A Restricted Stock Unit is a grant (or promise) to you by your employer. On completion of a 'vesting period', you will receive either a number of shares in the company or the cash equivalent of shares.
You must pay IT, USC and PRSI either on the market value of these shares at the date of vesting or the cash payment (if you receive cash equivalent).
An employer needs Revenue approval to set up an approved scheme. Under approved share schemes, your employer can allocate up to €12,700 in tax-free shares to you annually. The shares must be held in a trust set up by your employer. If you leave the shares in the trust for three years you will be exempt from Income Tax (IT) but you must pay Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on the value of the shares. If you sell or transfer your shares before the end of the three years, you will have to pay IT on either the original shares value or the shares value at the date of sale or transfer, whichever is less.
You must pay IT, USC and PRSI on shares or options granted under unapproved schemes. Capital Gains Tax (CGT) may also be due when you dispose of your shares.
RTSO is due on the exercise of unapproved share options.
Your employer will usually make the necessary deductions from share awards through payroll and pay the tax directly to Revenue.
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