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Taxation of employment related shares

  1. Overview
  2. Free and discounted shares
  3. Restricted Stock Units (RSUs)
  4. Restricted shares
  5. Forfeitable shares
  6. Convertible securities
  7. Employee Share Purchase Plans (ESPPs)
  8. Growth shares (hurdle or flowering shares)

Overview

Shares you receive from your employer are generally referred to as 'share-based remuneration schemes' or 'share-based income'. There are many different types of employee share schemes.

Your employer may award you shares or grant you share options by either:

  • a 'formal' scheme with a written set of rules
  • or
  • an 'informal' once-off basis.

Unapproved share schemes

Employers do not need approval from Revenue for unapproved share schemes.

If your employer gives you shares free of charge or at a discounted price this is a taxable benefit. You must pay Income Tax, Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on shares or options granted under unapproved schemes.

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

This section explains the taxation of shares awarded through unapproved share schemes.

Unapproved share options

If you exercise a share option, you must report details of any gain you make to Revenue and pay any tax liability. Your employer will not deduct tax on your behalf through payroll. You can find more information about the taxation of unapproved share options in Unapproved share option schemes.

Gains made on the exercise of Key Employee Engagement Programme (KEEP) options are exempt from Income Tax, USC and PRSI. You can find more information about the treatment of share options awarded under KEEP in Key employee engagement programme (KEEP).

Approved share schemes

There are three types of Revenue approved share schemes:

  • Approved Profit-Sharing Schemes (APSS)
  • Employee Share Ownership Trusts (ESOTs)
  • Save As You Earn (SAYE) schemes.

Subject to certain conditions being satisfied, Income Tax will not be chargeable on shares or options acquired under these schemes. However, you must pay USC and PRSI on these.

Your employer will deduct USC and PRSI through payroll.

You can find more information about the taxation of Revenue approved share options in the Revenue approved share option schemes

Note

Capital Gains Tax (CGT) may also be due when you dispose of your shares.

If your shares entitle you to dividend payments, then you must also declare this income to Revenue.

Next: Free and discounted shares

Published: 30 August 2022 Print this page

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