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Tax on options

  • 05-06-2020 9:15pm
    Registered Users Posts: 447 ✭✭

    Another tax question for company options.

    Let's say company gave me options for 100 shares at €30 and I want to sell them when they are at €50. If I got the table attached here correctly I have 2 options:

    1. Exercise which I presume means just "taking the difference", so €20 per share in the above scenario or €2000 in total on which I'll pay Income tax up to 48% and 4% of social tax for a total of 52% meaning my NET profit will be €960
    2. Buy shares at €30 per share, meaning I'll pay €3000 for them and then straightaway selling them for €50 per share or €5000 for the same gross profit of €2000 difference being I now only need to pay CGT of 33% meaning I'll have a NET profit of €1340

    On one hand the above seems silly as I feel everybody would go for option 2, but I'm maybe completely misinterpreting what exercise and sell mean?