Article
Capital Gains Tax on Shares in Ireland
When you sell or transfer shares in Ireland you are liable to pay capital gains tax (CGT) and file the necessary returns.
By David BarryShares are a capital asset, and as such you are liable to pay capital gains tax (CGT) where you make a ‘gain’ on the disposal of shares.
In most cases a disposal means a sale of shares, however if you transfer shares to another person during your lifetime, CGT would also need to be considered.
What is CGT?
CGT, or capital gains tax, was introduced in Ireland in April 1974. CGT is a tax levied on gains made on the disposal of capital assets such as shares, property, land etc.
What is the CGT Rate in Ireland?
The headline rate of CGT in Ireland is 33%, so approximately one third of your gain will be paid in tax. However, note that Revenue provide certain reliefs and exemptions from CGT. Depending on the circumstances of each specific case, careful planning can result in a lower rate of tax (or possibly no tax).
CGT on Shares Calculations
In many cases the calculation of your capital gains tax payment will be straight forward.
For example, where you sell 1000 shares at €10 per share, your sales price is €10,000.
If you purchased those 1000 shares at €5 per share each, the cost price is €5000, leaving you with a €5000 chargeable gain.
Please note each person is entitled to an annual exemption from CGT of €1,270, meaning that the taxable gain is €3,730.
This will give rise to a CGT bill of €1,231.
Complex CGT Calculations
It can get more complex where you acquired shares in several tranches, or at several different cost prices. It may also be the case that you do not sell all the shares you own. In those situations, a share history table should be built, to track your acquisitions and sales of shares.
Many working in multinational companies may acquire shares under various share plans or share options schemes at work. This will impact the share history table, and ultimately your CGT liability.
Tips for reducing CGT Liability
1. Capital Losses
If you have existing capital losses from prior capital asset sales, these losses may be available to reduce any CGT liability.
If you sell shares and make a loss on the sale, it is possible to offset this loss against other chargeable gains made in the same tax period. If you cannot utilise the loss in the same tax period, it may be possible to transfer this loss to a spouse, if applicable, or otherwise the loss can be carried forward to a future period to offset future chargeable gains. Please note losses can only be carried backwards in very limited circumstances.
2. CGT exemptions and reliefs
Every ‘individual’ is entitled to an annual exemption from capital gains tax in the sum of €1,270. (A Trust or Estate can’t claim this annual exemption.)
Indexation relief applies to assets acquired up to 2003, to allow adjustment to costs for inflation. This indexation relief does not apply to assets acquired from 01 January 2004 onwards.
Retirement Relief can apply to the disposal of chargeable business assets, normal trade, business or farming assets. It does not apply to investment assets and several conditions must be met.
Entrepreneurs Relief is another valuable relief, again applying to the disposal of business assets. Several conditions must be met, and investment assets also would not qualify for this relief either.
There is a partial relief from CGT applicable to certain assets purchased between 07 December 2011 and 31 December 2014. This was introduced to stimulate the purchase and holding of property during the recession.
There are also several reliefs and exemptions applicable to companies such as share for share relief, share for undertaking relief, Group Relief, and the participation exemption.
Specific advice should always be sought for specific scenarios.
3. CGT Planning
The legislation for CGT is a very complex area and you may benefit from tax planning in relation to shares. With careful planning, it may be possible to reduce your capital gains tax liability. It is advisable to consult a professional before taking action.
When is CGT Paid?
Where you make a gain on share sales in the period from 01 January 2024 to 30 November 2024, Revenue’s CGT payment deadline is 15 December 2024.
Where you make a gain on share sales in the period from 01 December 2024 to 31 December 2024, Revenue’s CGT payment deadline is 31 January 2025.
When and how do I file the returns?
Capital gains tax returns can be filed using Form CG1, or via the CGT section of the annual income tax return (if self-assessed for tax).
Tax returns should also be filed where you sell shares. The tax return filing deadline for 2024 capital gains tax is 31 October 2025. This is separate, and in addition to, the payment deadlines above.
How do I make a CGT payment?
You can pay your CGT bill through ROS with a credit or debit card. Or with your permission an accountant can make CGT payments on your behalf via ROS.
What happens if I miss the deadline to pay?
Revenue can charge interest for each day in which a payment is late. i.e. paid after the deadline.
They will also apply a surcharge where a return is filed late and penalties will arise where a disclosure needs to be made.
It is important if your returns and payments are late to not ignore it and get advice as soon as possible. We can help ensure you pay lowest penalties possible in this situation.
What if I am living abroad?
If you are Irish domiciled and resident in Ireland you are subject to Irish CGT on gains made on the disposal of assets, wherever the asset located.
If you leave Ireland for more than a temporary period of time, it may be possible to restrict your Irish CGT liability to disposals of Irish based assets only (specified assets).
What if I am not an Irish citizen but I’m living in Ireland?
If you are not an Irish domiciled person, but you do live in Ireland you are typically subject to Irish CGT on gains made from the disposal of Irish assets, and the proceeds of foreign gains that are remitted into Ireland.
Please talk to us about your specific scenario, as this area of tax law can be complex.
What other assets attract CGT?
The other main assets that can attract CGT where a gain is made on sale or on a transfer, are land and property.
What if I transfer assets to my spouse?
If you transfer assets to your spouse or civil partner during your lifetime, spousal exemption means no CGT arises on you. Your spouse is deemed to acquire the asset at the same time and cost as you did, ensuring no loss of tax on an eventual sale of the asset.
If your spouse acquires assets from you on your death, again no CGT will arise however your spouse will be deemed to acquire the asset at the date of your death (and the value at that time).
I work at a multinational and have received shares. What do I need to do?
Income Tax:
If a manager at a multinational acquires shares via an unapproved share option scheme up to 31 December 2023, the responsibility is with the individual to file Form RTSO1 within 30 days of exercising their share options. They must also make a payment of a form of income tax known as Relevant Tax on a Share Option (RTSO). They must also file an annual income tax return (Form 11) relating to the year in which options were exercised.
From 01 January 2024, the responsibility shifts to the employer to account for RTSO via payroll, so no Form RTSO1 need be filed by the employee/ manager. However, there is still an obligation to file an annual Form 11 income tax return.
Capital Gains Tax:
Once the shares have been acquired, the shares may be sold on the same date, or held for a period prior to sale.
From the selling price, the market value of the shares at the date of acquisition will be deducted (along with associated costs), to arrive a figure which represents the gain (or loss) made on the sale.
Any capital gains tax can be paid via Revenue’s Online Service, as outlined above. And a tax return will need to be filed to report the transaction as well.
We can help
We at TaxAssist Accountants are very familiar with the capital gains tax legislation and calculate the minimum required CGT payments for our clients all the time. We also file any required tax returns. Contact us to see if we can help you.
Date published 15 May 2024 | Last updated 15 May 2024
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
David Barry
David Barry is a Chartered Tax Advisor (CTA) with the Irish Tax Institute. David trained in Ernst & Young and is a highly experienced tax advisor. He has significant experience in accounts, tax returns and advising clients in the SME sector. He also has a particular interest in the importance of succession planning for businesses.
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