Taxation of stock options in ireland
US multinationals here are pressing the Government to reduce the tax due on share options awarded to company executives in the upcoming budget, in order to boost foreign investment. The Government is coming under increasing pressure to sharpen the incentives for foreign investment into Ireland following the Brexit vote and the subsequent pledge by the UK government that it will slash corporation tax.
The chamber warned that the Incentivised share option schemes are a favoured method for US multinationals and major listed companies to reward senior executives. Multinationals, as well as smaller companies in the tech industry and other sectors, also routinely grant cheap share options to lower-ranked staff.
Currently, standard corporate share incentive schemes are usually taxed at marginal income tax rates as soon as the shares are granted. This means that, for top earners, they are hit with a tax bill of 52 per cent on the discount given on the share value. In practice, this means that they usually sell some of the shares as soon as they get them, in order to pay the tax bill.
The lower capital gains tax CGT rate of 33 per cent applies to these approved schemes, but only when the shares are sold and not as soon as they are awarded. However, US multinationals usually operate conventional corporate share option schemes that fall outside of the Revenue approved schemes, especially for top executives.
Firstly, it said the State should change the rules from income tax rates on acquisition to the CGT rate on disposal for all share payments.
Failing this, it said, PRSI and Universal Social Charge should not be paid on non-approved share awards. Finally, it wants social security discounts to employers who pay share awards maintained.
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The website has been optimised for modern web browsers; for the best experience, please update your browser now. Public consultation The submission was made as part of a public consultation by the department on the taxation of share schemes, which closed last Friday.
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Taxation of stock options granted to expats - Lexology
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