Tax on Stock Trading Ireland

This page offers some information regarding the tax that must be paid to the Irish government on any gains gained from the buying and selling of stocks in Ireland. (Capital Gains Tax (CGT). As more online stock trading platforms become available and as share trading fees continue to decrease, the practice of investing in shares is becoming more mainstream in Ireland.

The Competition and Consumer Protection Commission in Ireland conducted a survey in 2021 and found that 36 percent of adults in Ireland held some kind of investment product, with 19 percent of those adults owning stocks and shares. On the other hand, a significant number of those individuals who possess stocks might be unaware of the possibility that they will be required to pay capital gains tax (CGT) on any profits derived from the sale of those shares.

Capital Gains Tax in Ireland

You are considered to have made a capital gain whenever you sell shares (or any other type of property) for a price that is greater than the amount that you paid for them initially. This capital gain is liable to be taxed by a levy known as the Capital Gains Tax (CGT), which in Ireland is levied at a rate of 33 percent at the present time.

CGT Exemption in Ireland

The first €1,270 of taxable gains made throughout the course of an Irish fiscal year are excluded from capital gains taxation. (The capital gains tax, based on €1270, would be €419)
You are also allowed to deduct any expenditures associated with trading from any earnings. The following provides an illustration of a CGT computation example.

(As a point of reference, the annual capital gains tax exemption in the UK is £12,300!)

How Ireland Determines the Amount of Tax Due on Capital Gains on Stocks

1. In January of 2012, you made a purchase of stocks at a total cost of €5,000, which included stamp duty and trading expenses.
2. You make a profit of €8,000 off of the transaction in December 2022. (after deducting any costs charged by the broker)
3. Gain Subject to Taxation = €3,000
4. Deduct: Personal exemption from the CGT in the amount of €1,270
5. The amount of the net chargeable gain is €1,730.
6. Chargeable @ 33% Capital Gains Tax due= €570.90
7. Profit after CGT = €2429.10

When Are You Required to Make a CGT Payment on Stocks in Ireland?

For disposals made between: If you made a capital gain or loss between January 1 and November 30, you have until December 15 of the same year to pay your CGT.

For disposals made between: You have until the 31st of January of the following year to make your payment of capital gains tax if it was due between 1 December and 31 December.

Through the use of Revenue’s online service (ROS) (or myAccount, if you are a PAYE taxpayer), you are able to register for CGT and pay CGT. You have until October 31 of the year after the date of the disposal to file a tax return for that year. According to Revenue, you are required to do this even if there will be no capital gains tax owed as a result of reliefs or losses.

How to Decrease Capital Gains Tax on Stock Sales in Ireland

It is not possible to carry forward any unused portion of the yearly tax-free CGT exemption of €1270 from one year to the next. Therefore, the following is a list of things that can be done to lessen or avoid some of the Capital Gains Tax. If you own shares that have gained in value, you can sell a sufficient number of those shares during each tax year to provide you a gain of €1,270, which is equivalent to the annual tax-free exemption. This gain can be deducted from your taxable income.

If you want to keep ownership of the shares after they have been sold, you can instantly repurchase them from the buyer. You do not have to wait for a month and a half (that is a common misunderstanding). The term “Bed and Breakfast sales” is used to refer to these kinds of deals rather frequently. You need to take into account any fees, such as Brokers’ fees or Stamp Duty, and compare them to the amount of tax you will save. (For example, the stamp duty on the sale and purchase of Irish shares is 1%, while the stamp duty on UK shares is only 0.5%). When a person uses their annual exemption of €1270, they are eligible for a maximum cash value benefit of €419.

An Illustration of How to Reduce or Eliminate Some of the Tax on Stock Trading Ireland

• In January of 2022, you invest €5,000 total in Irish shares at a price of €500 a share.
• In October of 2022, each one of them is worth 800 Euros. (The value of each share has increased by €300.)
• In October 2022, you sell four shares at a price of €3200 each, resulting in a capital gain of €1200, which is less than the CGT exemption amount of €1270.
• In October of 2022, you make a single purchase of those same four shares (assume for the same price). The stamp duty is €32 if it’s 1%.
• You decide to sell all ten of your shares in 2023 for a total of €10000 (€1000 each).
• Due to the fact that the four shares you repurchased in 2022 set you back, €3200 rather than the initial price of €2000, your total capital gains tax burden in 2023 will be smaller.
• The gain on the six shares that were purchased in 2022 and sold in 2023 is €500 each share, which comes to €3000 in total.
• The profit made on the four shares that were sold, then repurchased for €800 each in October 2022, and then sold once more in 2023 is just €200 on each share, for a total profit of €800.
• The aggregate profit from all 10 shares comes to €3800.
• Deducting the exemption of €1270 results in €2530, which, multiplied by 33%, equals €834.90.
• If the sale and subsequent purchase hadn’t taken place in October 2022, the total capital gain would have been €5000, and the CGT would have been €1230.90; hence, €395 of CGT was avoided (minus the additional stamp duty of €32).
• There is no need to worry about Stamp Duty in regards to European Union or American shares.
• Naturally, you also need to take into account the commissions charged by the broker for selling and buying back the asset.

Making Up for losses on Stocks in Ireland

If you have stocks that have decreased in value and you want to use the loss you’ve incurred on the shares to offset other gains, you have to get rid of the shares in the same tax year as sales of other shares on which you’ve made a gain. Otherwise, you won’t be able to deduct the loss.

It’s possible that you’ll want to hold onto the shares in your portfolio that have experienced a decline in value in the event that their value recovers in the future. You will need to get rid of the shares in order to take advantage of the tax benefits associated with the decrease in value. You have the option to re-acquire the shares at any time, but you are required to wait a period of four weeks before doing so. This is to ensure that the loss you have realized can be deducted from any other gains you have made. (Let’s just cross our fingers and hope that the price doesn’t skyrocket in the next four weeks!)

Recommended Stock Brokers.

1. Long-term stock trading – Visit eToro
2. Short-term stock trading (Day Trading) – Visit TD365

 

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