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ESPP Taxation questions

  • 10-09-2019 2:49pm
    #1
    johnnykilo
    Registered Users, Registered Users 2 Posts: 1,186 ✭✭✭


    I get shares through work on an ESPP program. There were a few (hopefully straight-forward) things I hope someone could confirm for me

    1) I understand that when I sell the shares I'm liable for CGT at 33% on any gains, with the first €1270 exempt per year. With the new tax year starting on January 1st, could I theoretically sell half my shares on December 31st and the other half on January 1st to essentially double the €1270 exemption?

    2) For each 6 month period in which I have purchased shares through my company I have submitted an RTSO form and paid these charges electronically, however I understand I also need to mention this in my yearly Tax Return too. Does this mean in my Form 12? If so, can anyone tell me which section of the Online Form 12 this is in?

    3) When I do sell my shares I presume I need to declare the CGT on any gains over €1270 in a Form 11 (if the gain is over €5000?) or a Form 12 (if under €5000) during the next filing period in October/Novemeber?

    Thanks in advance!


Comments

  • #2
    Ace2007
    Registered Users, Registered Users 2 Posts: 19,778 ✭✭✭✭Ace2007


    No idea about the forms, but just something to be aware off, lets say you have 5k worth of shares, and this values rise to say 6500, you can in theory sell the shares, and buy back automatically and apply for the allowance of 1270. Then in year two you could sell them if worth 7700 and buy back, so say you get to year 3 and they are worth 8900 - you would sell them and not have to pay any tax.

    As oppose to going from 5k to 8.9k and paying 875 in CGT.

    Obv it depends on the cost of buying selling the shares.


  • #3
    steamsey
    Registered Users, Registered Users 2 Posts: 686 ✭✭✭steamsey


    johnnykilo wrote: »
    I get shares through work on an ESPP program. There were a few (hopefully straight-forward) things I hope someone could confirm for me

    1) I understand that when I sell the shares I'm liable for CGT at 33% on any gains, with the first €1270 exempt per year. With the new tax year starting on January 1st, could I theoretically sell half my shares on December 31st and the other half on January 1st to essentially double the €1270 exemption?

    2) For each 6 month period in which I have purchased shares through my company I have submitted an RTSO form and paid these charges electronically, however I understand I also need to mention this in my yearly Tax Return too. Does this mean in my Form 12? If so, can anyone tell me which section of the Online Form 12 this is in?

    3) When I do sell my shares I presume I need to declare the CGT on any gains over €1270 in a Form 11 (if the gain is over €5000?) or a Form 12 (if under €5000) during the next filing period in October/Novemeber?

    Thanks in advance!

    1) Not CGT on ESPPs. It's income tax so PAYE + PRSI + USC (so could be up to 52%) on the gain you made. If you hold onto shares after you get them via ESPP and there is a further capital gain, then CGT would apply. You should get a statement from your stock trade system with the gain on it - which is the taxable gain in question.

    2) https://www.revenue.ie/en/self-assessment-and-self-employment/documents/form11.pdf. Page 16 mentions RTSOs that you have already paid - fill it in there.

    3) Income tax would be declared on Form 11 if you have non PAYE income over 5K - you do it in Oct / Nov for the previous year. So this year you'd be doing your 2018 gains & taxes.


  • #4
    towger
    Registered Users, Registered Users 2 Posts: 440 ✭✭towger


    Think you need to give more info.
    When you say you “got” shares, did the company give them to you, or did you buy them, and if bought, was the price discounted.
    These are all factors.

    As regards RTSO, dunno why you did that.... RTSO is related to unapproved share options, which is not the same as an ESPP.


  • #5
    steamsey
    Registered Users, Registered Users 2 Posts: 686 ✭✭✭steamsey


    RTSO is the only form / mechanism that Revenue have at the moment for you to report a taxable gain on ESPPs.


  • #6
    johnnykilo
    Registered Users, Registered Users 2 Posts: 1,186 ✭✭✭johnnykilo


    towger wrote: »
    Think you need to give more info.
    When you say you “got” shares, did the company give them to you, or did you buy them, and if bought, was the price discounted.
    These are all factors.

    As regards RTSO, dunno why you did that.... RTSO is related to unapproved share options, which is not the same as an ESPP.

    Sorry, I purchased them at a 15% discount on the market value and I paid RTSO on this 15% discount.


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  • #7
    towger
    Registered Users, Registered Users 2 Posts: 440 ✭✭towger


    Ah. My employer deducts the tax and PRSI related to the discount.
    So I’ve nothing extra to do except pay CGT if I sell them.


  • #8
    johnnykilo
    Registered Users, Registered Users 2 Posts: 1,186 ✭✭✭johnnykilo


    towger wrote: »
    Ah. My employer deducts the tax and PRSI related to the discount.
    So I’ve nothing extra to do except pay CGT if I sell them.

    I wish mine did! Every step is a ballache trying to figure out what needs to be done! :(


  • #9
    pabloazazel
    Registered Users Posts: 155 ✭✭pabloazazel


    johnnykilo wrote: »
    I wish mine did! Every step is a ballache trying to figure out what needs to be done! :(

    I am kind on the same spot as you now. I did fill out the RTSO1 form when I purchase them but I do not know if I have to fill out the Form 11 too.

    Did you do it?


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