Employer giving shares as "bonus"

3DataModem

If an employer buys shares (not their own shares, but for a separate company) for an employee as a bonus, I presume this is treated as a taxable BIK just like any other benefit?

okidoki987

3DataModem wrote: »

If an employer buys shares (not their own shares, but for a completely separate company) for an employee as a bonus, I presume this is treated as a taxable BIK just like any other benefit?

Sure is, it will be on the gross amount with possible CGT due depending on how the shares have done if you sell them in the future.
I've never heard of a company giving a bonus as shares in another company before.

Seth Brundle

Thats weird.
Did the employer buy them new or were they the employers and then transferred?
Is the company behind the shares in a similar field to the one you're working for (or are they suppliers)?

3DataModem

okidoki987 wrote: »

Sure is, it will be on the gross amount with possible CGT due depending on how the shares have done if you sell them in the future.
I've never heard of a company giving a bonus as shares in another company before.

Yeah it's a weird situation.

I understand the shares will attract CGT for the employee once he or she has them, as if they purchased them themselves.

The employee will also have to pay normal income/USC/PRSI/etc on the purchase price.

I presume the employer will probably have to pay employer's PRSI also on this?

3DataModem

Seth Brundle wrote: »

Thats weird.
Did the employer buy them new or were they the employers and then transferred?
Is the company behind the shares in a similar field to the one you're working for (or are they suppliers)?

1. They purchased them new, specifically for this purpose.
2. The "employer company" is a supplier to the "shares company" so they are connected.

3DataModem

OK, its a slightly different scenario.

It turns out the employer believes it is not allowed purchase the shares for the staffer (they don't want to own the shares of the connected company), so an even yet more bizarre situation has been proposed.

1. Employee engages to buy the shares.
2. Employer pays for them i.e. transfers the payment required.
3. Employee treats it as a benefit in kind, and becomes liable for full whack tax, PRSI, USC, etc on the amount paid, and CGT upon disposal.

I think they must be missing something here. but AFAICS its the same as an employer paying any other "invoice" for the employee as a benefit in kind.

Stratvs

You say "connected company". But is there any connection by way of common control, directors, shareholders between the companies or are they just supplier and customer? Is this just that the supplier company wants to keep the business of their customer by investing in it ( albeit at a remove by using an employee ). Why on earth would an employee want that as a bonus. If a bonus is due to the employee for good service/performance give them cash let them pay what's due and be done. Or if there is a company pension scheme they could have something extra done there and it would be tax efficient. There is something driving this on the part of the employer that is not coming across here and may not be explained to the employee. What sort of % of issued s/cap of the customer company are we talking about. Is there some agenda on the part of the employer to influence control over the customer indirectly via their influence over their employee.

However keeping it simple to the employee - if they receive some benefit other than wages and not part of items exempt from BiK then there would be a tax/prsi/usc charge and it should go via payroll. However weird the whole set up might be.