Tax liability on share options for overseas workers

Tax liability on share options for overseas workers - Crowe Horwath Ireland

If you were a multinational worker who spent some time working in Ireland and have (or had) share options, you may be liable for Irish tax.

Revenue have recently confirmed they will be contacting multinational workers who have failed to pay Irish tax on share options.

Share options have become particularly popular in large multinationals as a means for rewarding employee performance. A share option is a right that an employer grants to an employee to acquire shares in the company at a pre-determined price. If the share price rises and the multinational employee exercises the option at the fixed price, the subsequent gain is liable to income tax, PRSI and USC.

Unlike share awards or approved share schemes, it is the employee and not the employer who is liable to income tax on the share option gains.

However, only the gains which are attributable to any periods during which the duties of the employment were exercised in Ireland are taxable. If none of the duties of employment in relation to the options are exercised in Ireland, Revenue will not impose any charge to tax.

Check your tax liability

As a multinational employee you should review details of any share options you hold or have exercised as soon as possible and determine if any of them could relate to employment duties you carried out in Ireland.

Remember it is you as the employee and not the employer who is liable.

If you are unsure of the tax treatment of your share options, please contact a member of our tax team and we would be happy to discuss the details with you.