Shares for employees

Save As You Earn (SAYE) schemes

A SAYE scheme is a tax efficient share option scheme.  Revenue approval is required to operate the scheme.

There are two elements to a scheme:

  • a save as you earn certified contractual savings scheme
  • an approved saving related share option scheme.

You can grant options over shares in your company to your employees. The shares must be ordinary shares.

Separately, your employees will have a formal savings contract with a third-party financial institution for a fixed period. The savings period can be a three-, five-, or seven-year period. At the end of the savings period, the participants can exercise their option to acquire shares. The share purchase is paid for out of the proceeds of the SAYE certified contractual savings scheme.

All of your employees who satisfy the qualifying conditions must be eligible to participate on similar terms.

Note

Details of how the scheme operates, and the requirements for approval are set out in Chapter 12 – Save As You Earn Schemes (SAYE).


Taxation

Subject to certain conditions, your employee will be exempt from an Income Tax (IT) charge on any gains arising on the exercise of the options. Your employee will still be liable to Universal Social Charge (USC) and employee Pay Related Social Insurance (PRSI). You must collect the USC and employee PRSI under the Pay As You Earn (PAYE) system. Employer PRSI does not apply to share-based remuneration.

You can claim a Corporation Tax deduction for the cost of establishing the scheme.

Reporting requirements

You must file a Form SRSO1 by 31 March of the year following the grant or exercise of share options under an SAYE scheme. A nil return must be filed in respect of years with no scheme activity.

Revenue approval of a scheme may be withdrawn for failure to comply with the reporting obligations.