Tax on share options

martin_090

The company I work for was taken over a few years ago and all employees received 161 share options. These have now vested and can be sold. We were given a price on the day we received them and we get the difference on the price we sell them multiplied by 161.

What is the tax suitation on these, is any money made just classed as additional income and charged tax + prsi + USC
Or can you claim €1270 tax free and pay tax on the balance as some think. The tax office isn't sure when contacted and everyone gets a different answer.

The share options are worth about €1600

MrFinance

If you have shares that have increased in value you could make a disposal of a sufficient number of shares each tax year to give a gain of 1,270e which is equal to the annual tax free exemption.
So for example:
161 Shares valued at 9.94 each = 1600.34e
1600.34 - 1270.00 = 330.34e residue which would be taxable.

So I would sell 126 shares in year 1 for 1252.44e.
I would sell 35 shares in year 2 for 347.90e.
Total = 1600.34
Tax = 0.

martin_090

I tried reading IT72 from revenue website and I got confused with it.

As the shares are considered unapproved no one seems to know if GPT comes into it

MrFinance

martin_090 wrote: »

I tried reading IT72 from revenue website and I got confused with it.

As the shares are considered unapproved no one seems to know if GPT comes into it

I'm assuming they're either free shares or discounted. If so (per Revenue);


1. Free Shares

The value of the benefit is the market value of the shares at the date of the award.
The shares may be subject to a vesting period. If so the value of the benefit is the market value of the shares at the date of vesting.
You pay Income Tax (IT), Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) through the Pay As You Earn (PAYE) system.


2. Discounted shares
Your employer may give you the opportunity to buy shares in the company at a discounted price. The discount is the difference between the:
X. Market value of the shares at the date of the award X .Amount you pay for them.

You will pay IT, USC and PRSI on the discount amount. All deductions will be made through the PAYE System.

martin_090

Thanks for your reply so does that mean just pay tax on full amount