Shares for employees
Unapproved share options
Employers are obliged to operate Pay As You Earn (PAYE) on gains realised when their employees or directors exercise, assign or release share options on or after 1 January 2024.
A share option is a right granted to an employee to acquire shares in a company. You can decide to issue the shares at no cost to the employee, or you can set a predetermined purchase price.
Any gain an employee makes on the exercise, assignment, or release of a share option must pay:
Exercise of share options prior to 1 January 2024
The employee is a chargeable person and must pay Relevant Tax on a Share Option within 30 days of the exercise. Your employee’s obligations are outlined in Employment related shares.
Share options exercised prior to 1 January 2024 are not taxed through the PAYE system. You must not deduct Income Tax, USC or PRSI through payroll on any gain arising from the exercise of share options. Employer PRSI is not due on share option gains subject to certain conditions.
Exercise of share options on or after 1 January 2024
Share options exercised on or after 1 January 2024 are taxed through the PAYE system. Your employee is no longer a chargeable person. You must deduct Income Tax, USC and PRSI through payroll on any gain arising from the exercise of share options. Employer PRSI is not due on share option gains subject to certain conditions.
Assignment or release of share options on or after 1 January 2024
You must deduct Income Tax, USC and PRSI through payroll if your employee realises a gain by assigning or releasing a share option.
If you make a cash payment to your employee to release a share option, then you must operate PAYE, including Employer PRSI, in the normal manner.
You must report the grant, exercise, assignment or release of an option on Form RSS1.
For further information, please see Share reporting obligations.
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