Stock Option Crisis !!

S

Salem

Registered User
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73
Help guys,
I began working for a large US company in Dublin back in '94 ... Was given
stock options as a welcome package which I didn't really bother with as their value was stable for many years ... The company closed up shop in 2003, all made redundant ... I sold the options just before I left for about
1100 euro ... Thought no more of it and got rid of all paper work (Big mistake!) as I was making fresh start in new company ... I have just received a tax bill from revenue for 904 euro !! .. They say it is to do with the selling of the options ...
I really am lost .... Am I being ripped off here or if not, can anyone explain to me where they might have got this figure from ???
Once again sorry for lack of info ...
 
I don't think that the revenue are in the 'Rip Off' game. If you have received options & subsequently exercised them, then you are liable to pay tax on the gain example...

If you receive 100 options at $10 per share & then the share value goes up to $25. If you exercise theoption then you will gain 100 x $15 ie $1500. You are then liable for 42% tax on the $1500.

ninsaga
 
I do agree and I don't normally slag off the rev. but I just wanted to know how they might have come up with 904 euro as a % of 1100 ... To me it seems like over 80% CGT !!
If ye know how these things are calculated please explain ...
Cheers ...
 
You say you sold your options for €1100. Do you mean 1100 in total or a profit of €1100? How much did you buy the options for?

The revenue probably is adding penalties also. Have you tried writing or calling them to ask how they arrived at the figure?
 
When you joined the company you received options.
At some point you exercised the options and converted them into shares. The difference between the market value of the options and the price you paid for them on that day should have been declared for income tax at your highest rate (probably 42% -- not sure about PRSI.).
This is regardless of the price you eventually sold the shares for -- you received an asset from your employer, so you are liable to income tax on the value when you receive it.

When you left, you sold the shares -- the difference between this sale price and the market value on the day of purchase should have been declared for Capital Gains Tax (20%). I'm guessing you actually made a capital loss here, but unfortunately that can't be set off against income tax.

There may also be interest and penalties included in the Revenue bill.
 
Thanks MugsGame that kind-of seems to make a bit of, sort of sense ...
One more thing .... If I could get thru to the collector general's office would ye think they
would be obliged to send me a full breakdown of the bill giving the calculations etc ...
 
See the [broken link removed] for more info on the tax treatment of shares from employer share purchase/option schemes.
 
Had a simliar experience 5 years ago with options...Revenue sent out a bill to me and my workmates. The figures they were looking for were completely pulled out of the air, random, non-sensical. The only reason I knew this was I was able to compare what they were charging me with people I was sitting next to. Some had more options and were charged a lot less...some had exactly the same and were also charged more or less.

No breakdown was ever given, so I went to an accountant and got him to apply the actual rule to what was owed. I submitted a calcualtion and a check. Never heard from revenue again.
 
If people don't make a declaration then it's hardly surprising if Revenue will bill them for the wrong amount. However I thought that the details of benefits to employees arising from share schemes (in fact any payment in cash or kind over €3K) were returned to Revenue separately by the compnay as part of their tax returns (can't remember the specific form name)?
 
yankinlk said:
Had a simliar experience 5 years ago with options...Revenue sent out a bill to me and my workmates. The figures they were looking for were completely pulled out of the air, random, non-sensical. The only reason I knew this was I was able to compare what they were charging me with people I was sitting next to. Some had more options and were charged a lot less...some had exactly the same and were also charged more or less.

No breakdown was ever given, so I went to an accountant and got him to apply the actual rule to what was owed. I submitted a calcualtion and a check. Never heard from revenue again.
Click to expand...

Just because the amounts were different does not necessarily in itself mean the Revenue were wrong, the amount of options received only represents part of the equation, each individual’s personal circumstances could also factor in i.e. what are their tax credits and standard rate cut off point (would be different for married vs. single etc) and what are their basic salaries.

That said the Revenue can and do get things wrong so it can be worthwhile to check it out.
 
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