Tax due on Shares

I am wondering about my tax liability on Shares ~ I have simplified the figures

In 2002 a company I had invested in was delisted and I lost 5000 Euro (victim of the tech bubble!)

In 2005 I decided to cash in share options - net profit on Shares 5000 Euro.

2 Questions:

(1)
Can I write off the loss of the 2002 shares against the gain of the 2005 shares so that I have no tax liability

(2)
Do profits from Share option fall under Capital Gain or Income tax?

In reply to Question 2:


In general, gains resulting from the sale of shares are liable to CGT at the standard rate of 20%. You are entitled to an annual Capital Gains Tax allowance of €1,270.

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bMino said:

In reply to Question 2:


In general, gains resulting from the sale of shares are liable to CGT at the standard rate of 20%. You are entitled to an annual Capital Gains Tax allowance of €1,270.

See [broken link removed]

Click to expand...

Not necessarily, if the share options are received from his employer there may be an income tax liability unless it was a revenue approved scheme.

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I doubt you would be able to set a capital loss agains't this income tax liability.

Unless revenue approved, usually, profits from share options have an income tax component and sometimes have a capital gains component.

As far as I know, if your options were at $4.00 (strike price), the shares were being traded publically at $5.00 (closing price) on the day you exercised your options (i.e. bought shares) and you received $5.50 when you sold the shares (selling price), you are liable for income tax on the difference between $4.00 (strike price) and $5.00 (closing price). You are liable for capital gains on the difference between $5.00 (closing price) and $5.50 (selling price). As I understand it, you cannot offset any capital losses or CGT allowances against the income tax component, only against the CGT component (if any) of the transaction. There's a further sting: the income tax is due 30 days after buying the options.

Thanks the information you have given is very useful.

Is it possible to avoid paying tax on this (legitmately!) ... e.g. is it possible to put the proceeds of this into a pension fund or something like that.