Shares for employees

Unapproved share options

A share option is a right granted to an employee to acquire shares in a company. You can decide to issue the shares at no cost to the employee, or you can set a predetermined purchase price.

Any gain an employee makes on the exercise, assignment, or release of a share option they must pay:

The employee must pay Relevant Tax on a Share Option within 30 days of the exercise. Your employee’s obligations are outlined in Employment related shares.

Share options are not taxed through the Pay As You Earn (PAYE) system on exercise. You must not deduct IT, USC or PRSI through payroll on any gain arising from the exercise of share options. Employer PRSI is not due on share option gains.

If you make a cash payment to your employee to release a share option, then you must operate PAYE on this payment in the normal manner.

Reporting requirements

You must report the grant, exercise, assignment or release of an option on the Form RSS1.

The Form RSS1 must be filed by 31 March following the relevant tax year. The return must be completed offline and then uploaded to Revenue Online Service (ROS). The return contains detailed instructions on how to complete and upload it to ROS.

Next: Key Employee Engagement Programme (KEEP)