Apple Employee stock option scheme

phishcakes

Just started at Apple and wondering if its worth it to opt into this scheme, ive never done one of these schemes befor so im not sure how they work and if the high irish taxes make it worthwhile..

Frogdog

What exactly are the details of the scheme?

Atlantic Dawn

Normally it's an option to buy shares in a couple of years time at X price, you can either buy them or not when the time comes around. Not sure if you then need to hold on to them for so long or not.

Value Hunter

Generally company stock options for employees are very generously priced. Include large gains in stock prices (like apple has experienced) and they can become hugely valuable.

Can't comment on your own situation without more info, for example are they available freely or in place of salary/bonuses????

phishcakes

Thank for the replies,

Basically you can purchase Apple common stock at 15 percent less than the stock's market price at the beginning or end of each six month offering - which ever is lower, you can have up to 10% deducted from your eligible pay to purchase stock and you or your accountant has to look after the tax on it like its seperate from your pay and the company

Colonialboy

phishcakes wrote: »

Just started at Apple and wondering if its worth it to opt into this scheme, ive never done one of these schemes befor so im not sure how they work and if the high irish taxes make it worthwhile..

Opt In.
Deductions will be made but before they convert what you have been deducted into shares you will get one last chance at the end of each 6 month period if you want togo ahead.
you can always just take the cash, no tax, no issues, you get back what you put in and it was a handy little savings piggy bank.

In the meantime do alot more investigation.
You could get hit hard if Appl stock felt alot and you were selling stock and using future stock sales to pay the tax.

jank

You will be liable on tax for the difference between the discounted price and the actual price of the share, as this will be a capital gain.

phishcakes

jank wrote: »

You will be liable on tax for the difference between the discounted price and the actual price of the share, as this will be a capital gain.

Didn't realise that, taxed befor i even make any money

phantom_lord

Just be careful of having too much invested in one company; have seen people lose their job and a decent proportion of their savings and pension when their employer went under.

jank

phishcakes wrote: »

Didn't realise that, taxed befor i even make any money

Not sure how it works in Ireland but I had a similar scheme with a company here. When your shares vest, as in they pass into your ownership at whatever price they are, then the difference in the vesting price and the money you outlaid is deemed a capital gain. Therefore at the end of the tax year, you had to declare it and pay tax

In Ireland, you may have to just pay tax when you sell it, not sure but being Ireland it definitely won't be tax free.

phishcakes

jank wrote: »

Not sure how it works in Ireland but I had a similar scheme with a company here. When your shares vest, as in they pass into your ownership at whatever price they are, then the difference in the vesting price and the money you outlaid is deemed a capital gain. Therefore at the end of the tax year, you had to declare it and pay tax

In Ireland, you may have to just pay tax when you sell it, not sure but being Ireland it definitely won't be tax free.

I think the tax could be the killer here, Apple are a solid company and i can't see there share price sliding anytime soon

shanec1928

phantom_lord wrote: »

Just be careful of having too much invested in one company; have seen people lose their job and a decent proportion of their savings and pension when their employer went under.

Can't see the richest company in the world going under anytime soon.

phishcakes

Can this thread be deleted please

** MOD PLEASE DELETE **

evostik

I work in a different US multinational. The scheme you quote looks the same.

In summary you are guaranteed a 15% discount on the share price when it falls or stays flat over the six month period. You can obtain a far higher discount if the share price rises over the six month period. You should be able to sell the shares immediately thereby realising a 15%+ gain. The only risk is if the share price falls between the purchase date and the date the shares get allocated to your account which can take 1-2 weeks post purchase, or if the EUR:USD rate changes significantly between purchase date and the date of sale.

Any gain (discount) is liable to income tax and must be paid within 30 days of purchase by filing a Form RTSO1 with Revenue.

For example assuming you made the minimum 15% gain, you would be liable for 52% Income Tax/PRSI/USC, leaving a net return of 7.2%. If the share price rises the net gain can be significantly more.

The other factor to consider is that you need to transfer the USD proceeds back to EUR which could cost you 2-3% of your net gain by the time the bank takes it’s cut through the FX rate. There are cheaper options such as transfermate which would give you a better exchange rate than your bank.

In summary, a minimum 15% discount, less income taxes, less FX charge, leaving a minimum return in the region of circa 3%-5% with minimal risk. Most people use the ESPP scheme as a short term savings scheme where they dispose of the shares every six months straight after purchase to capture the gain which beats the current bank deposit rates.

https://www.boards.ie/discussion/comment/95503369#Comment_95503369

No it’s not. General replies like this tie in with your 71k post count