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:
What does that mean to the shareholder?
What does the Shareholder actually get?
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:
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?
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:
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?
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
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:
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.)
Designated activity company (DAC):
Every Limited company in Ireland is required to have a Statutory registered office in the state. The following Irish addresses are required:
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.
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.