Employee share schemes

Companies can sell or give away part of the company by issuing shares in the company. The price of shares can go up and down.

If you have a share option, it means that you are given the option to get shares at a fixed price at a future date.

If your employer gives you shares, or share options, they may be exempt from income tax if the shares are under a Revenue-approved share scheme.

There are 3 types of Revenue-approved share schemes:

• Approved Profit-Sharing Scheme (APSS)
• Employee Share Ownership Trust (ESOT)
• Save As You Earn (SAYE)

These may be exempt from income tax but they are subject to:

• Universal Social Charge (USC)
• Pay Related Social Insurance (PRSI)
• Capital Gains Tax (CGT)

The Key Employee Engagement Programme (KEEP) is a share option scheme that is subject to CGT but is not subject to income tax, USC or PRSI.

Approved Profit Sharing Schemes allow you to get shares from your employer without paying income tax on them, up to a maximum of €12,700 per year.

The employer must hold the shares in a trust for a specified time and you must not dispose of them before 3 years.

If you dispose of the shares earlier, you pay income tax on the lower of:

• The original market value of the shares
• The proceeds you get when you dispose of the shares (or if you transfer them, their market value on the transfer date)

Your employer will deduct Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on the value of the shares when they are given to you.

When you dispose of the shares, you may be liable to Capital Gains Tax.

Revenue has more information on Approved Profit Sharing Schemes.

An ESOT is usually used by State and semi-State organisations to provide shares to employees.

It is usually set up along with an Approved Profit-Sharing Scheme (APSS). The shares acquired by the trust can be transferred through the APSS to eligible employees.

Shares can be kept in the trust for up to 20 years.

Revenue has more information on ESOTs.

Your employer can use a savings scheme to give you share options that are exempt from income tax:

1. Your employer sets a share option price, which can be up to 25% below the market value.
2. You enter into a contract to save enough from your salary to buy the shares. You can save between €12 and €500 per month for 3, 5 or 7 years. These savings are placed on deposit.
3. If you decide to use your savings to buy the share option at the end of the contract, you do not have to pay income tax on any gain you make.

You do have to pay any USC, PRSI and CGT due.

You can read more about savings-related share option schemes in Revenue's information on approved shares schemes and in the Revenue Tax and Duty Manual on Save as You Earn Schemes (pdf).

Under KEEP, share options must be held for 1 to 10 years.

You must be an employee, or director, from the time the share option is granted to the time it is used. There are requirements about the amount of time you work for the company and how many shares you can have.

You not have to pay income tax, PRSI or USC on gains when you use the share option. You may have to pay Capital Gains Tax when you dispose of the shares.

This incentive was introduced for qualifying share options granted between 1 January 2018 and 31 December 2023. In Budget 2023, it was announced that the programme would be extended until 31 December 2025.

Revenue has more information about KEEP.

There is information on employment-related shares on revenue.ie.