Company Shares Tax Returns

If you are given shares or shares options by your employer you will generally need to consider tax twice:

 

For a lot of people, acquiring shares is the first time they will need to file a tax return directly with the Revenue Commissioners.

 

Remember, your employer is obliged to provide the Revenue Commissioners with a return on their share schemes every year so your details are in the system and unpaid taxes will be pursued. 

 

In the case of share options, from 01 January 2024 the process has been updated, to shift the burden of responsibility from the employee to the employer. For exercises of share options from 01 January 2024, employees will no longer be obligated to file a Form RTSO1, and pay tax. Employers will now process these matters through payroll, which brings share options in line with other share based remuneration (such as RSUs). 

 

Whatever your situation with shares and share options, your local TaxAssist Accountant can meet with you and prepare your tax returns. We will ensure you claim any reliefs due to you. By giving you a fixed, competitive price, we can take the worry away when it comes to tax returns.

 

Generally share incentive schemes fall in to two categories – Share Award Schemes and Share Option Schemes:

 

 

Share awards are when your employer gives you shares in the company as part of a bonus or remuneration package.

 

The good news for employees is that although you still have to pay income tax when you receive the shares, your employer will have looked after the payment of this tax for you through your payslip, so one step has already been taken care of. 

 

Once you decide to sell your shares you have to pay another tax in the form of Capital Gains Tax - your employer will not deal with this element. In Ireland this is currently charged at 33% of the gain and the first €1,270 of a gain in a tax year is exempt from CGT. It is your responsibility to pay the CGT and file the appropriate tax returns on time - or have a professional do it for you.

 

The basic principal here is that you need to determine what your gain was, i.e. you pay tax on the difference between the value of the shares when you received them and the value of the shares when you sell them. 

 

Remember, even if you do not make a gain you need still to file a return to Revenue.

 

Share options are a benefit granted to employees. A Share option allows the employee to purchase shares in a company at a set rate which is often below the current market value.

 

You need to be aware of two tax events in relation to share options: 

 

 

 

If you are part of an unapproved share option scheme, you (not your employer in this case) will need to calculate the income tax you owe and file the necessary tax returns where you exercise options up to 31 December 2023. The amount of tax that you pay is calculated on the difference between the option price you are offered by your employer and the market value of the shares at the time of purchase. It is really important to note that the taxes associated with buying the shares must be paid over to Revenue within 30 days of buying the shares by filing a RTSO1 form. 

 

As mentioned above, from 01 January 2024, the burden of responsibility shifts from employee to employer, which brings unapproved share option schemes in line with other share based remuneration schemes. From 01 January 2024, exercises of unapproved share options will be dealt with by your employer via payroll. 
 

 

 

 

When you sell your shares you will then be liable to CGT on any gain arising. The gain is calculated as the difference between sales proceeds and the market value of shares at date of purchase minus exemptions. When you need pay CGT is dictated by when in the year you sold your shares. If the shares are sold on or before 30 November CGT is due by 15 December in the same tax year, while if the shares are sold during the month of December the payment date is 31 January in the following year.

 

Sometimes people will buy and sell on the same day and sometimes people will buy options but hold on to them for a time in the hope the share price will increase.

 

Read more about how to pay tax on share options here

 

 

 

Restricted stock units, or RSUs, are stock units in a company. They are restricted because they will not be transferred to you, the employee, until certain conditions have been met. When they are transferred to you one day they are said to “vest”. Once vested, they are now in your ownership and you will be allowed to retain or sell them on. A typical example of a condition is that you have stayed with the company for a certain number of years. 

 

Executives who receive RSUs usually do not run into income tax problems with shares that are acquired under RSU, since the employer is obliged to deduct PAYE/PRSI/USC at the point that the executive acquires the shares. However, if you decide to sell on your RSUs, you will be liable for CGT.

 

Read more about Restricted Stock Units (RSUs) and tax here

 

Whatever your situation with shares and share options, your local TaxAssist Accountant can meet with you and prepare your tax returns. We will ensure you claim any reliefs due to you. By giving you a fixed, competitive price, we can take the worry away when it comes to tax returns. 

 

If you would like us to help you through your share tax returns then call us today on 01 492 3588  or contact us online here to arrange a free initial consultation.