Class B Shares RSUs

Hey Guys,

I'm really hoping you can help me here, I'm being stonewalled by my employer on this.

In March this year the first 25% of my RSUs vested. My employer never withheld, filed or paid any sort of income tax on it. I reckoned it was because they are an American company and I am their first Irish based employee, I am and was pretty sure they don't really know what they are doing.

BUT, now I'm trying to be optimistic and I am thinking maybe they haven't messed up. The shares that vested are actually B-Shares, which can't be sold on the open market until I convert them to tradeable A-Shares. Does that mean that they are technically zero value meaning they shouldn't be taxed?

Thanks if you can help, the guy I am dealing with in the company has been ignoring me for some time now......

And if I'm being pessimistic (or just realistic to be fair) what kind of charges are my employer and I going to be hit with if we finally get the income tax paid on the RSUs 6 months late?

RSUs are taxable via the PAYE system. However, it wouldn't be unusual for a foreign employer to miss this point especially when you are the sole Irish employee. What is the conversion process to A-shares? It it is something within your control (e.g. making an election via an electronic portal or signing a document) then my view is that the shares are already have value. Unfortunately just because your employer didn't apply PAYE to the RSUs does not mean that tax isn't due. You are still liable to income tax etc on these. If the conversion occurs on an external event (e.g. a trade sale or a future date) then vesting may not have occurred or the shares may have a reduced/lesser value.

Without stating the obvious the devil is in the detail.

dublin67 said:

RSUs are taxable via the PAYE system. However, it wouldn't be unusual for a foreign employer to miss this point especially when you are the sole Irish employee. What is the conversion process to A-shares? It it is something within your control (e.g. making an election via an electronic portal or signing a document) then my view is that the shares are already have value. Unfortunately just because your employer didn't apply PAYE to the RSUs does not mean that tax isn't due. You are still liable to income tax etc on these. If the conversion occurs on an external event (e.g. a trade sale or a future date) then vesting may not have occurred or the shares may have a reduced/lesser value.

Without stating the obvious the devil is in the detail.

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I'm sorry I didn't see your message until now - I didn't have notifications set up. The conversion is within my control- I can convert them whenever I like. After further investigation I think what I have qualifies as a convertible security. I just posted a question about how this are handled in a separate thread.
From what I can find it sounds like Income Tax is due when the Class-B shares vest, and then Income Tax is due again when I convert them to Class-A shares. Which is an insane burden that I can't really comprehend being possible so I feel I'm misunderstanding something. It's a simple question that I want to ask a Tax expert but I can't pay a few hundred euro to talk to one just for one question.

MicsMoney said:

I'm sorry I didn't see your message until now - I didn't have notifications set up. The conversion is within my control- I can convert them whenever I like. After further investigation I think what I have qualifies as a convertible security. I just posted a question about how this are handled in a separate thread.
From what I can find it sounds like Income Tax is due when the Class-B shares vest, and then Income Tax is due again when I convert them to Class-A shares. Which is an insane burden that I can't really comprehend being possible so I feel I'm misunderstanding something. It's a simple question that I want to ask a Tax expert but I can't pay a few hundred euro to talk to one just for one question.

Click to expand...

Ok I have experience of RSUs and never heard of Class B shares, but let's not panic.

I would imagine that converting Class B would be done in the US, then you will have RSUs that can be sold.
I would imagine that the Class A shares received after conversation are what forms the basis of taxable income, obviously you would pay 52% on the shares and return that amount to Revenue. I'm assuming you pay top rate tax. The US won't care from a tax perspective and I would make sure you have a valid W-Ben 8 so that you pay minimum US tax.

Any US tax paid by you on dividends is an additional tax credit here, if theres other taxes no idea.

If you are hanging onto the shares you need to sell enough to cover the tax liability or sell them all and when the proceeds arrive in Ireland you pay Revenue and as this is a 2021 transaction you don't have to return until you do your form 11 next year, its 2021 income.

Hope that helps

Edit: The class B shares are illiquid they can't be sold and in my not so expert view you can't value them at market value.

Paul O Mahoney said:

Edit: The class B shares are illiquid they can't be sold and in my not so expert view you can't value them at market value.

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They can be immediately converted to class A shares and unsurprisingly there is an anti-avoidance measure to ensure they are taxed factoring in the value of the right to convert.

@MicsMoney
Based on your description, I think your scenario is covered in Example 2 in section 5.5 of the below Revenue guidance.

The calculation to avoid double charge of income tax on conversion is covered in section 5.7.2.2