Employer RSU's / CGT

J

Jimmy85

Registered User
Messages
16
Hi All

Any help received here is greatly appreciated.

My wife has a Restricted Stock Unit compensation package with her employer, 1872 Shares vesting at 25% per year over 4 years.

The first vesting period has just happened and the shares are now settled in the account. 468 vested shares.

The value of the 468 Vested Shares is Approx $75,000 - Base Salary E60,000

The employer withholds a portion of the shares to cover the tax on same, in this case 244 Shares Approx $39,500

So she should be left with Approx $35,500 after the employer deduction for Tax.

Where would you start to try work out the CGT Liability here? The 244 withheld shares for tax I am assuming are to cover Income Tax, PRSI, USC.

Is CGT still applicable to the total gain on the Shares? i:e Disposal Proceeds Less Costs of Disposal Less Cost of Acquisition?

Trying to find the starting point to work out the CGT Liability.

Cheers,
J
 
You only pay CGT when you sell the shares. The CGT will be based on the gain between the price you sell the shares for and the value on acquisition of 35,500.
 
Ciru75 said:
You only pay CGT when you sell the shares. The CGT will be based on the gain between the price you sell the shares for and the value on acquisition of 35,500.
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Hi Ciru75, Yes i understand CGT is paid when the Shares are sold, and the shares are in fact sold with the balance remaining after the employer deduction for tax being $35,500.

If the Purchase price was $52 and the Sell Price was $160 how would you calculate the CGT Liability?
 
When the shares vest, the entire value is considered income. You pay income tax on this by way of selling a portion of the vested shares. CGT arises when you sell the remaining shares with the price at vesting being the acquisition. Sell price less acquisition price is your gain/loss. No CGT at vesting.
 
Hi Itchy

That's great, Thank You.

It would be pretty savage to pay 52% income tax and then get nailed CGT on top.

I couldn't look past the acquisition price being on the date of receipt of the RSU's, but it makes sense now, they are not shares, they become shares when they vest, hence the acquisition price being the price at vesting.

J
 
Well she did get the shares for free, so if like options difference between exercise price and price on release treated as income so subject to income tax. Any gain between the price on release and when you sell is subject to CGT.
 
cloughy said:
Well she did get the shares for free, so if like options difference between exercise price and price on release treated as income so subject to income tax. Any gain between the price on release and when you sell is subject to CGT.
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Hi Cloughy

Yes true, point here is shares were sold within 24hrs of settling (from RSU's to Shares) so the Disposal and Acquisition prices are almost identical, so no CGT.
 
So then no CGT, only income tax based on the value of shares received less what they paid(if anything), thsts way options work, so if sell immediately then only income tax, prsi, usc etc due.
 
From the above link

Irish Tax Position
Legal title is not transferred to the employee until vest, so the holders have no voting rights, or right to receive dividends until this point. As such, there is no tax due when the award is granted.
Instead, income tax, Universal Social Charge “USC” and Pay Related Social Insurance “PRSI” become due on vest as follows:

where the RSU is delivered as shares, tax, USC and PRSI are calculated based on the market value of the shares at vest*
where cash is received, tax, USC and PRSI are based on the cash amount
RSUs are typically taxed at the employee’s marginal rates of tax, USC and PRSI. Please refer to our tax rate card for further information
 
Yes RSUs are taxed as income, CGT isnt applicable, so if your RSUs are worth 100k its as if you get a 100k cash bonus when you sell them.
 
Blackrock1 said:
Yes RSUs are taxed as income, CGT isnt applicable, so if your RSUs are worth 100k its as if you get a 100k cash bonus when you sell them.
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Hi Blackrock1

My understanding is Shares are taxed as income, so when the RSU's vest into Shares they become taxable.

When they become Shares on the vesting date, this is the Acquisition price for the purposes of CGT, if sold immediately, then no CGT is applicable, CGT would be applicable if the shares returned a gain from the vesting date to the date of disposal.

Not sure about your last point in regards to cash bonus, that would infer the 100k would be included as income and taxed under income tax, is that what you mean? A portion of the Shares are withheld at vesting to cover income tax.

J
 

Hi, my memory must be fuzzy, i was granted rsus in an old role and as you said some were restricted to cover the income tax, but it was the same thing effectively if they were worth 100k at vesting, 50k of it went to cover the tax effectively.

i wasnt aware a gain from that point was subject to cgt as i tended to sell mine at award, that seems unfair.
 
this thread seems to come to the same conclusion

Tax liability on Restricted Stock Units

I work for a US company I have received restricted stock units in the past in the US company. Typically they vest over 4 years (25% each year). So you get notified you will get 100 shares - you can sell 25 after year 1 and so on. I am trying to figure out the tax liability for these. The...
www.askaboutmoney.com
 
Employers tend to advise the stock plan servicer of the tax rate to be applied. That is then normally remitted to pay the income tax. Theres no obligation on the employer after that.
 
relax carry on said:
Do employers not explain to employees what the tax implications and responsibilities are for these schemes?
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They do, but only in terms of income tax, they have a duty to their employees for that as it is collected through payroll. With CGT, the onus is on the employee in terms of reporting and payment so the employer would tend to stay away from that IMO.
 
Hi,

I recently disposed of RSUs that had vested over the last 4 years on a quarterly basis (8 vesting periods), shares are in Dollars. As the share price was different at each of the 8 vesting dates when I sold the system worked out the P/L on each bucket of shares to ascertain the correct profit or loss. This resulted in a gain of 5k, my question is regarding the exchange rate to Euros for CGT.

Do I just convert the 5k gain from usd to eur using the USD/EUR on the sale date. Or do I need to convert each of the vesting periods (acquisition dates) into euro using the prevailing EUR/USD on the vesting period?



E.g
Option 1: Vesting Period 1 - Share Price 90, sale price 100, EURUSD on sale date (0.95) = P/L $10 *0.95 = 9.5 EUR *0.33 = 3.135 CGT Due

Option 2: Vesting Period 1 - Share Price 90, EURUSD on Vesting Date 0.9, Sale price 100, EUR USD on sale date (0.95)
- EUR 81, Sale Price 90, PL = 9 EUR * 0.33 = 2.97 CGT
 
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