Share Option Tax Implications For Employees

It has recently been reported that the Revenue Commissioners of Ireland ("Revenue") have collected close to €12 million in unpaid tax on share schemes¹. The collection appears to relate to share awards, and follows from reports last year that Revenue was investigating share option schemes².

Typically, when employers provide their employees with shares or other rewards, the employer is obliged to account for tax under the Irish Revenue payroll ("PAYE") system. However, in the case of share options, the employee is required to account for tax. Many employees are either not aware of, or not compliant with, the personal tax liabilities they incur on exercise of share options.

In this guide, we review some tax and practical implications for employees receiving share options.