Are you sure you can sell immediately, some of these schemes you're waiting a couple days for the shares to be ready to sell. If if there's an official buy and sell option - that helps as it probably will be at least same day - if not same time.Thanks, that is exactly what I thought!! Yep, could sell immediately so little or no CGT as am selling as the value at sale is the same price as value at purchase. Then all I have to pay is the Tax, PRSI and USC on the difference between what I paid for the shares and the value of the shares when they were purchased as that is classed as a benefit in kind.
Not sure about with Irish taxation if it's worth buying shares in an ESPP if the gross profit looks like it's only going to be close to 15%.
3-5% net is a lot better than you'll get in a savings account, and pretty good for a relatively low risk investment.Your profit after tax and costs might only end up at 3-5% which could all be lost if the share price dips before the earliest point you can actually sell.
Not sure about with Irish taxation if it's worth buying shares in an ESPP if the gross profit looks like it's only going to be close to 15%.
Certainly is - and if you wanted to put it on an annual basis you could say it's 6-10%.3-5% net is a lot better than you'll get in a savings account, and pretty good for a relatively low risk investment.
I done this last month, real world example:Certainly is - and if you wanted to put it on an annual basis you could say it's 6-10%.
When the price at the end is higher than the start - you're doing very well. If the buy and sale are handled for you and are done same day that's great.
But when Revenue increased taxation on these from 40% to 50% that made the scheme less attractive where the profit is 15%.
In an ESPP typically there's restrictions like up to 10% of your salary. Transaction charges however are usually at least partly fixed charges, so not trivial in comparison to the investment profit on the sums of money involved.
An example might be someone on 60k putting in 3k over 6 months. If the profit is 15% that's 450e.
That's about 225 after tax. Maybe around 125 in profit or so after typical charges and conversions (assuming dollar based).
For that 125, you've got to send a cheque for 225 and an RTSO form within 30 days, then you've got to fill in the same information again next year in the Form 11.
There were times I made a loss or a few 10s of euro profit, because that same day sale wasn't always part of my ESPPs. The tax hassle was definitely not worth the effort in those cases - so eventually I would always take the option to pull out of the scheme a few weeks before the end of period if it was clear the end price would not exceed the start price.
I also done this last month.I done this last month, real world example:
Gain: $1078 (891 eur)
Gross gain %: 17.6% (share price dropped)
Fees & commission: $20 (16.5 eur)
Wire fee: $25 (would of been zero if you have US bank account, I've since got one) (20.5 eur)
Currency conversion: 24 eur
Tax: 463 eur (52%)
Net gain: 367 eur
Net gain %: 7.3%
It took 5 mins to fill out RTS01 and email to revenue and pay tax online.
So in 6 months I made a net return of 7.3%, this was the worst result that could come from this since share price dropped and had to pay wire transfer fee. What investment offers a return that high, in such a short amount of time with no risk (in theory, company could go bust, but unlikely. Also I think the money is kept in escrow, so not sure what would actually happen in this case)
You are grossly overestimating the charges associated with it. Also the 'profit' isn't 15% as stated, minimum gain is 17.6% on your capital.
This is wrong, Fungie20 has worked it out correctly. It doesn't matter what the exact $/€ figures are. If you are buying at a 15% discount, this is always a 17.6% gain on your capital.The way the 15% works is if you invest 1000 into your ESPP you buy 1150 dollars worth of shares for 1000.
I assume you're working it as getting 1000 of shares for 850 as that would be 17.6.
But for that you'd be getting 150 of your 1000 back plus your shares and the profit would still be 15% on the 1000 you'd invested over the 6 months.
Fair enough, I'm NOT saying to not invest in ESPPs. ALWAYS invest in ESSPs. I always do. Just beware of costs at the end for lower amounts in the case where the share price isn't higher.This is wrong, Fungie20 has worked it out correctly. It doesn't matter what the exact $/€ figures are. If you are buying at a 15% discount, this is always a 17.6% gain on your capital.
As for your earlier example of €3k invested in ESPP. At the end of the cycle, you have €3k to buy discounted shares. If they are €10 FMV, you buy them at €8.50 (15% discount). Your will receive 352 shares at €8.50 (€2992). The leftover €8 usually just goes into your next cycle. So you have now bought €3520 worth of shares for €2992 or in other words, you have a 17.64% gain on your investment.
Maybe it is just your case and your employer has not set up a very beneficial ESPP but in general, it is no-brainer to contribute to these if offered. As long as you can execute same day sales and there are no prohibitive restricted trading periods that coincide with the ESPP purchase, then it is one of the few low risk and high return investments that we have in Ireland.
Transfer in USD to Revolut then change to euro within Revolut and transfer it straight away to your AIB, BOI etcIf I can get 7000 dollars from a US bank to euros in an Irish one for only 24e then that does change the calculation - how do I do that? I prefer to avoid Revolut for anything over a couple hundred euro - is this via N26 or what?
There's another risk, a fairly lowish risk but one I've been stung by, if the USD/EUR exchange rate changes dramatically in the last month or two before the stock purchase, you can end up in a situation where the gross gain in euro in your account is less than the tax owed. This is due to each month's contribution being transferred to a USD holding/escrow account at the time its taken from your wages rather than holding it in a euro account and then only transferring it over to USD shortly before the purchase date to buy the stock.in such a short amount of time with no risk (in theory, company could go bust, but unlikely. Also I think the money is kept in escrow, so not sure what would actually happen in this case)
In my experience brokers generally don't have a breeze about how this works, or frequently quote UK legislative requirements.I think your broker has confused the two schemes. USC & PRSI are due in either case (approved or unapproved share schemes).
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