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Unapproved Share Options – Feb 2025

Recently a client got in contact with us having received a letter from revenue notifying them of a significant tax liability relating to share options the client had been in receipt of over several years.

It would certainly appear to us, that for a large cohort of individuals in receipt of unapproved shares, the process and responsibilities were not very well highlighted by the companies.

What are shares?

A share option is a right that your employer grants you to acquire shares in the company.

The shares may be at no cost to you (nil option) or at a pre-determined price your employer sets (the option price). Under a share option scheme, your employer will predetermine:

the number of shares you can acquire
the option price, if any
and
the exercise period (that is, the dates from which, and by which, you may exercise your option).

Taxation of share options?

Taxation on grant date

There is no tax due on the date that the right is granted. Your employer will report details to Revenue of the options granted to you.

Taxation on exercise date

When you exercise an option, you must pay income tax, USC and PRSI.

The Income Tax and USC due on the exercise of a share option is known as Relevant Tax on Share Options (RTSO). The amount of the gain is the difference between:

the market value of the shares on the date you exercise the option
and
the amount you paid for the shares, plus any amount paid for the grant of the option.

Gains realised prior to 1 January 2024

You must pay RTSO within 30 days of exercising the option and complete a RSTO form. The 30 day period is inclusive of the exercise date.

You must also file an income tax return for the year you exercise the option. You should include details of the RTSO already paid in the relevant section of the form. Your employer will also report details to Revenue of any options exercised by you.

For our clients we take the hassle and stress out of the situation by handling the returns and engagements with revenue. Furthermore we have found that we were able to make counter claims for tax rebates for our clients which significantly reduced their liabilities. We have also made payment plans for the repayment of the tax for our clients

Get in touch with us to see if we can help you – taxsmartadvisorsdublin@gmail.com