Scrip Dividends/Taxation

[extramild]

Hi folks,

I am a PAYE worker.

My question is this:

If I get a dividend of €100 from company B I should pay income tax of about 50% on that dividend at the end of the financial year is that correct?

If someone could post the calculation I would be thankful.

If however I decide to take the dividend in the form of script i.e shares in the company do I pay tax at the end of the financial year or do I pay tax when I sell my shares in the future?

Regards

Extramild

 

[Brendan Burgess]

Check out The taxation of Irish dividend income

If you take shares instead of cash, you will get the same dividend certificate showing Gross Dividend/DWT/Net Dividend . The net dividend will be used to buy the shares.

You will pay income tax on the dividend as if you had received cash.

 

[extramild]

Thanks for getting back to me Brendan,

A couple of assumptions

1. I get €100 in dividends from Company A
2. I am a PAYE worker earning above 16k a year.

Part One - There will be a 20% deduction in dividend withholding tax taken by the company and given to the taxman that I will never see?

Part Two - Of the €80 euro left I will have to declare that income to the revenue and will pay the USC and PAYE rates on that money i.e I will pay approx 50% of that €80 in tax.

Of the 100 euro that company declared in dividends I will end up with approx €40 in my pocket?

 

[WindUp]

not quite:
100 div less withholding tax 20 = 80 to you

you pay tax on the gross = 50% of 100 = 50 -- less the 20 already paid = 30

total Div 100
Total Tax & USC 50
Net 50