Advice on tax due on overseas inheritence

[mammyof2]

Apologies in advance if the info in this thread is a little vague ...

In a nutshell, it seems likely that my husband is in line to inherit from a distant relative a substantial amount of shares (currently valued in the low six figures in euro). As far as I can work out - and this is still a little murky - the company was initially incorporated in the UK, so the shares were bought in sterling, but was then subsequently floated (IPO) in Canada, so value is now in Canadian dollars.

If we do come into the inheritence, the idea would preferably be to sell the shares asap, a) because the share price is very volatile at the moment and its unclear what way things will go over the next year or so and b) because hubby has been recently made redundant, so having a lump sum to either put on deposit to help with day to day expenditure or to pay off a big chunk of the mortgage is a priority right now.

So, question is; does anyone know how the capital gains from the sale of the shares would be taxed? My DH is adamant (without having any professional advice, I should point add) that it would be taxed as capital gains, i.e. at 20%. However, I have seen references to deposit interest on overseas bank accounts being liable for tax at the applicable rate of income tax, which would I guuess be 41% (I am on higher rate, as was my husband before his redundancy)?

Does anyone have any idea? Or do I need to consult a tax accountant - in which case, can anyone make a recommendation?

Thanks in advance

 

[DB74]

There's a couple of things here (and I am open to correction on any or all of them!)

1. Your husband will be liable to Capital Acquisitions Tax on the value of the shares/inheritance over and above the relevant threshold (for a distant relative I think it's about €16,500). The rate of CAT is 25%

2. If the shares are then sold, your husband will be liable to CGT on any profit on the sale of the shares. CGT is again, 25%.

So basically, suppose the shares are worth €150K

Value of inheritance = €150K
Threshold (tax-free amount) = €16,500
Taxable amount = €133,500 taxed @ 25%
CAT payable = €26,700

When shares are sold

Sales proceeds = €150K
Assume no costs associated with purchase or sale (in reality there will be some costs)
Tax free threshold = €1,270
Taxable amount = €148,730 taxed @ 25%
CGT payable = €37,182.50

Now there MAY be some relief available because he has already paid CAT on the inheritance but I'm a bit grey on this area so someone else may be able to assist you here (I don't think there is personally but you will need to check)

 

[T McGibney]

When shares are sold

Sales proceeds = €150K
Assume no costs associated with purchase or sale (in reality there will be some costs)
Tax free threshold = €1,270
Taxable amount = €148,730 taxed @ 25%
CGT payable = €37,182.50

The CGT calculation also includes a deduction for the market value of the shares at the date of acquisition so any CGT liability will only arise on any additional capital appreciation in the meantime.

There may also be a CAT-type tax liability or withholding tax exposure in the country of residence of their deceased relative. A credit for any such foreign tax suffered may be available against their Irish CAT liability.

Obviously, given the sums and issues involved, professional tax advice is recommended.