On 2nd September 2013, Vodafone Group Plc. announced that it was disposing of its 45% interest in Verizon Wireless to Verizon Communications Inc.

At the same time, it also announced its intention to carry out a “Return of Value” to its shareholders, of which there are almost 400,000 in Ireland.  Many of these shareholders had acquired Vodafone shares in exchange for their Eircom shares in 2001.  The “Return of Value” would be partly in cash and partly in Verizon consideration shares.

On 14th May 2014 the Irish Revenue Authorities issued a comprehensive Tax Briefing outlining the tax treatment of the Vodafone Return of Value to its shareholders which provides comprehensive guidance on the calculation of the base cost for Capital Gains Tax purposes.


 In what form will Vodafone return this value to the shareholders?

 Either by the issue of:

  1. B Shares (The Capital Option) or
  2. C Shares (The Income Option)


 What does that mean to the shareholder?

  1. If the shareholder opts for B Shares or the Capital Option then the return of value will be liable under the Capital Gains Tax rules.  The C.G.T. rate is currently 33%.
  2. If the shareholder opts for the C Shares or the Income Option then the return of value will be subject to the Irish Income Tax rules.  In other words the shareholder will be treated as having received a dividend and will be taxed as with previous Vodafone dividends.

What does the Shareholder actually get?

  1. 6 new Vodafone Ordinary shares for every 11 Vodafone ordinary shares held.
  2. 0.0263001 Verizon Shares for every Vodafone share
  3. A cash amount of €0.3585437 for every Vodafone share



 What about the shareholders who exchanged their Eircom shares for Vodafone Shares in 2001?

 These shareholders will NOT have a Capital Gains Tax liability.

Instead they will have a capital loss to offset against other chargeable gains arising in the current tax year or if unused they can be carried forward against future capital gains.


No Capital Gains Tax charge will arise for these shareholders in the following situations:

  1. Where the shareholder opted for the capital option and the sale of Verizon shares.
  2. Where the shareholder opted for the capital option and held onto the Verizon shares.

What is the base cost of the Vodafone Ordinary Shares?

The base cost for those Vodafone shares acquired in exchange for Eircom shares in 2001 is €4.46 per share.


Where in legislation are the apportioning rules?

 Section 584(6) Taxes Consolidated Acts 1997 outlines the rule for calculating the apportionment of the original holding between the three elements of the new holding i.e. the cash element, the new Vodafone ordinary shares and the Verizon shares.


What about future disposals of these shares?

  • €4.58 will be the base cost per share of the new Vodafone ordinary shares by former Eircom shareholders when they dispose of these shares in the future.  (This figure could be subject to future adjustments)
  • €53.85 will be the base cost per share of the Verizon shares by former Eircom shareholders when they dispose of these shares in the future.  (This figure could be subject to future adjustments)


What is the Income Tax treatment for those opting for C Shares?

Individuals who opted for the C Shares have received a dividend from Vodafone which consisted of two elements:

  1. A cash amount and
  2. Shares in Verizon

The shareholder should include both amounts in his/her Income Tax Return i.e. the cash actually received and the market value of the Verizon Consideration Share Entitlement received.  He/she must then pay the Income Tax arising on this dividend.


How is the tax on these dividends paid?

  • Employees or individuals who pay tax through the PAYE system and where their non-PAYE income does not exceed €3,174 can have any tax arising on these dividends collected and offset against their tax credits.
  • Self employed individuals must file a Form 11 in which income from all sources must be included and correct taxes paid on or before the self assessment deadline.
  • Employees or individuals who pay tax through the PAYE system and where their non-PAYE exceeds €3,174 must complete a Form 11 and include the amount of Vodafone income received.  They must comply with the pay and file requirements of the self assessment system.

Are there any exemptions?

