Shares for employees
Overview
Shares offer a way to reward your employees in addition to their basic pay. The shares can be awarded by either a formal scheme with a written set of rules or under an informal once-off basis.
There are many different types of employee share schemes. They can be Revenue approved or unapproved.
Unapproved schemes
You do not need Revenue approval to operate an unapproved scheme. Examples of unapproved schemes include the following:
Revenue approved schemes
There are three types of Revenue approved share schemes:
You need Revenue approval to operate any of these schemes.
Taxation
Income Tax (IT) is chargeable on shares or share options acquired by employees free of charge or at a discount price. Share based remuneration is also liable to Universal Social Charge (USC) and employee Pay Related Social Insurance (PRSI).
Employees may also acquire shares or share options under any one of the tax efficient employee share schemes. Subject to certain conditions being satisfied, IT will not be chargeable on shares or share options acquired by employees under these schemes.
Employer PRSI does not apply to share based remuneration.
Filing requirements
There are several year-end reporting obligations for employers who operate share schemes for their employees. In certain circumstances, trustees have a filing obligation.
The standard filing deadline for such share schemes is 31 March following the year in which the activity arose. For example, returns in respect of 2020 activity are due by 31 March 2021. It should be noted that penalties for failure to make returns may apply.
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