Advice on Dividend Reinvestment Plans (DRIP)

newvestor8

I'm a PAYE worker and looking for some advice re tax on US DRIP shares. I don't have much experience with this kind of thing and am trying to work out the correct course of action but am finding the whole thing confusing so am hoping someone with more experience might share their wisdom.

I was working in Ireland for a U.S. company for a few years in the 1990s and bought shares as part of the employee reward programme. They offered a DRIP programme where all dividends are automatically reinvested and new shares purchased. The U.S. government withholds 15% tax on the gross dividend (only about 30euro per year) and I think I have to pay Irish income tax on the gross dividend but that I should reduce the amount of Irish tax I pay by the amount I have already paid to the U.S. govt. Is that correct?

I tried to do this on the PAYE online system and found the place in form 12 to input the gross dividends received but could not find where I claim the tax credit for the U.S. tax already paid. Any advice?

With regard to CGT:
Am I correct in thinking that when I sell my shares (in one batch) all I need to do is pay 33% of the difference between the amount I paid for the initial shares originally and the amount I receive when I sell the shares (including the DRIP ones)? Or do I have to do some horrible calculation involving each time my dividends were reinvested in the DRIP?
I hope this all makes sense to someone!

Generally, do people think US DRIP shares are a bad idea due to tax complications?

Thanks in advance for any help.
NewVestor

For ever odd

newvestor8 wrote: »

With regard to CGT:
Am I correct in thinking that when I sell my shares (in one batch) all I need to do is pay 33% of the difference between the amount I paid for the initial shares originally and the amount I receive when I sell the shares (including the DRIP ones)? Or do I have to do some horrible calculation involving each time my dividends were reinvested in the DRIP?

NewVestor

€1270 tax free in the year you sell.
Inflation from the year you bought can be taken in to account.

More knowledgeable posters on here will give you the ins and outs of it.

newvestor8

Thanks For ever. That's good to know!

Does anyone here have a DRIP and know how the tax works? I really like the idea of a DRIP but maybe they are just not practical for irish residents.