Does Ireland recognise Short Term CGT and Long Term CGT or just one CGT Rate

[Patrick512]

Hi All,

The query I have is in relation to a rule they have in the USA for short term capital gains where shares held less than a year are charged at the persons income tax band rates. I havn't seen it mentioned anywhere on the revenues site or elsewhere in relation to someone from ireland paying sort term CGT rates on their share gains.

It appears their just seems to be one rate of 33% no matter when the shares were traded even if they were bought and sold in the same day then the same 33% CGT rate applies.

Does anyone trade shares on a daily bases or even buying and selling for shorter periods less than a year from their personal trading account (i.e probably classifying themselves as a day trader 100-200 trades a year) and if you do what tax applies. Income Tax, Short Term CGT (Income Tax Bands) if it exists or just CGT at 33%.

For tax purposes maybe its probably best to do it under a company and let the profits be taxed at 12.5% and just pay a wage up to the 20% tax bands.

My main source of income is currently via savings and long term dividend stock holdings.

Thanks,
Pat.

 

[Brendan Burgess]

There is just one rate of CGT.

If you were trading regularly, you could be classifed as having a trade and be subject to Income Tax.

However, if you trade regularly, you are really only making profits for the stockbrokers. So your income would be a lot less, although you might be taxed less.

A company is never a good idea to hold shares. I think you would pay an Investment Income Surcharge as well, so the CT rate would be 25%. You would pay CGT when the company sells shares. You would pay CGT when you wind up the company.

If your income is at the 20% level, look for shares with high yields rather than Capital Gains.

Brendan

 

[dub_nerd]

We had multiple CGT rates in the 80s for < 1 yr, < 3 yr, > 3yr but they got consolidated.

 

[Patrick512]

Thanks for the info guys. I was reading more info on the company setup for trading shares here in Ireland anyway as you do get hit a lot along the way with all the different levels of tax before you can get your hands on the profits when its wrapped in a company.

As long as the revenue is ok with the level of trading to be classified as CGT no matter the length of time and how many buy or sells you do then its manageable. This is something i'll need to further clarify with a tax advisor to get in stone either with recorded or written clarification from the revenue or if a tax advisor knows this setup is ok with them for filling at 33%.

If i get more concrete information i'll add on to the post here.

Pat.

 

[dub_nerd]

As long as the revenue is ok with the level of trading to be classified as CGT no matter the length of time and how many buy or sells you do then its manageable... If i get more concrete information i'll add on to the post here.

Please do let us know. For the last year or so I've been trading fairly frequently (still only measured in dozens of trades) and sometime holding for only a couple of days. It didn't occur to me that Revenue would treat this differently to anyone else.

If you were trading regularly, you could be classifed as having a trade and be subject to Income Tax.

Under what rules would this be? Can I take advantage of it if it would be more advantageous to pay income tax than CGT?

 

[Setanta12]

Under what rules would this be? Can I take advantage of it if it would be more advantageous to pay income tax than CGT?

You would have to demonstrate short-term holdings i.e. no holding for the long-term, or even the medium-term. You likely would need to prove weekly activity to convince a tax-practitioner. Income tax rates are 50% from EUR33k earnings upwards; and of course, that is assuming you already had no other income - just the share-trading activity.

 

[dub_nerd]

Thanks. Pretty sure I wouldn't qualify, which is good ... I don't want Revenue claiming I am carrying on a trade.

 

[ShaneMac]

Thanks for the info guys. I was reading more info on the company setup for trading shares here in Ireland anyway as you do get hit a lot along the way with all the different levels of tax before you can get your hands on the profits when its wrapped in a company.

As long as the revenue is ok with the level of trading to be classified as CGT no matter the length of time and how many buy or sells you do then its manageable. This is something i'll need to further clarify with a tax advisor to get in stone either with recorded or written clarification from the revenue or if a tax advisor knows this setup is ok with them for filling at 33%.

If i get more concrete information i'll add on to the post here.

Pat.

Hi Pat, did you ever get more clarification on this point?