Buyback and Redemption of Shares Formerly, there were severe restrictions on a company purchasing and redeeming its own shares. Tax and company legislation was introduced in 1990 to facilitate the purchase back or redemption by a company of its own shares. A redemption is where the company buys back and cancels the share without acquiring it. Companies have always been able to issue and redeem […]
Dividend withholding tax Where an Irish resident company makes a distribution to certain persons including in particular Irish resident individuals the company is obliged to withhold 25% tax and pay it to the Revenue Commissioners. It applies where the recipient would be subject to Irish income tax on dividend income. It applies to any distribution. This may include the distribution or transfer of assets. Accordingly […]
Dividend Income A dividend is usually declared by the directors and confirmed by the shareholders. Under companies law, it may only be declared out of earned profits. It is not deductible for tax as it is a distribution of profit out of the company to the shareholders. Generally companies must withhold dividend withholding tax on dividends paid at the rate of 25%. A return of […]
Definition of Close Company The definition of a “close company” is designed to catch most companies, public and private, other than those with a genuinely wide dispersal of shareholders. The test is detailed and technical and it is very difficult to avoid being so classified. A close company for tax purposes is an Irish resident company which is controlled by five or fewer so called […]
Overview Tax rules limit the extent to which shareholders may use close companies in order to postpone, reduce or avoid personal tax liability. Tax law defines certain companies to be “close companies”. The vast majority of private companies and many non quoted public companies are deemed close companies. The effect of the definition is that the vast majority of Irish private companies and many non-quoted […]