Need to pay tax / notify revenue - when exercise stock options?

[SClarke]

I've left my employer and have been given the option to exercise my stock options as part of their ESOP scheme. I've purchased approx 150 share options at 1euro combined, something like 0.00001 each. Shares not on public market so no value recognised from them. My question is do I need to pay any tax on this and / or notify revenue or do I wait to when I sell them in the future? If there are requirements now, how do I go about them?

I'm not sure if the very low purchase amount makes a difference here as the tax would probably be non-existent if declared anyway for exercise? Company have said the tax obligations rest with me also.

 

[Paul M.]

You pay tax on them based on their current valuation. If the company is US registered this will be the 409A valuation which the company should be able to supply you with.

The tax is the Relevant Tax on Share Options. The details of how to pay are here:- https://www.revenue.ie/en/additiona...-share-option-schemes/calculate-pay-rtso.aspx It is due within 30 days of the share option exercise.

The rules recently changed about payment of RTSO so if the option exercise was since 1st January, the employer is responsible for remitting the payment to Revenue.

 

[SClarke]

Thanks very much for sharing the info above @Paul M., I haven't handed in notice to exercise yet to my employer as it was only sent a few days after I left so I take it I don't fall under the new January rule as I'm no longer an employee at that company. I've enquired to find out anyway so will see what they come back with, would be great if they sort it!

I had a question based on the link you shared above though, if the shares aren't on the public market, what figure do I put in for the 'market value at date of exercise' or how do I complete the calculation as shown?

 

[Paul M.]

so I take it I don't fall under the new January rule as I'm no longer an employee at that company.

I think you still would but it’s certainly an edge case that I’m not sure Revenue have really properly considered. It’ll be interesting to see what they come back with!

if the shares aren't on the public market, what figure do I put in for the 'market value at date of exercise' or how do I complete the calculation as shown?

That’s pretty common for share options. You’ll use the latest valuation of the shares, for US private companies this is regulated by US Code 409A and Revenue accept 409A valuations for this purpose.