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Are you part of an employee share incentive scheme and been given shares by your employer? 

If you are given shares or shares options by your employer you will generally need to pay tax twice:
 
  1. Income Tax when you receive the shares 
  2. Capital Gains Tax (CGT) when you sell them.
For a lot of people, being given shares is the first time they will need to file a tax return directly with the Revenue Commissioners. Sometimes, employees assume their broker or employer has looked after paying all of their taxes and filing the necessary returns however this is not the case. The onus is on you to calculate the tax and file the necessary tax returns.
 
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.
 
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.

 

Book your FREE Initial Consultation

 

Share Award Schemes and Share Option Schemes

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

Share Awards

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

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: 
 
  1. Income tax, USC and PRSI when you buy the shares
  2. Capital Gains Tax when you sell the shares.
 
1. Income tax, USC and PRSI when buy the shares:
 
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. 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. 
 
2. Capital Gains Tax when you sell the shares
 
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 (RSUs) and Tax

 
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

 

We Can Help

 
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 1800 98 76 09  or contact us online here to arrange a free initial consultation.

 

Book your FREE Initial Consultation

 

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