Irish Revenue updates guidance on scrip dividends, clarifying the income, corporation, and capital gains tax treatment under section 816 of the TCA 1997.
Irish Revenue published eBrief No. 213/25 on 14 November 2025, updating guidance on the treatment of scrip dividends for income and corporation tax purposes.
Tax and Duty Manual (TDM) Part 33-02-01 outlines the tax treatment under section 816 of the Taxes Consolidation Act 1997 for shares issued instead of cash dividends, when chosen by the shareholder. Commonly called “scrip dividends,” these transactions are now covered with revised guidance that removes outdated material and adds new examples for clarity.
The manual explains how scrip dividends are taxed, detailing the treatment of the cash amount the shareholder forgoes when opting for additional shares. For both income tax and corporation tax, the categorisation of this amount depends on the issuing company’s residency and status. The rules differ between non-Irish resident companies and Irish resident companies, whether quoted or unquoted.
Specific provisions cover Dividend Withholding Tax (DWT), noting that payors who are quoted or unquoted Irish resident companies must apply these rules. Additionally, the manual clarifies the Capital Gains Tax (CGT) implications: the value of the forgone cash dividend is treated as enhancement expenditure and must be properly apportioned across the total shareholding when calculating future disposals.
