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Earnings on Employee Shares | Investing in startup to avoid CGT

  • 22-12-2020 3:12pm
    #1
    LauraandCiaran
    Registered Users, Registered Users 2 Posts: 1 ✭


    Hi,

    I have recently earned some income through employee shares and in my revenue account it states that I am liable for emergency tax that amounts to around 55% of the current value of the shares despite the fact that I haven't sold any.

    I would like to invest the money into a startup and I am wondering if I am still liable for income tax and capital gains tax?

    According to this I am not: wealth wise dot ie /minimise-tax-investments/ (sorry, new user so can't post urls)

    "Invest directly in shares which don’t pay a Dividend. You’ll only pay 33% Capital Gains Tax on any profit you make when you sell those shares."

    Digging deeper, I found this page about Start-up Capital Incentive: www dot revenue dot ie/en/personal-tax-credits-reliefs-and-exemptions/investment/relief-for-investment-in-corporate-trades-for-in/start-up-capital-incentive.aspx (ugh, annoying)

    In this PDF it explains that I would have to submit a form in the year of the investment, but otherwise I would just transfer the money to a business bank account controlled by the company in exchange for a “statement of qualification”, whatever that is.

    revenue dot ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-16/16-00-03.pdf

    Has anyone been through this process before? Am I on the right track? The last thing I want to do is put the money into a startup which then burns through the capital and leaves me still liable for the tax on it.

    Help would be appreciated.


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