Company shares

You may give company shares to an employee, which are either:

  • free of charge
  • at a discounted price
  • under a share award or share option scheme.

Free shares

These shares are a benefit in kind (BIK). The value of the benefit is the market value of the shares at the date you award them. Most employment-related shares are chargeable under the Pay As You Earn (PAYE) system to:

Employer’s PRSI is not due. An exception to this position is where shares are appropriated under a Revenue approved share scheme.

You must include the cash value of these shares when completing your payroll submission for the period in which they are awarded.

Discounted shares

The value of the discount is taxable as a perquisite and is subject to tax through the Pay As You Earn (PAYE) system to:

  • Income tax
  • Pay Related Social Insurance (PRSI)
  • Universal Social Charge (USC).

Share options

You must not deduct Income Tax, USC or PRSI through payroll on the income gain arising from the exercise of share options. You must however make a return of the grant, exercise, assignment or release of an option on Form RSS1.

The employee must pay Relevant Tax on a Share Option within 30 days of the exercise. Your employee’s obligations are outlined in the Employment related shares section.