If you transfer your building out of a company it will trigger a capital gains tax liablity for the you despite that you will not be paid for it in cash.
If we go back to the property example for a minute, the transfer of property from the person to the company is a trigger for CGT as they are separate parties. Transferring an asset to a company is no different to selling it to a 3rd party.Surely any liability only occurs when the value of the asset is realised, either by the sale of the IP by the company that now owns it or the sale of shares in that company?
the transfer of property from the person to the company is a trigger for CGT as they are separate parties. Transferring an asset to a company is no different to selling it to a 3rd party.
Understood, and I'd accept it's a "trigger", but how can a liability arise if there is no (or a tiny nominal amount of) cash involved in the transaction? I'd accept that there may well be issues if the asset is property, but surely not for IP or (for example) office furniture?
As I said, I'm no expert, but I've actually done this in the past and it was never queried by our accountants or raised as an issue.
Ah, OK - that makes sense, all turning on: "subject to the Capital Gains Tax Acts, a person’s acquisition of an asset shall for the purposes of those Acts be deemed to be for a consideration equal to the market value of the asset". Thanks for the various clarifications - the original response to the OP didn't make much sense to me.
By the way, regardless of any reliefs available, there's a very strong case that any IP gifted to a company at startup has effectively no value. IP - at least in the technology sector I'm familiar with - tends to have value only when packaged with a team capable of understanding and exploiting it. If you doubt this, try selling some IP in the absense of having that in place.
Well that certainly makes sense on one level, on the other hand if I am the person with the intellectual property, and you and I set up a company together where you get half the equity for €100,000 and I get half the equity for my intellectual property, it's hard to see how your investment doesn't effectively value my IP at €100,000...?
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