Unapproved share option schemes

  1. Overview
  2. Taxation of a short option
  3. Taxation of a long option
  4. How to calculate and pay Relevant Tax on Share Options
  5. Disposal of share options

How to calculate and pay Relevant Tax on Share Options

Note

You must pay Relevant Tax on Share Options (RTSO) within 30 days of exercising share options.

Step 1: Calculate your gain

The gain is the difference between:

  • the market value of the shares when you exercise the option, or the amount received for its assignment or release
  • and
  • the amount you paid for the shares (plus amount paid on the grant of the option, if any).

Step 2: Calculate Relevant Tax on Share Options

Rate of tax

The Income Tax and Universal Social Charge (USC) due on the exercise of a share option is known as Relevant Tax on Share Options (RTSO).

You must calculate Income Tax and USC at the higher rate. You must also calculate Pay Related Social Insurance (PRSI) using the rate of the PRSI class applied to you for the tax year.

Paying at the lower tax rate

Your income from all sources for the year might be chargeable at the standard rate (20%). If it is, you may apply for approval to pay:

  • Income Tax at the standard rate of tax
  • a lower rate of USC.

You can apply for approval:

Note

This approval must be obtained in advance of paying RTSO to the Collector-General. Otherwise, you must pay tax at the higher rate.

Step 3: When to pay RTSO

You must pay RTSO within 30 days of exercising the options. The 30 day period includes the exercise date.

Note

Late payment of RTSO is subject to an Income Tax interest rate of 0.0322%. Interest is charged for each day, or part thereof, from the date when the payment is due until the date the payment is made.

Step 4: How to pay RTSO

If you have never been registered for RTSO, refer to Manage your tax registrations.

If you are already registered for RTSO, you can make your payment using the payments facility in:

Step 5: Complete RTSO1 Form

You must complete a RTSO1 Form when making your payment and send it to the Collector-General's Office

Step 6: File your Income Tax Return

You must also complete an Income Tax Return (Form 11) under self-assessment for every year that you exercise, assign or release a share option.

You must include details of any dividends received from your shareholding.

If you dispose of shares, you may be liable to Capital Gains Tax (CGT).

How to correct an underpayment of RTSO

If you notice an error in your calculation of RTSO, or you have not reported all income or gains for a previous year, you must tell Revenue.

For further information on how to make a disclosure on RTSO, please see Making a disclosure.

Next: Disposal of share options