What is an RTSO1?

If you have been told to complete an RTOS1 form it is likely you are on an Unapproved Share Scheme. Being part of an Unapproved Scheme is not a negative thing, in fact if your employer wants to grant you options worth more than €12,700 they have to do it under an Unapproved Scheme and these type of schemes are fairly common in Ireland. 

What it does mean for you though is that the Income Tax, PRSI and USC payable when you obtain the shares is not looked after by your employer. It is up to you to figure out the Income Tax due and pay this over to the Revenue yourself. 

Essentially you will pay Income Tax, PRSI and USC on the difference between the price which you pay to acquire the shares i.e. the option price and the market value of the shares if an independent third party were to buy them.

For example, if you were granted an option to buy 100 shares at €140 and the market value of these shares was €150 then there is a benefit to you of €10 per share or €1,000. You need to pay Income Tax, PRSI and USC on this €1,000.

This income tax is known as RTSO (Relevant Tax on a Share Option). You need to file an RTSO1 form with Revenue and pay this tax within 30 days of triggering the option to buy the shares.

Read more about paying tax on share options here

 

 

 

 

Date published 22 Mar 2022

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.