Tax on Share Options in Ireland

Are you working for a US multinational in Ireland?

If you are working for a US multinational in Ireland and receive Stock Options (ESOPs), then you need to pay tax in Ireland when you are granted and when you sell these shares. 

The payment of tax for this is not taken care of by your employer. 

You are personally liable to pay tax on the profit you make from selling your RSUs and/or share options. You pay Capital Gains (33%) on this profit. 

We know what your tax obligations are, come talk to us. 

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I reached out to Philip and the team as I had some questions about RSUs and related taxes. They were incredibly helpful and a pleasure to deal with. David answered all my questions with ease! Prompt service, very knowledgeable - I couldn't ask for more. Highly recommended.

Aine SolonDublin, Ireland | 10th August 2021

How are share options taxed in Ireland?

There are 2 tax activities with stock options. 

1. When the option is exercised/granted. This is when the employee purchases the option. 

2. When the option is sold. This is when the employee sells the shares.

Any gains you make is either taxed as a Capital Gain @ 33% (CGT) or as income where you can pay up to 52% of tax.

Paying tax on share options in Ireland

 

Tax is paid on the profit made from purchasing the option, this is the difference between the option price and the market price when the option is sold (exercised). 

Example: 

Laura was granted 1,000 options @ €10 per share in January 2019. The current market value for the shares was €45. Laura sells the shares at the €45 price. 

Laura needs to pay tax on the difference here - €35,000.

Laura has to pay the following taxes:

• Income Tax @ 40% - €14,000
• Universal Social Charge (USC) @ 8% - €2,800
• Employee PRSI @ 4% - €1,400
• Total tax rate is 52% and €18,2000

The above taxes must be paid within 30 days of the options being exercised (purchased)

Register and pay RTSO 1 share options tax online

To file and pay for any profit you make on your stock options  you will need to:

1. Register your MyAccount in Revenue
2. Register for RTSO relevant Share Options Tax
3. Make your RTSO1 Payment and submit your RTSO1 form.
4. Register for Revenue’s ROS Portal to Submit your Form 11.
5. Submit your Form 11 end-of-year tax return.
6. Remember to deregister from the self-assessment system if you are no longer exercising share options.

Alternatively, you can contact Nathan Trust to do all the calculations and filings for you with our service outlined above. 

How Nathan Trust can help you pay and file your share options tax?

Nathan trust is a team of specialist tax advisors and qualified Accountants who can take the hassle out of filing your tax return. We provide the following services:

• Register as your tax agent
• Calculate your tax liability
• File your tax return

As part of this service, we also provide a consultation with one of our team who can help answer any questions or concerns you might have.

Fees for this service start at €495 inc vat. In some situations, there might be more work required but in the majority of cases, this fee covers it. 

RSU vesting and tax residency

RSUs are taxable where you are resident at the time of vesting. If the employee is not a tax resident in Ireland at the time of vesting, then there is the potential that these RSUs are not taxable in Ireland. 

In theory, you could move to another country shortly before the RSUs vest, become a tax resident there and not pay any tax in Ireland. 

The Non-Dom tax regime in Ireland could be very beneficial if you are moving to Ireland from the UK.

Say you were granted shares in 2019 and they were to vest in Jan 1 2022. You could move to another country in late 2021 and then become a tax resident there. Potentially, the vesting of those shares might not be taxable in Ireland even though you live in Ireland for the majority of that period. This is a crucial difference between RSUs and regular stock options.

Are RSUs taxed twice?

No, but there are normally 2 tax events. The value of your shares at vesting is taxed as income and anything that is sold above this amount, if you continue to hold the shares, is taxed at capital gains. The second taxable event (the capital gains tax) doesn't apply to any portion you have already paid income tax on.

 

How can tax planning help?

If you have RSUs that are about to Vest or you are about to dispose of the shares, then it is very important to talk to a tax advisor first. You might be able to structure this in a way that could lighten your tax burden. 

This is especially the case for non-Doms and people who are willing/able to move to another country for a couple of years. 

Get in contact with us using the form below or click on this link to book a meeting with a member of our team.