WHAT ARE THE KEY RULES? This is not an all-employee scheme. So, companies can choose which employees they want to include in any such plan. Companies can offer restricted shares to all employees if they wish, but usually an RSS will be targeted at senior executives and key employees. Initial income tax, USC and PRSI liabilities are reduced because of the restrictions imposed in the terms of the plan. The extent of the abatement will be linked to how many years the restrictions will be in place. Prior Revenue approval is not required, but the company must complete a return of information (Form RSS1) annually by March 31 following the end of the relevant tax year in which the restricted shares were awarded, and details must also be included in their Corporation Tax returns (CT1).
WHAT ARE THE ADVANTAGES FOR THE COMPANY?
The company is safeguarding its shares, in that sale is prohibited before the set period elapses.
Companies can claim a tax deduction on the cost of setting up and running the scheme.
Employers make no PRSI contribution.
An RSS may be useful when looking to build a stable senior team. As noted previously, this scheme allows employers to target specific employees. By giving key individuals a formal stake in the company, you make them more likely to stay with you into the long-term.
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