Pfizer Upjohn and Mylan

[Paul O Mahoney]

The vaccine has dominated the news over the last few weeks and rightly so, but Mylan and Pfizers generic/off patent segment mergered on Monday.
We will get .1246 free shares in the new entity free.
Anyone know the tax treatment for this little windfall, we don't intend selling, made that mistake with Zeotis.
Is it income ? I'm doing 2020 preliminary now and don't know what to do.

Thanks

 

[Brendan Burgess]

Hi Paul

No, it's not income.

I am not sure what company you have shares in.

But let's say you bought 100 shares in Mylan for €2 each. The cost for CGT purposes is €200

You now have 100 shares in Mylan
And 13 shares in New co.
Your cost for CGT is still €200

If you dispose of them all at the same time, no problem.

If you decide to sell your Newco shares or any part of your holding, you will have to apportion the cost.

Come to think of it, I have a similar issue with Siemens. They spun off a company during the year. I should figure out the apportionment now while there is plenty of information. It might be more difficult to do if I were to sell them in 20 years time.

You could probably do it based on the share price before and after.

Let's say your 100 shares are worth €1,000 before the new shares.
When the new shares are quoted, let's say the values are
Mylan: €900
Newco: €100

Then 10% would be the apportioned cost.

Brendan