Irish tax advice
Budget: £20 – £250 GBP
I have a question about tax consequences regarding a transaction. May I please request an advice from a skilled Irish tax advisor?
The mother company Loreta Canada has currently a receivable in the amount of about 40 mil. CZK against a Company XY (client). As the following transactions are made in Europe, Loreta Canada would like to assign this receivable to its daughter company Loreta Ireland.
Loreta Ireland will have a receivable against a Company XY in the amount of 40 mil. CZK
There are 3 possible scenarios:
Scenario A
The Company XY will sell the shares of Company Z to Loreta Ireland. The value of shares is expected to be about 67 mil. CZK. The purchasing price of the shares will be about 40 mil. CZK. Loreta Ireland will set-off its receivable against the Company XY and will hold the shares in the current value of 67 mil. CZK. Loreta might sell the shares in the future.
Scenario B
The Company XY will sell call option to Loreta Ireland for the shares of the Company Z. Same amounts as in Scenario A. The call option may be called or sold in the future.
Scenario C
The Company XY will sell the call option to Loreta Ireland. Again same amounts as in Scenario A. It might be the case that Loreta Ireland will grant a consent that Company XY can sell the shares of Company Z to some other company (let's call it a Buyer), but the payment for the sale of shares of the Company Z by the Buyer adjusted by the purchasing price for the call option will be sent to Loreta's bank account (instead of the shares themselves). This means that the fulfilment of the option agreement will be in cash and not in shares.
What are the tax consequences for Loreta Ireland in each scenario?
Thank you
Kind regards
Frank Cross
The mother company Loreta Canada has currently a receivable in the amount of about 40 mil. CZK against a Company XY (client). As the following transactions are made in Europe, Loreta Canada would like to assign this receivable to its daughter company Loreta Ireland.
Loreta Ireland will have a receivable against a Company XY in the amount of 40 mil. CZK
There are 3 possible scenarios:
Scenario A
The Company XY will sell the shares of Company Z to Loreta Ireland. The value of shares is expected to be about 67 mil. CZK. The purchasing price of the shares will be about 40 mil. CZK. Loreta Ireland will set-off its receivable against the Company XY and will hold the shares in the current value of 67 mil. CZK. Loreta might sell the shares in the future.
Scenario B
The Company XY will sell call option to Loreta Ireland for the shares of the Company Z. Same amounts as in Scenario A. The call option may be called or sold in the future.
Scenario C
The Company XY will sell the call option to Loreta Ireland. Again same amounts as in Scenario A. It might be the case that Loreta Ireland will grant a consent that Company XY can sell the shares of Company Z to some other company (let's call it a Buyer), but the payment for the sale of shares of the Company Z by the Buyer adjusted by the purchasing price for the call option will be sent to Loreta's bank account (instead of the shares themselves). This means that the fulfilment of the option agreement will be in cash and not in shares.
What are the tax consequences for Loreta Ireland in each scenario?
Thank you
Kind regards
Frank Cross