Willie Penrose
Question:108 Mr. Penrose asked the Minister for Finance the method used to tax share options which are given to a person who is employed as a PAYE worker with a company; and if he will make a statement on the matter. [7331/00]
Written Answers. - Share Options.
I am informed by the Revenue Commissioners that share options which are given to a person who is employed as a PAYE worker are chargeable to tax under Schedule E for the year of assessment in which the gain is realised.
The charging provisions are contained in section 128 of the Taxes Consolidation Act, 1997. The charge to tax is the difference between the market value of the shares at the date of exercise of the option and the price paid for the shares by the employee. The person is charged to tax at their marginal rate.
Section 27 of this year's Finance Bill proposes that the tax charge normally due on the exercise of the option may, as a result of this section, be deferred until the shares are actually sold or within seven years whichever is the earlier. This will apply to all options exercised on or after the 6 April 2000.
An individual in receipt of share options must return details of the gain to his or her inspector of taxes, who will calculate the tax due.
The company who issues the share options of its employees is obliged to deliver details of the options to the inspector of taxes within 30 days of the end of the tax year.