Your Complete Guide To Irish Employee Share Plans

SO, HOW DIFFERENTLY MIGHT THIS SEQUENCE OF EVENTS UNFOLD UNDER AN APSS?

At the outset, you’d need to liaise with Revenue to ensure that the scheme you intend to implement is fully compliant from the legal and tax perspective. Once that is formally approved, you can then proceed. As with a cash bonus, with an APSS, the intention to reward a high- performing employee with a bonus, but instead of making that a cash payment we convert it into shares. The shares are appropriated, at which time the employee will be liable for USC and PRSI, but, crucially, not income tax. The scheme allows for those shares to then be held in a trustee account for three years. After this time, if the employee then chooses to sell, whatever gain has been accrued above and beyond the value of the shares at the date of appropriation will be subject to Capital Gains Tax (CGT). The USC and PRSI deduction will be the same as with the cash bonus, but the CGT payment will be far less than would have been

claimed as income tax. In this scenario, the employee receives the original bonus largely intact and CGT is only applied to whatever gain is achieved in selling the shares. The beauty of an APSS is that employees behave as if they’re owners – they’ve got skin in the game, so to speak, and as the company grows, they share in that success.