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25 August 2022
Tapestry Alert: Irish Revenue issues
Employer Notice
to share scheme registered employers
Dear
Client
The Irish
Revenue recently sent a communication to employers who have
indicated that they operate share-based scheme(s) for their
employees, as reported on Form RSS1 (for reporting option plans)
and/or Form ESA (for reporting other share-based remuneration). The
Employer Notice in respect of unapproved (i.e. not tax-qualified)
share options was issued to such employers on 12 August 2022 (here).
The Irish Revenue notes that employees may not be fully aware of
their tax obligations where they are engaged in a share-based
remuneration scheme(s), for example, where they exercised, assigned
or released share options, and/or disposed of shares. As such, the
Irish Revenue is requesting that all employers operating
share-based remuneration scheme(s) circulate the information
provided in the Employer Notice to all employees to inform them of
their tax obligations under sections 128 (the charging provision)
and 128B TCA 1997 (which sets out that the tax is to be paid on the
Form RTSO1). Employers should be able to access this notice through
their ROS (online reporting) inbox.
Remember that in Ireland, employees are actually responsible for
reporting (on Form RTSO1) and paying any taxes arising upon
exercise of their share options (which must be reported and paid
within 30 days of exercise).
Our counsel in Ireland is aware that, in some cases, employers are
operating payroll when their employees exercise share options
but, by doing so, employers are inadvertently creating tax issues
for employees. It is clear that the Irish Revenue are
cross-checking information provided on the Form RSS1 and reaching
out to employees who they have been notified have exercised share
options but who have not filed a Form RTSO1.
It is important that employers and employees are aware of and
adhere to their obligations under Irish tax law in respect of share
awards, and in particular, share options.
We would like to
thank our relationship law firm in Ireland McCann
FitzGerald for providing us with the information in this
alert.
Tapestry
comment: this
intervention by the Irish Revenue demonstrates a very real concern
that employees are not aware of their reporting and tax payment
obligations in respect of share options. The system in Ireland
is unusual in requiring employer withholding for some types of
employee share plan but not for plans that are treated as options
for Irish tax purposes. This is not always straightforward as,
depending on the terms of the plan, this may include a share
purchase plan. If the plan is treated as a share option, the
employee is responsible for declaring and paying any taxes,
including social security, on the benefit. It goes without saying
that employees do not want to be in default in their tax
obligations and employers may want to take extra care to ensure
that the obligations are explained. Employers will also want to
make sure that their payroll is aware that withholding does not
apply to option plans.
Please let us know if you have any questions about the share plan
reporting obligations, whether in Ireland or elsewhere.
Sharon
and Matthew
 
Sharon Thwaites Matthew Hunter
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