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Taxation of employment related shares

  1. Overview
  2. Free and discounted shares
  3. Restricted Stock Units (RSUs)
  4. Restricted shares
  5. Forfeitable shares
  6. Convertible securities
  7. Employee Share Purchase Plans (ESPPs)
  8. Growth shares (hurdle or flowering shares)

Growth shares (hurdle or flowering shares)

Growth shares are a special class of shares issued by your employer. They generally have a low or nil value until a company reaches a certain target or hurdle. You own the shares from day one. Your employer may give the growth shares to you free of charge or at a discount.

These shares are also known as hurdle shares or flowering shares.

Depending on the plan, growth shares may be treated as convertible securities.

Taxation of growth shares

You must pay Income Tax, Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on the:

  • market value if the shares awarded are free shares
  • discount value if the shares awarded are discounted shares.

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

If the shares have a nil value at the date of the award, then no tax arises.

Capital Gains Tax (CGT)

If you dispose of your shares, you may be liable to CGT. You must report this disposal to Revenue, even if no tax is due. Your employer will not deduct any tax or report the disposal for you.

  • Example

    In March 2021, Karen was granted 500 growth shares with a nil value. The company agrees that if it reaches a specific turnover goal the shares will be worth €5 each.

    The company reached the goal in March 2024 and the 500 shares are now worth €2,500. Karen disposes of the shares in March 2024 for the market value of €2,500.

    Karen’s tax on acquisition of her growth shares
    DescriptionAmount

    Market value of shares

    €0

    Amount paid by Karen

    €0

    Amount chargeable

    €0
    Karen’s tax on disposal of her growth shares
    DescriptionAmount

    Market value of shares

    €2,500

    Acquisition cost

    €0

    Chargeable gain (ignoring annual exemption)

    €2,500

    CGT payable (33%)

    €825

Published: 30 August 2022 Print this page

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