Revenue approved share schemes

Employee Share Ownership Trusts (ESOTs)

A company can set up an ESOT to provide shares to employees. Shares can be retained in the trust for up to 20 years. To date, ESOTs have mainly been set up by State and semi-State bodies.

An ESOT is normally set up in conjunction with an Approved Profit-Sharing Scheme (APSS). The shares acquired by the ESOT can be transferred through the APSS in a tax-free manner to eligible employees under the APSS rules.

Taxation of shares

Payments received from ESOTs are taxable. You will not pay Income Tax (IT) on ordinary shares transferred through an APSS up to a value of:

  • €12,700
  • or
  • €38,100 (in very limited circumstances).

You will pay Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on the share awards. The shares must be held in trust for a specified period for the IT relief to apply.

Capital Gains Tax (CGT)

If you dispose of your shares, you may be liable to CGT. You must report this disposal to Revenue, even if no tax is due. Your employer will not deduct any tax or report the disposal for you.

CGT for shares transferred to an APSS

Your shares might have been transferred to an APSS. If they were, you will need to calculate your cost of acquisition in order to calculate your capital gain. Deduct the market value of the shares, when first transferred from the ESOT to the APSS, from the disposal proceeds.

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