Declaring share options etc.

[Hammer]

PAYE employee for big American multinational in Ireland Recently I’ve received Revenue notice for “Underdeclaration of tax on the exercise of Share Options” (multiple years affected). It’s a fair cop - I knew this day was coming but my head’s been in the sand).

6% of my salary automatically goes into share purchases. HR website shows varying historical discounts (15-25%), though the purchase discounts I seem to see on my eTrade statements suggest a constant 15%.

We also receive Restricted Stock units. Our website says ‘[Company] will withhold tax when the Shares vest. I think I’m still expected to declare the RSU’s even if I’ve already paid the relevant taxes?

Dividends: Approx 1k per year, which is re-invested. This is the only tax that seems relatively easily calculable to me (albeit the amounts are in $ rather than euro).

I want to have as many ducks in a row as possible before going to see my accountant and I’m trying to figure out exactly what documents I might need to bring (no easy access to a printer capable of printing 100s of pages). Wage slips and all eTrade statements are electronic (Each monthly eTrade statment runs to 6 or 7 pages… and even then I’m not sure they have all the necessary info.

Maybe it’d make more sense to log into my eTrade profile in the presence of accountant, rather than presenting paperwork.
Appreciate advice on any points in the above ramble.

Many thanks,
H

PS I’ve never sold any of the shares (that'll be another fun day I'd say).

 

[ClubMan]

6% of my salary automatically goes into share purchases. HR website shows varying historical discounts (15-25%)

A common ESPP discount is that you get shares at 15% less than the price at the start or end of a 6 month purchase period whichever is the lower. For example, price at start is $10 and at end is $20, you get shares for $8.50 and the difference between that and the market value of $20 is $11.50 which is assessable for tax/PRSI/USC. But you need to check how your company's scheme works.

Many companies these days deal with the income tax on discounted shares or free RSUs through payroll. You should ask why yours doesn't.

$ amounts can be converted to € using exchange rates provided by the ECB or maybe Revenue.

We also receive Restricted Stock units. Our website says ‘[Company] will withhold tax when the Shares vest. I think I’m still expected to declare the RSU’s even if I’ve already paid the relevant taxes?

I never did when I was in receipt of them and the tax issues were dealt with through payroll.

PS I’ve never sold any of the shares (that'll be another fun day I'd say).

This will involve CGT calculation/payment/filing.

BTW retaining shares in the company that you work for is putting two eggs in one basket - your salary/remuneration and your investments - which is concentrating risk in one single company. Many would suggest that you liquidate these bonus shares as soon as possible and invest the money elsewhere to diversify and reduce the risk. It's what I always did in the past.

 

[Itchy]

First of all, here is the relevant Revenue information:

Taxation of employment related shares

This page explains about taxation of employment related shares

www.revenue.ie

It seems like you have three issues:

1) Share purchase through an ESPP
2) RSU's
3) Dividends

6% of my salary automatically goes into share purchases. HR website shows varying historical discounts (15-25%), though the purchase discounts I seem to see on my eTrade statements suggest a constant 15%.

First thing is to determine if this is an approved or unapproved ESPP. The revenue info above covers both cases which are slightly different in terms of tax treatment.

We also receive Restricted Stock units. Our website says ‘[Company] will withhold tax when the Shares vest. I think I’m still expected to declare the RSU’s even if I’ve already paid the relevant taxes?

This is easy enough to check. On your eTrade statements, when the shares vest, there is usually an automatic sale to cover the tax to be remitted to the employer to pay on your behalf. eTrade normally have information on the tax rate you pay, likely 52% so you should be covered there. The transaction will be described as a 'sell to cover' on your statement (this should also be on your payslips). If there have never been any sales and the full RSU grant vests, then you will have a liability to income tax for the vesting shares.

If you have never sold any of the vested RSU's then you have no CGT liability. You don't need to notify Revenue that you have shares/RSU's.

Dividends: Approx 1k per year, which is re-invested. This is the only tax that seems relatively easily calculable to me (albeit the amounts are in $ rather than euro).

You have/had an obligation to declare dividends for income tax purposes. eTrade will not have covered the taxes for you in this regard. Its the euro value on the date you receive the dividend. It seems that you have an income tax liability here.

 

[elcato]

How long are you talking about having your head in the sand ? In the last about 10 years payroll were obliged to collect RSU tax by usually selling half on vesting. You should see this in eTrade. You should be OK there. My company payroll collected the ESPP as well by just assessing the gain and collecting the relevant tax. Both of these appeared on the payslip. They also gave us a PP presentation on it to explain of obligations. You first port of call should be payroll on this to ask them about how they deal with it. Dividends may be the only tax due here if you haven't sold any RSUs or shares.