Share-Based Remuneration: Revenue’s Compliance Focus
During 2022, the Revenue Commissioners launched a share-based remuneration project. Revenue analysed employer annual share reporting forms (e.g. Form RSS1) against available data such as personal tax returns. They identified discrepancies such as employees under-declaring share option tax and underpaying Capital Gains Tax (CGT).
Given the significant level of non-compliance detected, Revenue is now undertaking a targeted compliance focus. Revenue may contact employers or employees who have been in receipt of share options and request that the taxpayer undertake a review of their tax position. Revenue may also instigate an intervention under Revenue’s Code of Practice for Compliance Interventions.
Maintaining Compliance while Participating in a Share Option Scheme
A share option scheme is one typically where the employee is given the right to acquire a number of shares at a pre-determined price which is set for a period of time.
With respect to share options, an employee is required to:
- Register for Relevant Tax on Share Options (RTSO) with Revenue;
- Pay the RTSO within 30 days of exercising the options, or interest at 0.0219% per day may apply;
- Complete a RTSO1 Form when making the relevant tax payment;
- By 31 October the following year (or mid-November if filing and paying online), complete a Form 11 personal tax return for the year in which the option is exercised, assigned and/or released;
- On sale, report the details to Revenue via a Form 11 or Form CG1 even if no tax is due;
- Pay Capital Gains Tax (CGT) where a chargeable gain arises on the disposal of shares. (CGT payments are due by 15 December where disposals were made between 1 January and 30 November in that year and 31 January for the prior December disposals); and
- Declare any attaching dividend payments and ensure appropriate taxes are remitted to Revenue.
An employee may be of the view that the employer has discharged their pay and file requirements; however, the employee is responsible for complying with their share option tax payment and personal reporting obligations.
Differing pay and file tax requirements may exist for other types of share scheme; thus, it is important to fully understand the Irish tax payment and reporting requirements for the type of share scheme in place.
How Can Grant Thornton Help?
At Grant Thornton, our specialist Employer Solutions team have extensive experience in share scheme reporting on behalf of both employers and employees. If you would like to discuss your obligations in relation to existing schemes or have any other share scheme queries, please do not hesitate to contact us.