D-Day for Vodafone shareholders
POST offices around the country experienced long queues yesterday as Vodafone shareholders sent off letters in an attempt to avoid being hit by tax following the company's deal with US telecoms giant Verizon.
Any of Vodafone's 380,000 shareholders living in Ireland who have not indicated by today how they want to receive their payout may be hit with tax.
The UK mobile company said the Form of Election document, where shareholders state whether they will receive their payment as a capital or income payment, had to have been submitted and received by 1pm this afternoon.
Shareholders were not allowed to send the forms by fax or email, so if you have not returned the Form of Election by the deadline, you've missed the boat.
For those who missed today's deadline, which has been flagged up since late last year, their payment will be treated as income instead of capital. This means that it will receive income tax treatment.
If you chose the capital option, you are likely to have avoided tax.
The reason for this is that if you bought Eircom shares in 1999, those shares became Vodafone shares in 2001 when Eircom sold its mobile arm Eircell to Vodafone.
If you still hold those shares, you have most likely made a loss on your initial investment in Eircom and the Revenue Commissioners have indicated that you won't have to pay any tax as a result – as long as you receive your payment as capital.
Vodafone said the default option had to be to receive the so-called Return of Value as an income payment because many of Vodafone's shareholders are in jurisdictions where it is only possible to receive it as income.
Vodafone announced yesterday that shareholders will receive 0.026 shares in Verizon Communications for each Vodafone share they own.
The British telecoms company also said its shares would be consolidated on Monday at the ratio of six new shares for 11 existing shares following the closure of the deal.