Taxation of employment related shares

Overview

Shares you receive from your employer are generally referred to as 'share-based remuneration schemes' or 'share-based income'. There are many different types of employee share schemes.

Your employer may award you shares, or grant you share options, by either:

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

Unapproved share schemes

Employers do not need approval from Revenue for unapproved share schemes. This section explains the taxation of shares awarded through unapproved share schemes.

If your employer gives you shares free of charge, or at a discounted price, this is a taxable benefit. You must pay Income Tax, Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on shares or options granted under unapproved schemes.

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

Note

Your employer will also make the necessary deductions through payroll if you realise a gain on share options on or after 1 January 2024.

Unapproved share options prior to 1 January 2024

Your employer is not responsible for returning the tax on your behalf if you exercised a share option prior to 1 January 2024. You must report details of any gain you make to Revenue and pay any Income Tax liability. You can find more information about the taxation of unapproved share options in Unapproved share option schemes.

KEEP options

Gains made on the exercise of Key Employee Engagement Programme (KEEP) options are exempt from Income Tax, USC and PRSI. You can find further information about the treatment of share options awarded under KEEP in Key Employee Engagement Programme (KEEP).

Approved share 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.

Subject to certain conditions being satisfied, Income Tax will not be chargeable on shares or options acquired under these schemes. However, you must pay USC and PRSI on these.

Your employer will deduct USC and PRSI through payroll.

You can find further information about the taxation of Revenue approved share options in Revenue approved share schemes

Note

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

If your shares entitle you to dividend payments, then you must also declare this income to Revenue.

Next: Free and discounted shares