Share Options in US Company paid thru payroll

Hi all...

I have recently exercised some share options that I was given a year ago. the company I work for is a US based company, quoted on the DOW. the broker used is also in the US. I have been told that the proceeds of my sale will be paid to me by my company thru payroll, therefore being open to Income Tax (& PAYE I guess).

Is this right? Shouldnt I be getting the full proceeds from the Broker and declaring this in my annual tax return?

many thanks in advance

Are you a regular PAYE employee as opposed to a director or something like that?

If you exercised and sold the options at the same time then the gain is assessable for income tax. I've never heard of the proceeds being paid through payroll in this way before. However it does take care of discharging your tax liability albeit sooner than you might need to if you declared/paid it yourself at a later date. What has your employer said about this way of paying the proceeds of the sale?

therefore being open to Income Tax (& PAYE I guess).

I presume that you mean PRSI and not PAYE? I presume that such income is liable for PRSI as well as income tax so, again, while you may be paying this sooner that it is strictly due, at least your liability is being discharged correctly.

declaring this in my annual tax return?

Note that PAYE workers are not obliged to file annual returns unless (a) requested by Revenue or (b) their tax affairs (e.g. credits, marginal tax rate, standard rate band, allowances etc.) are so out of whack that they need to sort them out. In the case of years in which relatively small amounts of tax/PRSI are over/under paid things can usually be sorted out by simply writing to Revenue with details and copies of the relevant P60(s).

Hope this helps.

Paying through payroll seems very strange to me, assuming that the broker account was in your own name. This would mean that the broker has to hand over money which is held in your name to your employer, though the broker has a direct relationship with you. This also opens a whole can of worms regarding FX rates - what rate does your empoyer use to convert the USD proceeds into EUR?

Are you sure it is the proceeds of the sale coming through payroll and not the taxes relating to when the options were issued being deducted from payroll?