Revenue Note for Guidance

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Revenue Note for Guidance

847B Tax treatment of return of value on certain shares


This section, inserted by section 47 of the Finance Act 2014, provides a measure of relief for individuals who hold small shareholdings in Vodafone plc and who inadvertently found themselves subject to an unintended liability to income tax, PRSI and Universal Social Charge, rather than a NIL capital gains tax liability, arising from a return of value made to them by Vodafone in February 2014.

It is clear that many small shareholders in Vodafone plc did not understand the choices open to them in relation to the return of value received. As a result, those who made the wrong choice found themselves subject to an unnecessary and unintended exposure to this liability as, had they opted to receive the return of value as a capital payment, they would have no tax liability on the return of value.

This relief is confined to small shareholders who received a return of value of €1,000 or less and the section provides that unless they elect otherwise, the receipt by them of a return of value from Vodafone in February 2014, will be treated as the receipt of a capital sum, which will be subject to capital gains tax rules. Because the base cost of the shares (having their origin in Eircom shares) is higher than the amount received, no capital gains tax will be payable.


Subsection (1) defines –

company” as being Vodafone plc

relevant legislation” as being Part 26 of the UK Companies Act 2006. This is the legislation under which Vodafone made a return of value and related share consolidation on or about 21 February 2014.

return of value” is defined as the special dividend paid by Vodafone plc in respect of fully paid bonus C shares issued to shareholders (who did not opt to received bonus B shares) under the terms of the return of value.

Subsection (2) provides that a return of value of €1,000 or less received by way of special dividend in respect of C shares will be treated as the receipt of a capital sum, which will be subject to capital gains tax rules, unless an individual shareholder elects otherwise.

Subsection (3) provides that if an individual wishes to have the return of value treated as income, he or she can include the return of value as “income” on his or her tax return for the year ended 31 December 2014 and this will be regarded as an election to have the amount treated as an income amount.

Relevant Date: Finance Act 2020