Requirement to file RTSO1

comfysofa

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Hi, Is there a requirement to file a form RTSO1 where no gain has arisen (i.e. shares vest immediately and are exercised at market value), or is it sufficient to just return details in my annual income tax return? Thanks for your help.
 
RTSO is not for capital gains, it's for Income Tax, PRSI and USC which is payable on the overall benefit.

A bit more detail about the share scheme might be useful - share options, RSUs?
 
Hi, sorry yes it's for share options. The share options were granted and exercised on the same date (no vesting conditions). The exercise price was the same as the market value. Thanks
 
No requirement to file an RTSO1 if you have no amount liable to tax. You'll need to file a tax return (Form 11) for the tax year in which the options were exercised.
 
Unfortunately I think you need to submit an RTSO.

I'm assuming the only reason to exercise a share option is if you'll make money on it, when you make money on share option you're liable to tax and need an RTSO.

The exercise price being the same as the market price is irrelevant for the RTSO, they most often will be the same when you exercise and sell immediately.

(If you decide to exercise a share option, but not sell immediately, then you still need to file the RTSO and pay tax within 30 days. When you do sell you'd need to pay CGT on any gain beyond the exercise price. But because the RTSO tax is due within 30 days in Ireland the almost everybody sells immediately.)
 
Thanks for your reply. I'm a bit confused now I'm afraid! The exercise price (that's the price I'm paying for the option) is €75, which is the same as the market value and I'm choosing to exercise my option immediately. I don't really see where my tax liability arises on this as I won't have made any money on it and haven't received an income. I will *hopefully* sell it in the future at a higher value at which point I will have a CGT liability. As of today however I have been granted an option in a private company and chosen to exercise that option at market value. Sorry - this stuff confuses me so I may have missed a glaringly obvious point! Thanks
 
The company had a valuation done and arrived at a value per share (based on various benchmarks and recent transactions).
 
If the exercise price is the same as the market price you don't have a taxable gain. The profit on the gain is what is taxable is this is given by market value less what you had to pay to exercise the option (and get the share). If these two amounts are the same you don't have a profit on exercise.
 
The exercise price (that's the price I'm paying for the option) is €75,
So to be clear you've paid €75 a share from perhaps your salary or savings? So say it was 100 shares you've already paid €7500?
If so then then no tax should be due now, but it seems unnecessary to have used share options as it'd be simpler to just buy the shares.
If the exercise price is the same as the market price you don't have a taxable gain.
In my experience it's the grant price that's important, i.e. you need to pay tax on (exercise price - grant price) here maybe the grant price was also €75?
 
Yes, the grant price was €75 and that's what was paid from savings. Ordinary shares weren't readily available to purchase - the only shares on offer were B-shares and these were only available through a share option scheme. Thanks for your help.
 
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