Captial Gains on stocks and shares bought while abroad

FamousBelgian · 31-08-2015 03:06PM #1

How does it work with Capital Gains Tax if you move to Ireland with stocks and shares bought a long time ago while abroad? My point is that sometimes you buy, say, some old blue-chip company and over 20+ years they split, merge, get acquired, create spinoffs, issue stock dividends and before you know it you have no idea of what you originally paid except that you know you're ahead overall.

Presumably one would only be liable for any capital gains made after becoming resident in Ireland so does one take a snapshot at the time of taking up residence and then make an honest self-assesment when one sells?

KlausFlouride · 31-08-2015 03:55PM

http://www.revenue.ie/en/tax/cgt/faqs.html

Have a read of the Revenue CGT Guide, might help with a few of your concerns.

FamousBelgian · 01-09-2015 09:56AM

KlausFlouride wrote: »

http://www.revenue.ie/en/tax/cgt/faqs.html

Have a read of the Revenue CGT Guide, might help with a few of your concerns.

Thanks for the reply. I had already looked at that and it seems a bit light on detail. I was hoping to find out how it worked in practice. It appears to be entirely up to the individual to calculate their gains and to voluntarily pay the tax.
At least it's possible to offset losses and to apply indexation. Probably going to need expert advice on this.

nompere · 01-09-2015 02:43PM

You should certainly seek expert advice. Most tax practitioners have the reference works designed to help with apportioning the original cost of something among the various new holdings that come from corporate reorganisations.

You will then also be told that you get taxed on the total gain - whether it had all accrued before you became resident or not.

KlausFlouride · 01-09-2015 04:28PM

FamousBelgian wrote: »

Thanks for the reply. I had already looked at that and it seems a bit light on detail. I was hoping to find out how it worked in practice. It appears to be entirely up to the individual to calculate their gains and to voluntarily pay the tax.
At least it's possible to offset losses and to apply indexation. Probably going to need expert advice on this.

Cash dividends are income tax rather than CGT if that helps.
And yes, it's self assessed.

It's probably not too bad if you sit down and go through it methodically, it depends on how bored you are! CGT is (relatively) approachable.

FamousBelgian · 01-09-2015 05:43PM

KlausFlouride wrote: »

Cash dividends are income tax rather than CGT if that helps.
And yes, it's self assessed.

It's probably not too bad if you sit down and go through it methodically, it depends on how bored you are! CGT is (relatively) approachable.

I was thinking about stock dividends and how they are supposed to be valued because it would seem unfair to set them at an acquisition price of zero. Usually those are already taxed when issued but it varies and one would have to dig out tax credits from many years back and compare apples with oranges. But maybe I'm just over-analysing all this. If it's self-assessed then I assess it as: it'll be grand.

FamousBelgian · 01-09-2015 05:49PM

nompere wrote: »

You should certainly seek expert advice. Most tax practitioners have the reference works designed to help with apportioning the original cost of something among the various new holdings that come from corporate reorganisations.

You will then also be told that you get taxed on the total gain - whether it had all accrued before you became resident or not.

Just read the last bit and that scares me. Do you know this for sure?
Also wonder if that's subject to a tax treaty and counts as double taxation as in, if one is taxed on an imputed income over the years can you still be taxed for a real accrual over the same period. Guess I do need an expert.

dogsears · 01-09-2015 08:07PM

FamousBelgian wrote: »

Just read the last bit and that scares me. Do you know this for sure?
Also wonder if that's subject to a tax treaty and counts as double taxation as in, if one is taxed on an imputed income over the years can you still be taxed for a real accrual over the same period. Guess I do need an expert.

Unlikely to be any assistance in the tax treaty unless the gain is also taxed in the other country, i.e the same kind of tax - e.g. you can't use income tax paid in one country as double taxation relief against capital gains tax in another country.

NB. What do you mean by "taxed on an imputed income over the years"?

newacc2015 · 01-09-2015 08:11PM

KlausFlouride wrote: »

Cash dividends are income tax rather than CGT if that helps.
And yes, it's self assessed.

It's probably not too bad if you sit down and go through it methodically, it depends on how bored you are! CGT is (relatively) approachable.