Individuals aged 65 years and over are entitled to claim an exemption from Income Tax if their total income i.e. income combined from all sources including Vodafone and Verizon dividends is


  • Less than €18,000 in the case of a single person, widowed individual or surviving civil partner or
  • Less than €36,000 in the case of a married couple or civil partnership.

Will there be Dividend Withholding Tax on the Verizon Shares?

Dividends paid to shareholders of Verizon shares will, in general, be subject to US withholding tax, currently 30% of the gross dividend amount.

Irish resident shareholders can make a claim to the US Tax Authorities to be entitled to dividend withholding tax at the reduced rate of 15%.

This claim can be made by completing a Form W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and forwarding it to Computershare as stated on the form.


The Irish resident shareholder will be entitled to a credit for tax withheld against Income tax or Corporation tax on the dividends received.


 The credit will be the lower of:

  1. The Irish effective tax rate on the dividends or
  2. The rate provided by the U.S./Ireland Double Taxation Treaty




Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so.. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

The Companies Act 2014



The Companies Act 2014 (the “Act”) introduced the provision that a Company Limited by Shares (“LTD”) could just have a single director.


In other words, a single Director company can be a private company limited by Shares. It allows for one Director but there must be a separate company Secretary.


Starting from the 1st of June 2015, all new companies will have a choice of two different types of companies to setup:


Private Company Limited by Shares (Ltd.)

  • It allows for one Director but it must have a separate Company Secretary. A Company Secretary can be any other person or registered entity here or abroad.
  • It does not have a Memorandum of Association.
  • It has no objects stated in its constitution. Therefore, it can be flexible in terms of the activity it engages in.
  • A one document constitution replaces the Memorandum and Articles of Association.
  • In the even of the company being wound up, the members’ liability is limited to the amount unpaid on the shares they hold, if any.
  • An LTD is not required to have an Authorised Share Capital.
  • The name of the company must end with the “Limited” or “Teoranta.
  • An LTD cannot be an insurance undertaking or a credit institution.



Designated activity company (DAC):

  • Is a private company limited by shares or by shares and guarantee.
  • It must have at least two directors and a Company Secretary.
  • At least one of the directors is required to be resident of a member state of the European Economic Area (EEA). According to Section 137 of the Company Act states, if you do not have a Director living in the European Economic Area, then you must purchase a bond, in the prescribed bond otherwise, you can apply to the CRO to be granted a certificate confirming that your company has a real and continuous economic link with Ireland.
  • It has a two document constitution consisting of a memorandum and articles of association.
  • It must have a main objects clause included in its constitution.
  • It can pass majority written resolutions, where the constitution allows.
  • It is required to hold an AGM where there are two or more members.
  • The maximum number of members is 149.
  • It is required to have an Authorised Share Capital.
  • The name of the company must end with “Designated Activity Company” or “Cuideachta Ghníomhaíochta Ainmnithe” unless it is exempted.



Every Limited company in Ireland is required to have a Statutory registered office in the state.  The following Irish addresses are required:

  1. The registered office address which is where CRO correspondence and formal legal notifications should be sent.
  2. The address where the company’s activity is carried out.


The address where the central administration of the company is carried out can, however, be located outside Ireland.



Companies will only have to meet two of the following three criteria to qualify as a “small company” for the purposes of claiming an audit exemption.

  1. A turnover that does not exceed €12 million
  2. A balance sheet that does not exceed €6 million
  3. An average number of employees that does not exceed 50


If a company qualifies for exemption, it must annex a copy of its abridged financial statements (approved by the directors) to the annual return.


Guarantee and Group companies will be able to qualify for the audit exemption.


Audit exemption for Irish companies can be lost if their annual return is filed late. This will result in the company losing its audit exemption for the next two years.



This article is for guidance purposes only. It does not constitute professional advice. No liability is accepted by Accounts Advice Centre for any action taken or not taken in reliance on the information set out in this article. Professional or legal advice should be obtained before taking or refraining from any action as a result of this article. Any and all information is subject to change.