Most efficient way to reinvest

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Woodie

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I wonder can anyone help with pointers, sources of advice about possibly investing in a new company venture. Take the following scenario:
1. COMPANY A has several shareholders/directors
2. COMPANY A is profitable which is a nice place to be.
3. Some of COMPANY A shareholders are resident and some are not.
4. Taking bonuses or dividends is (IMHO) penal in the extreme on shareholder/directors who don't need cash now (55%) so at least some of the individuals would like to invest their part of in the funds new COMPANY B but others living in more tax friendly countries vis a vis dividends are more inclined to want the cash.
Is there any way to reconcile this? Obviously we want to have the most amount available for the new venture but having to first pay a bonus or dividend will be counterproductive to the success of the new venture. I should all parties are tax compliant and our only interest is to undertake this operation in the most tax efficient way possible.
If advice cannot be given, any pointers would be helpful.
 
This is based on a misconception that "taking bonuses or dividends is penal in the extreme"

If you don't take bonuses, you will pay Corporation Tax now on the profits and then when you eventually pay the accumulated profits as dividends or bonuses, you will pay 55% tax.

So pay the bonuses now and pay tax only once.

It may be complicated to pay bonuses to some shareholders and dividends to others.

If some of the individuals wish to invest in a new company, they are better off investing their net proceeds in their own name.

However, this is a complex issue, and you need to take professional tax planning advice.

Brendan
 
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Thank you Brendan.

I hear you on the bonus vs dividends issue, in terms of tax paid it is more tax efficient to pay bonus rather than pay CT and then 55% on the distributed dividends (for Irish residents at least).
I suppose it is a matter of opinion whether or not 55% is penal, in my opinion it is, to leave a residue of 45% not for personal use but to creating something. I understand with tax planning it is possible to manage that but it does seem unnecessarily anti entrepreneurial or at least more difficult than is needed. In our case, the motivation is less about the money and more about doing something that can be technically challenging and ultimately creating something useful.
I guess the ideal would be to convince all existing shareholders to simply reinvest everything in the same share proportions from the existing company A to the new company B to give it the best chance of success.
 
Woodie said:
I suppose it is a matter of opinion whether or not 55% is penal,
Click to expand...

Hi Woodie

I wasn't expressing an opinion on whether 55% is penal or not.

Just that what you are proposing would result in your paying more tax. So if 55% is penal, your proposal is even worse.

Brendan
 
Hi Brendan,
Apologies if I seemed to misinterpret your explanation of the 55% bonus vs dividends. Actually I had understood it as you explained and confirmed. When I investigated and understood that this was the case it made me wonder how we can call ourselves an investment or business friendly country. Thanks for clarifying it was not an opinion but the reality of the facts rather than how fair it is.

About the motivation, I am pretty sure that all shareholders are motivated by the technical challenge of the possible new COMPANY B. That said, who am I to express an opinion as to how much money is the ultimate motivating factor. However it is still risky and the "rewards" for taking that risk are few. My sadness is that in our supposed business friendly economy the reality seems to be quite different.
Thanks again for your words of advice.
Woodie
 
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