Tax implication of company share

F

fin99

Guest
Hi,

I work for a very small (loss making) software company. Last year I was given a 5% share in the company. Are there any tax implications for me on this? The company has not made any profits and doesn't really have any assets of note. We only have single client the maintenance for which basically just covers salaries etc

Any advice would be very welcome.

F.
 
Don't think you've anything to worry about, except that you now own a piece of a loss-making enterprise!

AFAIK you're not considered a proprietary director unless you own 15% of the company. So the tax obligations of prop. directors wouldn't apply to you.

Are you an employee of this company?
 
Thanks for that.

Yes I am an employee. The 5% was basically an inducement to hang on and stay during a difficult period with the company.
 
I'm not so sure that you don't have anything to worry about. When I receive company shares as part of my bonus, I get hit for income tax on the value of the shares. OK, so it is a bit different as I work for a publically quoted company, but wouldn't the same income tax principle apply?

The fact that the company isn't making money at present may not be that relevant - it is the value of the share that counts.
 
Thanks for your comments Rainday.

The value of the share is the key one. I think fundamental difference with your PLC shares is that the company is loss making and has never paid a dividend and that since I was given 5% I believe I would not have been able to sell it or at least not for anything except a vefry small nominal amount. Therefore I find it hard to see on what income tax would be due. Obviously CGT would be expect if I eventually get opportunity to sell.

I suppose the question is would Revenue see the same way??
 
You're probably right, the shares are probably only worth their nominal value which could be as little as a few euro.

But this is not necessarily the case. If you were given 5% of the company, these shares are technically worth 5% of the shareholder's equity. Have a look at the bottom line of the company's balance sheet in the most recent set of accounts.

By the way, I am not an accountant or a professional financial advisor and these are only my opinions.
 
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