Hi,
I have an 15% discount ESPP scheme through work and have to fill out an RTSO1 form at the end of every offering period as my employer has permission from Revenue to not process Tax, PRSI and USC on the BIK through the payroll.
I have been told by a broker that if I hold on to the shares for 3 years then Income Tax is not due, however I cannot find any documentation to support this.
It is my understanding that Income Tax, PRSI and USC will always be due on the difference between what I paid for the shares and the value of the shares when they were purchased.
Then CGT of 33% will be due when I sell the shares, minus the personal exemption of €1,270, and this CGT is calculated on the difference between the value of the shares when I purchased them and when I sell them.
If there is any way to help reduce any kind of taxation by holding on to share longer then I would love to know, I just don't believe this to be the case for ESPP. I can only find information on an income tax exemption relating to Employee Share Incentive Schemes which I believe are different to ESPP schemes, see info below from KPMG. Maybe he is getting confused with this. I see on KPMG website it says under an APSS scheme shares are held in a trust for minimum of two years. After that time the members may dispose of them but may be subject to income tax. Shares held for three years may be sold free of income tax, USC and PRSI, however CGT may apply
Thanks,
Mark
I have an 15% discount ESPP scheme through work and have to fill out an RTSO1 form at the end of every offering period as my employer has permission from Revenue to not process Tax, PRSI and USC on the BIK through the payroll.
I have been told by a broker that if I hold on to the shares for 3 years then Income Tax is not due, however I cannot find any documentation to support this.
It is my understanding that Income Tax, PRSI and USC will always be due on the difference between what I paid for the shares and the value of the shares when they were purchased.
Then CGT of 33% will be due when I sell the shares, minus the personal exemption of €1,270, and this CGT is calculated on the difference between the value of the shares when I purchased them and when I sell them.
If there is any way to help reduce any kind of taxation by holding on to share longer then I would love to know, I just don't believe this to be the case for ESPP. I can only find information on an income tax exemption relating to Employee Share Incentive Schemes which I believe are different to ESPP schemes, see info below from KPMG. Maybe he is getting confused with this. I see on KPMG website it says under an APSS scheme shares are held in a trust for minimum of two years. After that time the members may dispose of them but may be subject to income tax. Shares held for three years may be sold free of income tax, USC and PRSI, however CGT may apply
Thanks,
Mark