Capital Gains Tax on Shares in Ireland: A Practical Guide

1. Capital Gains Tax: The Basics

Capital Gains Tax (CGT) is charged at 33% on chargeable gains arising from the disposal of assets, including shares, by Irish tax residents. A disposal occurs when you sell shares, gift them, or exchange them for other consideration. CGT does not apply to income received in the form of dividends; those are subject to income tax.

Each individual benefits from an annual personal exemption of €1,270. This exemption cannot be transferred between spouses and is not available to companies. Gains below this threshold in any tax year are not chargeable, but it is important to note that losses and prior-year carry-forwards must be applied before the exemption reduces the chargeable amount.

Where current-year losses exceed current-year gains, the net loss may be carried forward indefinitely and applied against future chargeable gains. Losses cannot be carried back.

Payment Deadlines

CGT is payable in two tranches depending on when in the year the disposal occurred. Gains arising between 1 January and 30 November are due by 15 December of the same year. Gains arising in December are due by 31 January of the following year. The annual tax return (Form CG1 or the CGT section of Form 11) is filed separately and is due by 31 October of the year following disposal.

2. How Shares Are Matched on Disposal (FIFO)

When an investor holds shares in a company that were acquired on different dates and at different prices, a rule is needed to determine which shares are treated as disposed of when a partial sale occurs. In Ireland, the First-In, First-Out (FIFO) principle applies to shares of the same class in the same company. The shares acquired earliest are treated as sold first, regardless of which shares the broker physically settles.

This is a significant departure from the average-cost method used in many other jurisdictions. Under average cost, the cost basis of a disposal is calculated by dividing the total cost of all holdings by the total number of shares. Under FIFO, the gain or loss depends specifically on which lot was purchased first and at what price, meaning the order and timing of purchases has a material impact on the tax liability.

EirTax automatically applies FIFO matching across all transactions in your account. When you record a sale, the system identifies the earliest open lots and allocates the disposal against them in chronological order, producing a separate disposal record for each lot consumed.

3. The Four-Week (Bed & Breakfast) Rule

Section 580 of the Taxes Consolidation Act 1997 (TCA 1997) contains a specific anti-avoidance provision commonly known as the Bed & Breakfast rule. Without this restriction, an investor could sell shares at a loss to crystallise a tax deduction and immediately repurchase the same shares, maintaining the economic position while generating an allowable loss for CGT purposes.

The rule applies where shares are sold at a loss and the same shares are reacquired within 28 days of the disposal date (either before or after). Where this occurs, the loss is restricted: it is removed from the general CGT loss pool and may only be offset against gains arising from the disposal of the specific repurchased shares. Any portion of the restricted loss that exceeds the gain on those shares is permanently forfeited — it does not carry forward and cannot be applied against gains from other securities or disposals.

EirTax monitors all transactions for four-week repurchases. When a restricted disposal is detected, the loss is excluded from the annual CGT loss total displayed on the tax return summary, and a warning is shown on the relevant disposal. When the linked shares are subsequently sold at a gain, the system automatically applies the restricted amount to reduce that gain before computing the CGT liability.

4. Bonus Shares

A bonus issue (also known as a scrip issue or capitalisation issue) occurs when a company distributes additional shares to existing shareholders at no cost, typically in proportion to their existing holdings. Because no consideration is paid for the new shares, the bonus shares have a nil acquisition cost in their own right.

For CGT purposes, the original cost of the holding is spread across the enlarged shareholding — that is, the total cost basis remains unchanged but is divided by the new, higher number of shares. The acquisition date of the bonus shares is treated as the same as the original shares for the purposes of identifying the holding period.

In EirTax, you record a bonus issue by adding a corporate action against the relevant holding. The system recalculates the cost per share across all open lots and records the adjustment in each lot's history, so the revised cost basis is applied automatically to any future disposals.

5. Rights Issues

A rights issue is an offer by a company to existing shareholders to purchase additional shares, typically at a price below the prevailing market price and in proportion to their existing holdings. Unlike a bonus issue, the investor pays a subscription price for the new shares. This subscription cost is treated as enhancement expenditurefor CGT purposes under Section 552 TCA 1997, not as a separate independent acquisition.

The practical consequence is that, on a subsequent disposal, the allowable cost comprises both the proportional original acquisition cost and the proportional subscription cost paid under the rights issue. The two components are tracked separately to ensure accurate computation when only a portion of the enlarged holding is sold.

EirTax tracks the original purchase cost and the rights issue enhancement cost as separate components within each lot. When a disposal is recorded, both components are apportioned by the fraction of the lot being sold, and the total allowable cost is the sum of the two proportions.

6. Cross-Class Share Apportionment

Certain corporate actions result in a shareholder holding two distinct classes of shares where previously only one existed — for example, a rights issue that creates a separate class of preference shares alongside the original ordinary shares. In these circumstances, the original acquisition cost cannot simply be split equally across the two classes. Instead, Revenue requires that the cost be apportioned between the classes in proportion to their respective market values at the time the new class comes into existence.

The apportionment calculation uses the market value of each share class on the date the rights are exercised (or the date the new shares are admitted to trading, if that differs). Once the original cost has been apportioned, each share class carries its allocated portion as its allowable cost for future disposals.

Because cross-class apportionment requires market value data at a specific point in time, EirTax does not automate this calculation. Investors should record the apportioned cost for each share class manually as a corporate action, using the market value ratios at the relevant date. The calculation itself follows the methodology set out in Revenue's published guidance on share disposals.