Approved and unapproved share schemes

If you are employed through the PAYE system, your employers may offer company shares (share awards or share options) to you, for example as a reward.

Share schemes can be both approved and unapproved in nature.

Examples of approved schemes include:

Approved Profit Sharing Schemes (APSS) 

Approved Profit Sharing Schemes allow employers give their employee shares in the company up to a maximum value of €12,700 per year tax-free. However, you must pay USC and PRSI on the value of the shares. Approved Profit Sharing Schemes are subject to certain conditions set out in legislation and administered by the Revenue Commissioners.

In Ireland, employees can get share options from their company that may be 'tax free' or 'tax efficient'. There are 2 main ways:

Approved Profit Sharing Schemes

Stock Options

If the scheme meets certain conditions, an employee pays no tax on shares up to a maximum value of €12,700 per year. The employer must hold the shares for a period of time (called the 'retention period' - generally two years from the date on which they were appropriated) and the employee must not dispose of the shares before 3 years.

If you dispose of shares before this time, then you're liable to pay income tax on whichever is the lower of the following:
the market value of the shares when they were given to you

or

the value of the shares at the time of sale

Approved savings related (or Save As You Earn - SAYE) share option schemes

If your employer grants you share options under an approved savings related share option scheme, you'll be exempt from IT on any gain you make when you exercise the options. Provided you don't exercise the share options within three years of receiving them.

There are two elements to this scheme:

- Save As You Earn (SAYE) - a certified contractual savings scheme

- An approved savings-related share option scheme.

Participation in the scheme is voluntary. You must save between €12 and €500 per month. You decide how much you want to save. Your employer may offer you a three, five or seven year savings contract. They will then deduct the savings amount from your net salary and place your savings on deposit with an approved bank or savings institution.

Once you complete the savings period, you can decide if you want to exercise your option to buy the shares. The amount you save must be enough to buy the shares at the option price set by your employer. Your employer sets the option price before you start saving. It may be set at a discount of up to 25% of the market value of the shares at the date of grant of the option.

If you decide not to exercise your option, the bank or savings institution will return your savings to you.

If you decide to exercise your option at the end of the savings period, you will not have to pay IT on any gain you make. However, you must pay USC and PRSI.

Approved Profit Sharing Schemes are subject to a number of conditions that should be checked with the Revenue Commissioners.