Restricted stock units

Tax on restricted stock units (RSU)

A Restricted Stock Unit (RSU) is basically a promise to an employee from his/her employer that he/she will receive a number of shares or cash to the value of such shares in the employer’s business after a period of time has passed (vesting period)

In this way, no shares or cash will pass to the employee/director until the vesting period has passed.

From an employees perspective the following is the tax implications at the following stages:

Tax on date of grant/promise

No tax is payable by employee or employer

Tax on date of vesting (i.e when shares are made available to employee)

Income tax is paid by employer on value of shares at vesting

No tax is payable by employee

Tax on date of sale of shares

CGT is payable by employee on sale of shares on the difference between the value of shares at date of vesting and how much you sell them for ( i.e roughly 33% on gain less personal exemption of €1,270 and losses forward)

If shares are sold between 1st January to 30th November, the CGT if any is due on 15th December of that year

If shares are sold in December the CGT is due on 15th January of following year

The employee is then required to return an income tax return to revenue by the 31st October in the following year even when there is no CGT due

Any queries on the above give me a call on 091 763817 or email me at oliver@taxreturnhelp.ie