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Tax payment for equity as payment

  • 12-08-2018 11:06pm
    #1
    colm_c
    Registered Users, Registered Users 2 Posts: 2,032 ✭✭✭


    I did some work for a friend of mine, and he has given me the option to pay me either via standard payment or give me a small amount of equity in his startup.

    Obviously the standard payment is subject to income tax, and I've been down that road before.

    If I take the equity option, obviously I still have an income tax liability, but do I need to pay it straight-away (this tax year), or do I pay it when I'm cashing out?


Comments

  • #2
    Peregrinus
    Registered Users, Registered Users 2 Posts: 26,998 ✭✭✭✭Peregrinus


    You pay now, on the value of the equity when it is given to you. You will argue, obviously, that the value of the equity is the value of the cash alternative that you have turned down, but note that the Revenue may take a different view, and there could be a bit of an argument.

    If you take the equity, and it subsequently goes up in value and you dispose of it, you pay CGT on the gain in the usual way. If it crashes and burns (which it won't, of course, but it might) then on liquidation you can claim a capital loss.


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