Tax - The Implications

There are a number of tax consequences associated with owning shares for Irish residents. Below we summarise the main taxes which investors face.

Stamp Duty

Stamp duty is chargeable on the purchase of Irish and UK shares. The rates are:-

• Irish Shares - 1.0 percent
• UK Shares - 0.5 percent

There is no Stamp Duty payable on the purchase of shares from most other countries. The sale of shares does not attract Stamp Duty.

Capital Gains Tax (CGT)

In general, gains resulting from the sale of shares are liable to CGT at the standard rate of 20%. In calculating whether you have realised a gain you may need to consider indexation (an allowance in the book cost of your shares to allow for inflation), whether rights or bonus issues were received, share splits and scrip dividends. You may also need to bear in mind that where the gain is as a result of the sale of part of a holding, the first acquired shares are deemed to be the first sold.

Shareholders should also be aware that if they transfer shares to third parties (including family members) at nil or below market value, the Revenue will deem them to have made a disposal at market value and a tax liability may result.

Individuals are entitled to an annual Capital Gains Tax allowance of €1,270.

Dividend Withholding Tax

As well as paying Capital Gains Tax, Irish residents are required to pay taxes on the income they receive in the form of dividends. Since 6th April 1999 all Irish resident companies must deduct tax at the standard income tax rate from dividends paid. Irish taxpayers can reclaim relief for the tax deducted when compiling their returns. Where Withholding Tax exceeds the taxpayer's liability, then the excess can be reclaimed.

US Persons

All US persons are required to complete and submit a W9 form before dealing in US shares.

A US person is defined as:

1. A US citizen
2. A Greencard holder
3. A person born in the US
4. A Person who has spent over 183 days in the US over the last two years.
5. A person with a US passport.
6. A person holding a joint account where any person on the joint account falls into 1 to 5 above. i.e. if one person falls into the definitions above then it applies to both parties.

A copy of the W9 form can be found at this address:-

http://www.irs.gov/pub/irs-pdf/fw9.pdf

All other persons resident in a country who are not a citizen (passport holder) of that country, excluding US persons are required to complete and submit a W-8Ben form before dealing in US shares.

W-8BEN Form - Certificate of Foreign Status of Beneficial Owner For United States Tax Withholding.

This form allows you to avail of lower tax rates on US dividends only. The form applies if you hold US shares or if you intend to deal in US shares at any point in the future.

It is important that investors realise that tax can be a complicated matter and that it may be prudent to seek expert advice.

All taxation rates are current at time and subject to change.