Employer share returns

Employer share return filing

The deadline for submission of the 2023 forms ESA, RSS1 and KEEP1 returns is 31 March 2024.

Which return is required? This depends on the type of share schemes operated. Where multiple share schemes exist more than one return is required.

Employers need to register with Revenue for share scheme reporting via ROS before submitting the relevant form.

As this registration process may take 2 - 3 working days (or longer), we recommend completing it early to avoid any delays in submitting the return. A penalty may apply in cases of late filing for the above-mentioned returns, and also, as noted below, the benefits of the KEEP scheme may be withdrawn if the return is not filed on time.

Employer’s Share Awards (ESA) return

The Employer’s Share Awards return (form ESA) was introduced in 2021. Form ESA broadly covers share-based awards not currently reported on a separate share scheme return and additional information employers are not currently required to provide on any other return filed with Revenue.

Reporting is required for the following categories of shares:

• Restricted Stock Units (RSUs).
• Restricted shares.
• Convertible shares.
• Forfeitable shares.
• Growth shares.
• Phantom shares.
• Discounted shares.
• any other awards with cash-equivalent of shares.

What share-related transactions or events are reportable?

The specific details of an event or transaction required to be reported on the form are wide-ranging.

The form ESA is in electronic format with separate tabs and reporting requirement instructions for each category. Depending on the category of share transaction, an employer may be required to include details of the award/grant, vesting, exercise, forfeiture, etc.

For example, with regard to RSUs, an employer should report any of the following events in the form ESA for a given year; RSU is granted, share-settled or cash-settled (although reporting the grant of RSUs is currently optional.)

An employer should report payment of the cash-equivalent of shares in the form ESA for the year when the cash payment is made, even if the employee or director is no longer with the company.

Please note that the form ESA does not replace the requirement to report details of real time double tax relief granted via payroll in relation to RSUs. See below for further details.

Form RSS1                              

A form RSS1 is a return of share options and other rights. This form contains information relating to the grant, exercise, assignment or release of share options. It also applies to employee stock purchase plans which fall under share option legislation in Ireland.

Form KEEP1

The Key Employee Engagement Programme (KEEP) is a tax-advantaged share option scheme with the objective of supporting Irish SMEs with the recruitment and retention of key employees.

Any company that has qualified for the KEEP scheme must file a return for any year in which it grants an option to an employee, or any year in which an option is exercised, transferred or released. Otherwise, the benefits of the KEEP scheme will be lost. 

Other share reporting obligations

Where an Approved Profit-Sharing Scheme (APSS) is in place and where shares are allocated, the scheme trustees are required to file a form ESS1 by 31 March of the year following the allocation of shares to an employee under the scheme. All ESS1 returns must be filed through ROS.

For Save as you Earn (SAYE) schemes, where SAYE share options are granted or exercised in a given year, an employer is required to file a Form SRSO1 by 31 March of the following year.

Reporting obligations for real time double taxation relief on RSUs

In addition to paying tax via the Irish PAYE system, individuals may also have a liability to tax in a foreign country on the RSU.

Where this is the case, and a double taxation treaty is in place with the other country, the individual may be entitled to a credit in relation to any amount subject to double taxation. As a concession, relief can be applied via payroll i.e. a “real-time credit” where certain conditions are met.

If a ‘real-time credit’ is granted for 2023, the company must provide the relevant information to the Irish Revenue office dealing with the affairs of the company by 31 March 2024.

Share option withholding requirements from 1st January 2024

From 1 January 2024, employers will be required to withhold Irish payroll taxes from gains arising on the exercise of share options. Please refer to our previous newsletter for more information:  Share option gains to be taxed through payroll.

If you have any questions in relation to the above, please reach out to your usual Mazars contact.

March 2024