Taxes Consolidation Act 1997 section 175

Purchase of own shares by quoted company

Section 175 provides that a share buy-back by a quoted company (or a member of its group) is not treated as a distribution, meaning the shareholder is subject to CGT rather than income tax, provided the buy-back is not part of a tax avoidance scheme.

• When a quoted company redeems, repays or purchases its own shares, the payment is not treated as a distribution — so no dividend withholding tax applies for the company and no income tax for the shareholder; instead, the shareholder is subject to CGT on the disposal
• This treatment only applies where the buy-back is not part of a scheme or arrangement designed to allow shareholders to extract profits without receiving a dividend, and a number of specific arrangements are identified as failing the anti-avoidance condition
• The company must notify Revenue of any share buy-back within 12 months of the end of the accounting period, stating whether the payment is being treated as a non-distribution; the treatment is subject to self-assessment with no requirement for advance clearance
• The term "quoted company" extends to any company that is a member of a group of which a quoted company is also a member