Employment related shares

Overview

Shares you receive from your employer are generally referred to as 'employment related shares' or 'share based income'. Your employer may award you shares or grant you share options. They can award you these by either:

  • a 'formal' scheme with a written set of rules
  • an 'informal' once off basis.

Schemes can be approved or unapproved.

Approved schemes

An employer needs Revenue approval to set up an approved scheme.

Any shares awarded or options granted under these approved schemes are exempt from Income Tax (IT). However, you must pay Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on these. For more information on this please see Filing your tax return.

Unapproved share schemes

Your employer may reward you by giving you:

  • free shares
  • discounted shares
  • restricted shares
  • forfeitable shares
  • convertible securities
  • Restricted Stock Units (RSUs)
  • Employee Share Purchase Plans (ESPPs)
  • unapproved share options.

You must pay IT, USC and PRSI on shares or options granted under unapproved schemes.

Vested period

Your employer may decide that the award of shares or share options will be subject to a 'vesting period'. This is the period between the date of the grant of shares and the date you meet the vesting conditions.

Tax deductions

Your employer will make the necessary deductions from share awards through payroll and pay the tax directly to the Collector-General.

Note

Capital Gains Tax (CGT) may also be due when you dispose of your shares.

Next: Approved share schemes