# Shares vs Funds - Tax



## cpt_boom (1 Feb 2009)

Hi All,

I thought I'd summarise the tax implications of investing in each as far as I'm aware. Please correct me if there are any errors/omissions. 

*Shares*
Capital Gains Tax is applicable at 22% on the sale of shares
There is an allowance on the first €1270 payable and you can offset stockbroking costs. Losses on shares can offset gains on your other shares. Losses can be carried forward to offset future gains. Not sure if there is any time limit on this?

Dividend Withholding Tax is applicable to dividends paid by the company. This seems to be payable at your marginal rate of tax but I'm sure from the revenue website. 

*Investment Funds/ETFs*
An exit tax of 26% is applicable on gains when you sell out of the fund and on the 7th aniversary of buying the fund. You can't offset gains in one funds by losses in another. Each is taxable indivdually.

Distributions from the fund are taxable only at the 20% standard rate. 

This probably isn't all correct so please correct where needed. I'd conclude that the tax treatment of shares is more favourable than of funds. This will particularly be the case if you have losses built up over the last couple of years, as many of us will have done. Any thoughts on this?


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## Brendan Burgess (2 Feb 2009)

HI CPT

A good idea, but it is way off in so many areas, that it needs to be rewritten, not corrected.

Read some of the Key Posts in the area and have another go. 

Brendan


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## TomOC (2 Feb 2009)

Hi all

Good idea CPT

I am not at all clear on this.  I had good look through very informative revenue website but still have queries.

Is capital gains tax at 22% the only liability? This is declared through form 11? From other sourses this 1270 exemtion seems correct.  
The next part I am not sure about and had queried in another post earlier.  

Can losses be carried forward to offset future gains?

If I make 2000 on first share trading and take out money, ( Profit =2000 first 1270 exempt then liability on 730 = 167.9  (23% of 730))then lose 1000 on next share trade (and take out money). Then do I have any tax liability at end of year? 

Also if I make a profit 2000 in January, pay 167.9 euro to in CGT then make a loss of 1000 (and take out money) in December, will CGT be returned to me. 

I read somewhere else that stockbroking fees can be offset against profit.  Is this correct.  

Can anyone provide any more clarification please?


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## cpt_boom (4 Feb 2009)

Ok, I think I have this sorted for the shares part anyway. Can I get some help on the funds part? Still confused after reading the other posts on it.

*Shares*
 Capital Gains Tax is applicable to gains made on the sale of shares

  Revenue.ie:
_Unused capital losses arising in the *current or earlier years* may be offset against the gain. (Unused losses are used before the annual exemption of €1,270). The first *€1,270* of an individual’s annual gains is exempt. *The balance is chargeable at 22%.*_

_The amount of a chargeable gain or an allowable loss is determined by deducting any allowable expenditure from the consideration received for the disposal._

  Allowable expenditure would include stock broking fees.

  Losses *can* be carried forward as stated on Revenue.ie:
_Allowable losses are set against the chargeable gains of the same year and if the losses exceed the gains, the excess may be carried forward against gains of later years._

Dividend income from Irish companies is taxable as any other income. Hence tax is payable at your marginal rate (presumably plus the income levy) of income tax as pointed out in post by Protocol.

  For dividends income from UK companies you pay a 10% non-refundable tax to UK authorities. The *net* amount is also taxable in Ireland as income. This was pointed out in this post by Domo.

  Dividends from other countries are also subject to Irish income tax and to individual Double Taxation agreements.

  Stamp Duty      Irish Shares – 1%
  UK Shares – 0.5%
  Doesn’t apply to European and US shares


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## TomOC (6 Feb 2009)

Stamp Duty Irish Shares – 1%
UK Shares – 0.5%
Doesn’t apply to European and US shares[/quote]

Thanks Cpt

So is stamp duty also applied on the purchase of shares, I sthis paid on the ammount invested, the ammout withdrawn or the profit?


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## cpt_boom (8 Feb 2009)

The stamp duty is charged on the total amount, on both the purchase and sale of shares.


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## mercman (8 Feb 2009)

cpt_boom said:


> The stamp duty is charged on the total amount, on both the purchase and sale of shares.



*INCORRECT* - There is no stamp duty on the sale of shares - only on the purchase. And in the case of Irish Shares, if bouth and sold within a 10 day period, the stamp duty is refundable.


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## cpt_boom (9 Feb 2009)

mercman said:


> *INCORRECT* - There is no stamp duty on the sale of shares - only on the purchase.



I sit corrected.


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## TomOC (11 Feb 2009)

cpt_boom said:


> I sit corrected.


 
And is this stamp duty charged directly when shares are bought (deducted from total) or is it charged seperately, how is it declared? Thanks


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## mercman (11 Feb 2009)

TomOC said:


> And is this stamp duty charged directly when shares are bought (deducted from total) or is it charged seperately, how is it declared? Thanks




Charged separately along with the Stockbroker commission


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## bogle (26 Feb 2009)

With regard to ETFs this is what I know about their tax treatment. By the way I'm not a tax expert so please don't take this as gospel. If somebody more knowledgeable sees errors below please correct them.

Stamp duty.
There is no stamp duty on the purchase of ETFs in Ireland or the UK.

UCITS
If you look at the ETFS listed on iShares.co.uk you will see that many are domiciled in Ireland and fall under the UCITS framework. UCITS stands for “Undertakings for Collective Investments in Transferable Securities”. These are a set of European Union directives that aim to allow collective investment schemes to operate freely throughout the EU.


The tax treatment of UCITs

Income payment (e.g. dividend for example)
Income tax at the standard rate plus health levy (plus 1% levy I presume???)
I'm not sure what the combined figure for 2009 is.

Gain on disposal (exit tax)
26% (for 2009) on any gain and you may not offset losses against other gains or claim the annual capital gains tax allowance.


Two things to watch out for with ETFs are...

Non European ETFs may be subject to withholding tax in their country of origin and also be subject to different tax rates by Revenue (e.g. instead paying tax at the standard rate plus levies on income or gains it could be taxed at the higher rate).

And if if you do not pay tax at the appropriate time (as defined by Revenue) again you could pay tax at the higher rate.

I'm not sure if ETFs that are UCITs compliant are subject to the 8 year rule like index funds.

I'd appreciate if others more knowledgeable than I, would correct the above if you see any errors or maybe expand on the subject a bit more.


Bogle.


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## cpt_boom (26 Feb 2009)

Nice One Bogle.


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