Not if you take your Dividends as shares. Your first €1270 per year is tax free. Then 33% after that. If you take them as income, you have to pay tax. AFAIK US shares are different. I think Ireland has a sweetheart deal with the US on Shares, that if you tell the US Revenue, that you are Irish Resident. Your dividends are taxed at 15% and you dont pay tax on them here. AFAIK thats why the Heirs to Campbells Soup live in Ireland. Their dividends are taxed super lightly in Ireland

FamousBelgian · 01-09-2015 09:31PM

dogsears wrote: »

Unlikely to be any assistance in the tax treaty unless the gain is also taxed in the other country, i.e the same kind of tax - e.g. you can't use income tax paid in one country as double taxation relief against capital gains tax in another country.

NB. What do you mean by "taxed on an imputed income over the years"?

I'm in Holland and while there's no DIRT or CGT there is a general wealth tax where you add a small percentage of your assets to your income (as a separate imputed income; same applies for houses) and are taxed on that. So at current interest rates you make little or nothing on your cash but on your shares (or house) you are free to enjoy any capital appreciation when you sell.

In my case I'd have paid a small amount every year on something that was appreciating and then if I sold it in Ireland I'd be taxed again on the basis of not having paid anything already for that gain.

FamousBelgian · 01-09-2015 09:46PM

newacc2015 wrote: »

Not if you take your Dividends as shares. Your first €1270 per year is tax free. Then 33% after that. If you take them as income, you have to pay tax. AFAIK US shares are different. I think Ireland has a sweetheart deal with the US on Shares, that if you tell the US Revenue, that you are Irish Resident. Your dividends are taxed at 15% and you dont pay tax on them here. AFAIK thats why the Heirs to Campbells Soup live in Ireland. Their dividends are taxed super lightly in Ireland

Is that what the W-12 form is about? Like the soup folks I don't return it either

KlausFlouride · 02-09-2015 09:49AM

FamousBelgian wrote: »

I'm in Holland .

Are you sure you're liable to Irish CGT?

Who is liable to pay (Irish)Capital Gains Tax?

If you are resident or ordinarily resident, and domiciled in the State you are liable on worldwide gains.
If you are neither resident nor ordinarily resident you are liable on gains on the disposal of specified assets.
If you are resident or ordinarily resident in the State but not domiciled you are liable on gains from the disposal of Irish situated assets in full and on gains from the disposal of foreign assets to the extent that the gains are remitted into the State.

Also that Revenue doc I mentioned earlier has a couple of nice examples for rights issues etc. in Chapter 8 "Taxation of shares - FIFO rules / Bonus and Rights Issues"

FamousBelgian · 02-09-2015 12:26PM

KlausFlouride wrote: »

Are you sure you're liable to Irish CGT?

Who is liable to pay (Irish)Capital Gains Tax?
If you are resident or ordinarily resident, and domiciled in the State you are liable on worldwide gains.

If you are neither resident nor ordinarily resident you are liable on gains on the disposal of specified assets.

If you are resident or ordinarily resident in the State but not domiciled you are liable on gains from the disposal of Irish situated assets in full and on gains from the disposal of foreign assets to the extent that the gains are remitted into the State.

Also that Revenue doc I mentioned earlier has a couple of nice examples for rights issues etc. in Chapter 8 "Taxation of shares - FIFO rules / Bonus and Rights Issues"

Thanks for that reference. I looked at Chapter 8 and my head started to hurt. There's no way I could manually work out all the splits and dividends from my own records.

I live in Holland but am looking at what's involved in moving to Ireland and would be liable for CGT if I decided to liquidate or continue trading. I'd still use a Dutch bank but they don't report anything specific to the tax authorities; they just need a PPS number on file.

KlausFlouride · 02-09-2015 02:17PM

Well Irish Rate is 33% vs Dutch rate of 25% by looks of it, so that might be something to think about.

With regard to the working out the splits etc, someone doing the calc. will need the historical detail to work it out for you.

If you have a business, worth looking at retirement relief also (if you are of that age cohort)

FamousBelgian · 02-09-2015 02:54PM

KlausFlouride wrote: »

Well Irish Rate is 33% vs Dutch rate of 25% by looks of it, so that might be something to think about.

With regard to the working out the splits etc, someone doing the calc. will need the historical detail to work it out for you.

If you have a business, worth looking at retirement relief also (if you are of that age cohort)

The 25% rate is for cash dividends like profit from your own company and there's a rate of 15% for publicly traded companies and they withhold this tax. Stock dividends are taxed at 5% I think. I never bothered with the details because come tax return time you just have to find out how much has been withheld and enter it as a credit on your return.

Whichever way you look at it Ireland seems to be a bad place to invest for the future.

Captial Gains on stocks and shares bought while abroad

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