There's a Tax forum which may provide better information.

RobertKK

I can't help, just want to add my agreement about capital gains tax being too high.
Most of the time it is money for the state which did nothing to make the gain possible.

alofek

I can't help either but couldn't agree more with Robert. The money invested in shares has already been taxed when it was first earned, and this is effectively a second enormous bite of the cherry from the government (with no attendant risk). Don't think anybody would have a problem with CGT of 12.5% but to my mind, current rates are a major discouragement. It's no wonder all the investment money is going towards property again.
Have you no loss-makers that you could use to take away some of the pain?

chompdown

Agree with all the above. Also not a tax expert, but one way to realise those gains tax free is to borrow from the bank and use them as collateral. Not exactly what you might want but another option all the same.

By the way, I moved away from Ireland when I finished college and absolutely love it.

If you choose to stay, you are paying the Irish Gov't almost a quarter of a million euro for that pleasure. F*** that!

ixus

chompdown wrote: »

Agree with all the above. Also not a tax expert, but one way to realise those gains tax free is to borrow from the bank and use them as collateral. Not exactly what you might want but another option all the same.!

Are you Sean Quinn?

chompdown

ixus wrote: »

Are you Sean Quinn?

Hang on a minute. Didn't Sean Quinn borrow to buy CFDs?

The OP may need some cash, so taking out a loan against those assets he already has certainly is an option for him.

I don't believe the OP is trying to release cash from those equities and buy more equities, like you are implying.

euroboom13

chompdown wrote: »

Hang on a minute. Didn't Sean Quinn borrow to buy CFDs?

The OP may need some cash, so taking out a loan against those assets he already has certainly is an option for him.

I don't believe the OP is trying to release cash from those equities and buy more equities, like you are implying.

If anyone knows a bank that will except shares as security on a loan, I would love to know(I know it was easy a few years ago but I found it impossible last year).

Morleystreet

Just wondering, how does the taxman find out. R the brokers obliged to report it. I know for 700k it will prob set lights flashing, but say for smaller amounts, how do they know about it?

quadrifoglio verde

Morleystreet wrote: »

Just wondering, how does the taxman find out. R the brokers obliged to report it. I know for 700k it will prob set lights flashing, but say for smaller amounts, how do they know about it?

Revenue operate on the basis of if you don't tell us, when we find out we screw you. They nearly always find out, unless you earn a bit from cash that doesn't go near the bank!

arrowloopboy

If you transferred the shares to a trusted friend/family member not resident in the state ,would the CGT have to be paid prior to transferring ?This is exactly why I spread bet instead of buying shares.

robp

arrowloopboy wrote: »

If you transferred the shares to a trusted friend/family member not resident in the state ,would the CGT have to be paid prior to transferring ?This is exactly why I spread bet instead of buying shares.

Nit sure but depending on the state many countries have gift tax which hinders this.

ixus

Please not that Tax Avoidance is illegal.

The idea of taking out a loan on the back of unrealized equity gains is so far off the scale. The OP is trying to retain as much of his equity gains as possible, not put the gains at more risk.

hullaballoo

Tax avoidance isn't illegal.

imitation

Get good advice op from an expert, sometimes a big windfall can be a liability if tax iisn't handled right. Its not unheard of for revenue to come knocking long after the money has been spent or reinvested long term. In my unprofessional opnion I can't see it really flying with revenue if the profit was made while you were resident (just not cashed in)

euroboom13

imitation wrote: »

Get good advice op from an expert, sometimes a big windfall can be a liability if tax iisn't handled right. Its not unheard of for revenue to come knocking long after the money has been spent or reinvested long term. In my unprofessional opnion I can't see it really flying with revenue if the profit was made while you were resident (just not cashed in)

gain is not real until cashed in ,so there is no gain until day of sale! Impossible to tax floating gains!

Any heads up on banks lending against stocks?

chompdown

ixus wrote: »

Please not that Tax Avoidance is illegal.

The idea of taking out a loan on the back of unrealized equity gains is so far off the scale. The OP is trying to retain as much of his equity gains as possible, not put the gains at more risk.

With all due respect your post is way off. Tax avoidance is absolutely not illegal. Tax evasion is.

Also, taking a loan out against the equities has got nothing to do with realised or unrealised gains. The equities are simply an asset that can be used as collateral against a loan, just like using real estate.

By your logic, if the OP had a property which had increased by €700k, would remortgaging it be illegal and "off the scale"?

Grecco

Just as an update I have put in for voluntary redundancy at work. I have 2 Job opportunities abroad 1 in Canada and the other in Moscow above all places!!
I can take it that Russia has no Tax agreement with Ireland, but what about Canada?
Also I wonder would Revenue be open to taking a smaller cut if I agreed to realize the profits here, surly they should be willing to cut deals for large one off payments.

euroboom13

chompdown wrote: »

With all due respect your post is way off. Tax avoidance is absolutely not illegal. Tax evasion is.

