Employer obligations and updates

If you run share schemes or are a trustee of approved share schemes, you must file an annual return. You also need to handle payroll taxes for all share awards.

From 1 January 2024, the responsibility to pay taxes on share option gains shifted from employees to employers, who will then pay Income Tax, Universal Social Charge (USC), and Pay Related Social Insurance (PRSI) through payroll.

Types of share schemes

Companies can give shares to employees as a bonus on top of their regular pay. This can happen through formal schemes with rules or informal, one-time arrangements.

There are many types of employee share schemes, which can be either approved by Revenue or not.

Unapproved schemes

Employers do not need Revenue approval to operate an unapproved scheme. Examples of unapproved schemes include the following:

• Share awards (free shares or discounted shares)
• Share options (option to buy shares in the future at a pre-agreed price)
• Employee Share Purchase Plans (ESPPs)
• Key Employee Engagement Programme (KEEP)
• Restricted shares
• Convertible securities
• Forfeitable shares
• Growth shares (hurdle or flowering shares)

Revenue approved schemes

There are three types of Revenue approved share schemes:

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

Employers need Revenue approval to operate any of these schemes.

Tax details

Income Tax applies to free or discounted shares and share options. Share-based pay also faces Universal Social Charge (USC) and employee Pay Related Social Insurance (PRSI). However, under some employee share schemes that meet specific conditions, shares or share options might not be taxable.

Employer PRSI doesn't apply to share-based pay if the shares are in the employer's company or a parent company. This exemption doesn't cover cash-settled awards or cash payments linked to share values.

Payroll reporting improvements

To better report Share Remuneration in payroll we have:

• Created a new Taxable Shares payment
  Subject to Tax, USC and Employee PRSI (not subject to Employer PRSI)
• Created a new Non-Taxable Shares Payment
  Subject to USC and Employee PRSI (not subject to Tax or Employer PRSI)
• Updated migrations to include share remuneration
• Updated submissions to Revenue to include share values according to the submission Schema
• Updated reports to include share values accordingly