Taxation of share based remuneration

Grant Thornton contributed to the Department of Finance’s Public Consultation on Share based Remuneration.The following are the key characteristics we recommend should be incorporated into any new share scheme system:

• the taxing point for unapproved share schemes (share options, restricted shares, RSUs etc.) should be on the ultimate disposal of shares when funds are available to fund the tax liability arising;
• a share option scheme for start-ups and SMEs should be introduced in line with the existing UK EMI scheme to assist with job creation and to restore Ireland’s competitiveness with other jurisdictions;
• the system should be flexible and adaptable to cater for foreign based share schemes and for globally mobile employees;
• share schemes should continue to remain a cost effective means for employers of remunerating employees. Therefore, the employer PRSI exemption should remain; and
• any system should be simple to understand and easy to administer.

Niamh Bushnell, Dublin Commissioner for Start-ups contributed to Grant Thornton’s response:

“When we talk about share options, we're really talking about how to attract talent. To become an innovation nation that can compete globally we need to be able to attract

1. key talent to our startups; and
2. key founders to start companies in Ireland.

And we're not just talking technical talent, we're talking about leadership roles like CEO, CRO, CMO, COO. Senior talent expects to be incentivized by both income and options from the outset and increasingly over time as the company scales…. The government needs to compensate startup employees for taking risk through share options. A simple, tax efficient, performance adjusted share option scheme will allow us to scale our most promising startups by bringing key Irish and internationally based global talent on board.”