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Question on Employee Stock Ownership Plan

  • 09-07-2020 10:48pm
    #1
    Registered Users Posts: 56 ✭✭✭ SpencerJC


    Hello all!

    I work for a company that gives us ESOP every so often. I've been with the company for a few years and have been getting additional ESOP every now and then. The idea of it as I understand is when the company is sold it's a cashless transaction so you never need to put down any money. The negative of this approach seems to be that once this does happen the money is just added to your income for that year which means you will be paying paye, prsi, usc etc on it which isn't very tax efficient. The ESOP's that you get 'vest' after 4 years and as I understand it at this point you can then purchase the shares taking on the risk but also if ever sold you'd be subject to capital gains tax which is 33%, this would be a lot less than the former. My question is since some of my ESOP has now vested, should I just buy the stock or at least aim to buy the stock before the company is sold. I know the company won't be sold for at least 2 years so I am thinking to leave it a bit longer but I think at some point it makes sense to take this approach. Am I missing anything here? I am not too familiar with this kind of thing. Thanks!


Comments

  • Registered Users Posts: 447 ✭✭ iAcesHigh


    As far as I'm aware, and if I'm wrong I stand to be corrected, you can't avoid paying IT and everything that comes with it. You'll be paying that upon buying your shares and then CGT kicks in between the price you got shares "for" and the price you eventually sell them for.

    More info on revenue site: https://www.revenue.ie/en/additional-incomes/employment-related-shares/employee-share-purchase-plans.aspx


  • Registered Users Posts: 56 ✭✭✭ SpencerJC


    iAcesHigh wrote: »
    As far as I'm aware, and if I'm wrong I stand to be corrected, you can't avoid paying IT and everything that comes with it. You'll be paying that upon buying your shares and then CGT kicks in between the price you got shares "for" and the price you eventually sell them for.

    More info on revenue site: https://www.revenue.ie/en/additional-incomes/employment-related-shares/employee-share-purchase-plans.aspx

    Thanks - I think I was getting the ESOP at the company valuation at the time so didn't get any discount as the link references. I would think this would mean that I wouldn't be subject to IT at the time of purchase unless of course, they would use the most recent company evaluation.


  • Registered Users Posts: 447 ✭✭ iAcesHigh


    SpencerJC wrote: »
    Thanks - I think I was getting the ESOP at the company valuation at the time so didn't get any discount as the link references. I would think this would mean that I wouldn't be subject to IT at the time of purchase unless of course, they would use the most recent company evaluation.

    yep, I would guess it's subject to IT at the time of purchase, but tbh not 100% sure...


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