As you may be aware, there have been changes to the withholding and reporting obligations for share options from 1 January 2024, however reporting for 2023 remains in line with prior years. If you are an employer who has operated a share scheme or has provided shared based remuneration to employees in 2023 you should be aware of the upcoming filing obligations.
The due date for such returns is 31st March 2024 and there are different returns required depending on the type of share scheme operated / share remuneration provided. We have outlined below the type of share schemes and the forms required for each.
Form RSS1:
- Share Options & other rights granted to directors/employees
Form ESA:
- Restricted Stock Units (RSU’s)
- Discounted / Free / Matching Shares
- Employee Share Purchase Plans (ESPP)
- Restricted Shares
- Convertible Shares
- Forfeitable Shares
- Phantom Shares
- Stock Appreciation Rights
- Growth/Hurdle/Flowering Shares
KEEP1:
- Key Employee Engagement Programme (KEEP) – Details of share options
ESS1:
- Approved Profit Sharing Schemes (APSS)
SRS01
- Save As You Earn Schemes (SAYE)
ESOT1:
- Employee Share Ownership Trust (ESOT)
The detail required on the returns relates to the grant, assignment, release of rights, allotment of shares or transfer of any assets granted under these schemes/awards. It is important to note that trustees of approved share schemes must file an annual return (ESS1/SRS01/ESOT1) for each year even in cases where a nil return would be required and where no events have taken place in the year.
Reporting Obligations from 1 January 2024
From 1 January 2024, the reporting and withholding obligation for Share Options will fall to the employer and removes the onus from the employee to file an RTSO 1.
Share options exercised on or after 1 January 2024 will be taxed through the PAYE system. The employer 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.
This new change will mean the employee is no longer a chargeable person for the purposes of share options and will not be required to complete and file the RTSO 1 within 30 days of the exercise. If an employee realised a gain in 2023, they will still be required to submit an income tax return for 2023 in advance of the income tax deadline of 31st October 2024. However if a gain is realised on/after 1 January 2024, there will no longer be a requirement to submit an income tax return (assuming the individual is not otherwise a chargeable person), as the employer has the obligation to operate payroll taxes at source.
This is a significant change for employers who will now need to gather and report the details relating to any exercise of share options during the year. Employers should also be aware that where they had mobile employees working outside of Ireland the gains may need to be apportioned based on the employees time working in Ireland in the grant to vest period.
Contact Us:
If you require assistance with completion or submission of the above returns, please contact a member of our team.
- Richard McAufield, Tax Director (01) 644 0100
- Tanya Dooley Tax Manager, (01) 644 0100
