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Tax Free Allowance when selling RSU's / Stocks etc

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  • 19-03-2008 12:41pm
    #1
    Jen199
    Closed Accounts Posts: 78 ✭✭


    Hi,

    I am looking for some advice with selling Stocks, Shares, and particularly RSU's.

    I have a number of RSU's that I want to sell but I don't know anything about the tax on such sales. I believe I have to pay a percentage of the sales to the tax office. So thats my first question. Does anyone know what percentage this is?

    Secondly, I also believe that I am entitled to annual tax free allowance on these and that I don't have to pay tax on the first €1100 or something.
    Can anyone confirm this and do you know how I would go about paying it. Do I wait for them to come to me or do I contact them or what?

    Any advice would be great as I am totally clueless but need to sell some this week. Thanks in advance,

    Jen


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    #2
    Mr. Incognito
    Registered Users Posts: 9,798 ✭✭✭Mr. Incognito


    Jen,

    Restricted Stock Units - is typically structured as an "unsecured promise" made by a company to transfer shares or pay cash to the value of such shares at the end of a designated vesting period.

    For normal shares;
    Assuming you were resident at the time of the grant and sales then CGT will be payable on the difference between the purchase price and sale price (if any) you are alluding to the annual CGT exemption of 1270 that is deducted from the capital gain. (if any)

    Howwever if these shares were given to you at below market value a charge to income tax may arise on the difference between the open market value and the offer price depending on the type of shares.

    For RSU's.
    There is no formal legislation which specifically covers the tax treatment of RSU's. Tax Briefing (Issue 63) May 2006 available at www.revenue.ie clarified the Revenue position.

    It is a taxable emolument chargeable to income tax
    It is not within the scope of PAYE if the shares are within the company which the individual holds his/her office of employment.

    There is no income tax charge at the date of grant rather there is a tax at wither the date of vesting of an RSU or wheere the shares or cash pass prior to the date of vesting (in other words when you receive the tangible benefit)

    _______________________________________________________________

    Shares themselves are quite tricky and a lot of times are called by the wrong names. I would advise you to seek a tax professional on these as you want to ensure they are in fact RSU's and that you are using the correct treatment.


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