Is that 500 euro taxed as income, or is it capital gains?
It is neither income (unless described as a special dividend) nor a capital gain.
It is treated as
consideration/proceeds relating to a part-disposal of the original shareholding.
For the sake of example, let's say:
Co. A cost basis = €1,000
Co. C value at the effective date of the merger = €750
You've received €500 cash consideration relating to a part disposal of Co. A.
You need to use the part disposal formula C x ( A / (A + B) ) to determine what part of the cost of Co. A is to be allowed in the computation of your CGT liability (if any), where:
A = cash received (€500)
B = value of Co. C at the time of the corporate action (€750)
C = original cost of Co. A (€1,000)
1,000 x (500 / (500 + 750) = €400
CGT computation:
Consideration received = €500
Cost for part disposal = €400
Chargeable gain = €100
If I sell my share of company C in future, is my cost basis the same as ever?
The allowable cost is the remainder of the cost of Co. A after deducting the amount allowed above (€400) for the part-disposal, therefore resulting in a cost basis of €600 for any future disposal.
See Example 2 on Page 3 of the
relevant Revenue Guidance on the topic.