Revenue Commissioners Plan TAX Raid on Eircom Employees

spongebob

It seems that Biddy will be tapped for a good few squids at the higher Income Tax rate this year. The Eircom Employee share trust, the ESOT, will carry out its final disposal (divide up) the shares among some 12000 current and previous Eircom employees. This will amount to 80k per person or something like that.

The Revenue Commissioners are not being forthcoming on how they will 'Interpret' this divvy up. They are inclined to decide that the free 15% of Eircom and the mark up on the other 15% that they bought from the 'original' shareholders at a knockdown price is income now that it has been 'distributed' (October ISTR) .

That 'income' could shove every Biddy into the higher tax bracket, the government should get €80-150m out of it. Remember that the other shareholders are outside the tax net so the Revenue wouldn't land the government in the doo doo with O'Reilly and his mates. Nor would this be unpopular with the other 400,000 shareholders who lost money thanks to the useless management and employees of Eircom ......and there is a Local and Euro election next year.

It seems that Biddys own Tax accountants (working for the ESOT that is) are at their wits end trying to get some clarity from the Revenue but are not receiving much assistance from that quarter .

M

jd

I'm not sure if you have this quite right Muck-
There may be a question about a dividend if it is distributed (the share of the payout that valentia gave themselves after the bond refinancing).
In November the trust gives a final allocation-however this only notional and no member of esot gets any shares-and there is no market available for them to be traded when esot members actually do receive share certs

Boston

where are yo ugettign this from muck? i'll probably be able to find out somethign about it, but i would of thought they would only to liable up to 20% of what they recieve from this

pete

From www.pseu.ie (the union)

EIRCOM

Due to a re-structuring of the Company’s debt, share values will be released to share holders including staff members of the ESOP. Members are being advised separately of the details.

That's not very informative, is it?

Oh well.

BigEejit

Well ... if it is anything like the stock option plans that yank companies do with employees, then they should (hopefully will) be charged 40% tax ... if the employees invested in the shares themselves they should (hopefully will) be charged 20% on their profits...

spongebob

Originally posted by Boston
but i would of thought they would only to liable up to 20% of what they recieve from this

Common mistake.

You thought that the profit would be liable for CGT@20%

Share Options are normally hit at the higher marginal rate because they are viewed as Income. It seems that some of the CWU officals, on secondment to the CWU from Eircom but PAID by the CWU are at their wits end. They have not been Eircom employees during the past 4 years or so.

The Revenue won't tell them what their treatment will be, suggesting they submit their tax returns like other citizens. They are therefore telling the ESOP to keep a contingency fund aside for them to give them some compo if stung for Income Tax and if the rest get away with CGT instead although it seems to be income tax for everyone here.

Some (the amount GIVEN by the government in 1999 , could be regarded as CGT and the rest regarded as Income Tax.

M