Exercising stock options with foreign company

spudrick

I work for a UK based company and lived and worked there for many years. I have employee stock options, the first of which I received 9 years ago and more have continually vested since then. It's a privately owned company and we can't just exercise the options whenever we want. There was an event to exercise a percentage of my options a few years ago when an investor purchased a stake in the company. As the company was part of the UK EMI scheme, I was taxed at 10% on the proceeds of this.

Fast forward a few years, and I moved back to Ireland at the beginning of COVID, where I have worked remotely for the past couple of years. I am tax resident in Ireland, I pay income tax in Ireland and I'm still a full time employee of the same company through an Irish payroll they've set up. The company has no presence in Ireland other than me.

Now, we've just received news that a new investor is buying a sizable chunk of the company and we can exercise and sell the rest of our options. From what I've read this is considered as income tax in Ireland and is taxed at 52% rather than the 10% if I'd remained in the UK. I guess there is no way to treat this as UK income for tax purposes given that I live in Ireland? I still have a UK national insurance number and bank account.

I know the answer is "speak to a professional" which I will be doing but I'm bouncing off the walls with worry while I wait for my appointment later in the week as it's an extremely significant difference. This is basically the most money I will ever have and I've spent my entire life working towards it intentionally joining a small company at low salary with the hope of a payoff when we made it big. To think I could lose more than half of it just because I made a decision to move to Ireland since I was working from home anyway during covid without properly looking into the consequences is kind of heartbreaking right now. To put it in context the difference between paying UK and Irish tax on this is about 5 times my gross annual salary. And I will never see that kind of money again.

ShelbyInc

just some observations

Exercise of the share options would be classed as employment income and is covered under article 15 of the Ireland/UK double tax agreement. Strictly reading that article, the UK would have taxing rights over that income to the extent that the income was derived while carrying out your employment duties in the UK. So, likely they will have taxing rights over the greater part of that income as you only returned to work in Ireland for the same company relatively recently.

Upon exercise of the options you are essentially a shareholder of the company, the sale of the shares is covered under article 14 of the Ireland/UK DTA, the sale of these shares will be taxable in the state of your residence(Ireland), provided the shares don’t derive the greater part of their value from immovable property situated in the UK, in which case the UK would have taxing rights over the share sale.

Markus Antonius

https://www.boards.ie/discussion/2058241339/exercising-stock-options-with-foreign-company

I was in a similar situation with regard to working for a small company and recieving a nice chunk of shares. Was landed with a 55K tax bill at the ripe old age of 26...

To add insult to injury, I had to pay by bank draft because there was a problem with the new electronic Form 11 at the time. I recieved a threatening letter in response from revenue to say I would be fined €7.777.77 in future if I refuse to use the online system again...

Cnuts