Taxation of employment related shares

Growth shares (hurdle or flowering shares)

Growth shares are a special class of shares issued by your employer. They generally have a low or nil value until a company reaches a certain target or hurdle. You own the shares from day one. Your employer may give the growth shares to you free of charge or at a discount.

These shares are also known as hurdle shares or flowering shares.

Depending on the plan, growth shares may be treated as convertible securities.

Taxation of growth shares 

You must pay Income Tax (IT), Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on the:

  • market value if the shares awarded are free shares
  • discount value if the shares awarded are discounted shares.

Your employer will make the necessary deductions through payroll and pay the tax directly to the Collector-General.

If the shares have a nil value at the date of the award, then no tax arises.

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.