Gift From Ltd Company.

[GreenGrass6]

Hi there,

I was wondering if someone could explain the tax implications for me of gifting 100k to my son from my Ltd company.

Myself and my wife are the company directors and we have no employees. My son was previously employed by the company while he was in university (if there are any complications due to this.)

With housing being as bad as it currently is, I want to help him out now rather than way further down the line with inheritance. Is it possible to transfer 100k to him from the Ltd company and what taxation factors and laws need to be considered?

Thank you.

 

[Savvy]

I can't see a scenario where you can legally have the company make a payment to your son.
You would have to pay yourself or wife paying the due taxes and can then gift to him what you want.

 

[Steven Barrett]

A quick google search

 

[AAAContributor]

what taxation factors and laws need to be considered?

Broadly speaking:

Son of GreenGrass6:
- Receives a gift of €100k from the shareholder(s) of Ltd.

- The company is “looked through” when it makes a gift. The beneficial owners of the company are deemed to make the benefit in the same proportions as the market value of their beneficial interests in the company is decreased by the benefit. Source: https://www.irishstatutebook.ie/eli/2003/act/1/section/43/enacted/en/html

- Assuming Ltd is owned 50/50 by parents, the gift of €100k will use up €94k [€100k - (2 x €3k small gift exemption)] of the son's Group A parent to child threshold of €335,000.

- No CAT return (IT38) needs to be filed by the son as the gift does not exceed 80% of the threshold.

Company
- Close company provisions will deem the transaction a distribution (as it is a payment to an associate (the son) of a participator (shareholders)). Source: https://www.irishstatutebook.ie/eli/1997/act/39/section/436/enacted/en/html

- Ltd will have to operate dividend withholding tax (DWT) @ 25%.

Shareholder(s)
- Shareholder(s) will have to pay income tax, USC & PRSI on the distribution (with a credit for the DWT).

 

[T McGibney]

I can't see a scenario where you can legally have the company make a payment to your son.
You would have to pay yourself or wife paying the due taxes and can then gift to him what you want.

Absolutely nothing to stop it. But grossed-up PAYE/PRSI/USC would have to be calculated and paid on the basis of the net amount stated.

A payment of €100k would probably cost the company north of €200k in total.

The OP should consult with their accountant on the off-chance that the company's position or circumstances afford an opportunity of mitigating that to some extent.