Stock Options

gowayouttadat

Can someone explain taxation of stock options to me please?

Say you're granted stock options at 30 euro each. Some time later you decide to take the option and sell the shares at 40 euro each. How is this taxed?

Sand Wedge

If you buy shares at 30 and sell them at 40, then you will pay Capital Gains Tax @ 20% on the profit (after deducting annual exemption of €1,270).

Eg.
buy 10,000 shares @ €30 = 300,000
sell 10,000 shares @ €40 = 400,000
Profit on sale of shares 100,000
Less annual exemption -1,270
Taxable Gain 98,730

CGT Payable @ 20% = €19,746

gowayouttadat

Sand Wedge wrote: »

If you buy shares at 30 and sell them at 40, then you will pay Capital Gains Tax @ 20% on the profit (after deducting annual exemption of €1,270).

Eg.
buy 10,000 shares @ €30 = 300,000
sell 10,000 shares @ €40 = 400,000
Profit on sale of shares 100,000
Less annual exemption -1,270
Taxable Gain 98,730

CGT Payable @ 20% = €19,746

So stock options aren't taxed differently? Because they were granted rather than actually buying them?

gowayouttadat

Can anyone confirm if stock options are taxed differently? I thought instead of being subject to CGT you had to calculate 41% (in my case) on the difference between the grant price and the exercise price and this had to be submitted to the collector general within 30 days of exercising?

Anyone know which is right?

Dan Chipowski

gowayouttadat wrote: »

Can anyone confirm if stock options are taxed differently? I thought instead of being subject to CGT you had to calculate 41% (in my case) on the difference between the grant price and the exercise price and this had to be submitted to the collector general within 30 days of exercising?

Anyone know which is right?

When you receive the shares, you return the 'benefit' of these free shares on your form 11 return for the year. (The benefit being whatever they are worth at the time you are granted them less any consideration paid for them.)

Any future disposal of these shares will give rise to a CGT liability. (The cost for the purposes of this disposal will be the market value of the shares when you get them).

That is my general understanding of the situation.

dblennon

I deal with this all the time, any real profit is subject to CGT unfortunatley theres no getting around it.

you can deduct fees from the pinciple but it's not counted as a loss that can be carried over to another trade.

gowayouttadat

Ok... so I was issued a grant of 1,000 shares in 2008. They vest on a monthly basis over a 3 year period therefore only some of them are exercisable at the moment.
At the time I accepted the grant but did nothing with the shares (have never done a form 11 return). They've been sitting there since. Today I want to sell the portion that are exercisable. If I sell them what do I need to do for tax purposes? What form needs to be filled out etc? I'm not trying to get around the CGT portion or anything like that. I just want to know what I need to do.


*edit* obvioulsy I've never dealt in shares before and don't have any other shares besides these.