Tax on shares in foreign account

[evan]

I own shares in an american etrade account. How does the irish revenue find out that you own foreign shares. How can they prove that you have paid the correct tax on those shares. I filed my tax return last year and entered an amount for profits earned on those shares. However I am a little concerned as I only needed to fill in the amount earned. I did not need to fill in any other details on the particular shares in question. If I was investigated, my tax returns do not contain enough detail to prove that I have paid the correct amount on these particular shares.

 

[jpd]

You need to keep backup documents in case you are audited.

These would include proof of purchase and selling transactions, dividend payments and bonus/rights issues.

Possibly you could ask your broker to reproduce these if required but I always keep a paper copy of my transactions, just in case.

 

[evan]

Thanks for that. However I am a bit curious as to how the irish revenue find out that you hold shares in an etrade account. I know that if you work for an american company and you get company shares at a discount, the company informs revenue that you have received this benefit in kind. However if you open an etrade account on your own, does etrade inform irish revenue of your holdings and dealings. I am just a little in the dark as to exactly what goes on.

 

[jpd]

They don't find out automatically, for now anyway.

But if you don't declare them and pay the tax due on time, then you are liable to fines and penalties for late payment in addition to the tax due if/when the Revenue come after you. The fines and penalties mount up quickly and can be three, four or more times the value of the tax due. They can go back indefinitely if the want to - the normal limitatioon of 3 years doesn't work if you are caught evading taxes.

 

[bosra]

Hi,

I have read the capital gains tax info on the www.revenue.ie ( that is the IRish tax authority) and they say that tax is only liable on monies remitted to Ireland. So I would take that to mean if you are trading on an etrade account in the US and you are not returning or making drawdowns then you are not liable for tax either in Ireland or the US until such a time as you do so. Does anyone else have info regarding this point?

Thanks

 

[senara]

Ithink that only applies to a person "resident but not domiciled in the State"

 

[evan]

"They don't find out automatically, for now anyway.

But if you don't declare them and pay the tax due on time, then you are liable to fines and penalties for late payment in addition to the tax due if/when the Revenue come after you. The fines and penalties mount up quickly and can be three, four or more times the value of the tax due. They can go back indefinitely if the want to - the normal limitatioon of 3 years doesn't work if you are caught evading taxes."

I know that when you sign up for an etrade account you have to submit a signed tax exempt document (exempt from the US revenue) and that Ireland has an agreement with the US on taxation. This document I think contains your RSI number. However I am not sure whether that obliges etrade to inform irish revenue of profits or capital gains that you earn on stocks in your account. I think it merely allows them to give irish revenue information if they request it. However I am still in the dark on this issue. Also if this was the case, even if revenue performed an audit on you they still would not detect this account if you had no transactions between it and your irish accounts.

 

[dam099]

I know that when you sign up for an etrade account you have to submit a signed tax exempt document (exempt from the US revenue) and that Ireland has an agreement with the US on taxation. This document I think contains your RSI number. However I am not sure whether that obliges etrade to inform irish revenue of profits or capital gains that you earn on stocks in your account. I think it merely allows them to give irish revenue information if they request it. However I am still in the dark on this issue.

I don't think there is any automatic exchange of information at present but that could change. When the EU savings tax directive/associated tax initiatives were initially being mooted the US then under Clinton were making positive noises about information exchange which was subsequently rowed back under Bush. Who is to say that at some point in the future under a different administration this won't be back on the agenda?

Also if this was the case, even if revenue performed an audit on you they still would not detect this account if you had no transactions between it and your irish accounts.

How was the account funded to begin with? This could be the start of a paper trail. How does the person intend to eventually spend/repatriate the gains? Again this may create a paper trail. It might be possible to hide the money for a long time but eventually the owner may wish to repatriate it which will create a paper trail and by then significant interest and penalties could be in play.

 

[keybored]

I am in a similar situation but am wondering about dividends. I receive dividends on shares i own in Etrade and this money is put into a brokerage account on Etrade.
I can see that 30% non-resident tax is taken off these. Also on the revenue.ie site it says that i will have to pay income tax on the gross amount of the dividends.
Does anybody know about this, does the amount sound right or are they taking too much tax?

As a side note, evan, do you know is it possible to transfer money from my (or any) Irish online bank account(e.g. AIB 24hour online) to Etrade in the US. (i have looked through the Etrade help but it is very AmericaniZed)
thanks