Also, taking a loan out against the equities has got nothing to do with realised or unrealised gains. The equities are simply an asset that can be used as collateral against a loan, just like using real estate.

By your logic, if the OP had a property which had increased by €700k, would remortgaging it be illegal and "off the scale"?

Chompdown
What banks are excepting stock as collateral.( I have it in writing that it is against lending policy at the moment)????

ixus

chompdown wrote: »

With all due respect your post is way off. Tax avoidance is absolutely not illegal. Tax evasion is.

Also, taking a loan out against the equities has got nothing to do with realised or unrealised gains. The equities are simply an asset that can be used as collateral against a loan, just like using real estate.

By your logic, if the OP had a property which had increased by €700k, would remortgaging it be illegal and "off the scale"?

"Avoidance" is a grey area. I put the warning up to deter people lacking in knowledge posting

State chases €135m in tax avoidance

If Revenue’s view of the transaction as a tax-avoidance transaction is upheld in the majority of cases, interest and a surcharge of 20% of the tax will become payable in addition to the tax in dispute

Collateralise against "unrealised equity", whatever the asset, goes against what the OP is trying to do. Exposes them to potential massive losses when all they were trying to do was minimise the impact of CGT. The value of their asset could deteriorate & they would still have a loan & interest to service.

chompdown

Thanks for the link. Very interesting, especially considering tax avoidance is by its very definition a legal means of reducing your tax liability. That won't stop the Irish government it seems....

Yes, the OP would absolutely have still have a loan liability if the value of those equities plumetted, but I was merely presenting it as an option.

Eurobloom, I am not based in Ireland so I cannot answer your question re Irish banks... I wish the OP luck with whatever way he goes, and major kudos for achieving such good returns!

ixus

If you have any other assets that may be open to CGT, it's worth taking them into account.

For example, if you have an investment property that has made a loss (not negative equity) you can write the loss off against income that is open to CGT.

You can carry losses forward but not profits.

This is where the tax adviser will help.

thisNthat

Just wondering are the shares actually sold and the 700K sitting in a trading account somewhere or are they still in shares and worth 700K should you sell them?

The reason I ask is, if they weren't sold but you moved to a more tax friendly country and then changed the named on the trading account to your new countries address, could you wait till then to sell them as there would be no profit from the shares while resident in Ireland, the profit would only be due in the country where the shares were sold and profit was made?

If the money is already in an account and the shares are already sold while you're resident in Ireland can you not just move the 700k to your new account in Canada or wherever?

I'm being completely speculative here and just wondering this myself?

Grecco wrote: »

Just as an update I have put in for voluntary redundancy at work. I have 2 Job opportunities abroad 1 in Canada and the other in Moscow above all places!!
I can take it that Russia has no Tax agreement with Ireland, but what about Canada?
Also I wonder would Revenue be open to taking a smaller cut if I agreed to realize the profits here, surly they should be willing to cut deals for large one off payments.

euroboom13

thisNthat wrote: »

Just wondering are the shares actually sold and the 700K sitting in a trading account somewhere or are they still in shares and worth 700K should you sell them?

The reason I ask is, if they weren't sold but you moved to a more tax friendly country and then changed the named on the trading account to your new countries address, could you wait till then to sell them as there would be no profit from the shares while resident in Ireland, the profit would only be due in the country where the shares were sold and profit was made?

If the money is already in an account and the shares are already sold while you're resident in Ireland can you not just move the 700k to your new account in Canada or wherever?

I'm being completely speculative here and just wondering this myself?

By moving to Canada with the cash, you would be leaving behind an unpaid tax liability that you would still be liable for plus interest. It may not be pursued but you would be fraudulently neglecting your tax debt.(criminal proceedings)

As for moving with unrealised profit ,to another tax system, there wouldn't seem to be any liability left behind depending on duration of the new residency and its relationship to the sale.

This is only an opinion!

thisNthat

Thanks for the reply,
This is the tricky area I'd say, I wonder is there a time frame you need to be gone from the country before you cash in (So to speak) on your shares?
or how long you need to stay resident in your new country to be cleared of all liability before you can return (Providing you wanted to return)?
Just curious as this is an interesting topic

euroboom13 wrote: »

As for moving with unrealised profit ,to another tax system, there wouldn't seem to be any liability left behind depending on duration of the new residency and its relationship to the sale.

euroboom13

http://www.amazon.com/Avoid-Capital-Gains-2013-2014/dp/0957602480

May help give you guidance , but if you may have a gain to realise in the future it would be more cost effective to get professional advise.

I have no connections with the book but I have read similar and found it helpful, but have had no gain worth the Hassle just yet!
gla