Yes I am a UK shareholder and tax payer. Details here. https://separation.ebayinc.com/2015/06/ebay-inc-board-directors-approves-completion-ebay-paypal-separation/
Hi again.I read the announcement and, whilst it mentions a distribution of Paypal shares, it doesn't say that it will be a dividend for tax purposes as far as I can see.If the issue to Ebay shareholders is treated as a dividend for UK tax purposes and you have to remember that this is a US company, then the cash equivalent of the dividend will be grossed up for UK tax purposes at 10% (£90 net = £100 gross) as any US stock dividend for a UK resident shareholder would under the terms of the UK/US double tax treaty. You will only have further tax to pay if you are a higher rate taxpayer in the tax year the "dividend" is paid.In its simplest form, the original cost of the Ebay shares will be split between the Ebay and Paypal shareholdings in proportion to their respective market values at the time of the demerger for Capital Gains Tax purposes. Given how imminent the demerger is, I'm surprised that there has been no information on the tax implications as there was with the Vodafone/Verizon demerger months in advance which leads me to believe that the Ebay/Paypal demerger will be a much more straightforward event in terms of the tax implications with no cash involved.Where there is a straight issue of shares and no cash is involved, there are usually no immediate Capital Gains Tax considerations.Whether the issue of Paypal shares will be treated as a stock dividend for UK tax purposes remains to be seen. I doubt it as there would appear to be no intention to "return value" to Ebay shareholders as there was with the cash payments to Vodafone shareholders. I may be wrong of course and I can see why one may come to the conclusion that the Paypal shares are being issued by way of a dividend because of the use of dividend language such as "ex-distribution".I hope this helps but let me know if there any further questions.
Let's assume it is a dividend, and that I am a high rate tax payer. Using an example whereby I receive PayPal shares with a value of $1000 can you explain the type of tax I would be liable for (I assume income) and the $ value I would owe. I don't quite understand the 10% grossing up.