I have been contributing some of my salary into an Employee Stock Purchase Plan (ESPP) for the past few years. The amount contributed from my salary is used to exercise shares at the end of every 6 month period. I paid income tax initially as part of the Relevant Tax on Share Options scheme (returning form RTSO1) and for the past couple of years my employer has deduced the tax directly from my salary.
I recently disposed of some shares which I received about a year ago, paid Income tax on at the time, but subsequently held onto. I may now be liable for Capital Gains tax but want to clarify how to calculate that CGT liability. For example when the shares were exercised their market value was 20 euro but I only paid 15 euro's for the share. I paid Income tax on the 5 euro difference/gain. I am now selling the shares at 22 euro - is it the case that I owe CGT on the 2 euro per share difference (i.e. current value of 22 vs value at exercise of 20 euro).
The leaflet on Share Options schemes (http://www.revenue.ie/en/tax/it/leaflets/it72.pdf) indicates the following "Regardless of when the options are exercised the cost of acquisition is the sum of the following:
• The cost (if any) of the option,
• The price paid for shares on exercise of the option, and
• The amount charged to income tax on the exercise of the option"
I am not sure if this applies to an ESPP and what it really means?
Anybody experienced in this area?
Thanks,
Warren
I recently disposed of some shares which I received about a year ago, paid Income tax on at the time, but subsequently held onto. I may now be liable for Capital Gains tax but want to clarify how to calculate that CGT liability. For example when the shares were exercised their market value was 20 euro but I only paid 15 euro's for the share. I paid Income tax on the 5 euro difference/gain. I am now selling the shares at 22 euro - is it the case that I owe CGT on the 2 euro per share difference (i.e. current value of 22 vs value at exercise of 20 euro).
The leaflet on Share Options schemes (http://www.revenue.ie/en/tax/it/leaflets/it72.pdf) indicates the following "Regardless of when the options are exercised the cost of acquisition is the sum of the following:
• The cost (if any) of the option,
• The price paid for shares on exercise of the option, and
• The amount charged to income tax on the exercise of the option"
I am not sure if this applies to an ESPP and what it really means?
Anybody experienced in this area?
Thanks,
Warren