Share Option Changes in 2024:
Key Information for Employers
From 1 January 2024, Revenue require employers to withhold Irish payroll taxes from gains arising on the exercise of share options. This will be a significant change, as up to now, the responsibility was on employees (and directors) to pay the “Relevant Tax on Share Options” (RTSO) through self-assessment to the Irish Revenue within 30 days of the date of exercise. The employees also had to submit Form RTSO1 to the Irish Revenue within the same timeframe.
Key points to note on this are as follows:
Management of Payroll Tax Withholding
Considerations such as ‘sell to cover’ arrangements should be planned, and effective communication with employees regarding share option exercises will be crucial.
Tax Liabilities - Funding these
Employers should consider how tax liabilities will be funded, considering potential delays between the exercise of options and the issuance of shares.
International Issues
If employees who worked in Ireland between the grant and vesting of share options have since left the country, Irish tax liabilities may still apply on option exercise. Employers must take into account payroll tax withholding in such cases.
Revenue Submission Requirements
Employers will need to submit Form RSS1 for 2023 to Revenue by March 31, 2024. This will detail share options granted, exercised, transferred, assigned, or released during 2023.
Please Note: Employers are encouraged to seek appropriate professional advice and proactively address these considerations to ensure compliance and effective management of share option-related tax obligations.
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