Share Incentive Scheme Reporting and Compliance Update for Employers and Employees

Reporting Deadlines

31 March 2022 is the mandatory annual filing deadline for employer returns of information in relation to employee share incentive schemes operated in 2021. Employers may be subject to financial penalties if they do not comply with their reporting obligations.

Form RSS1 - Employers must report the grant of unapproved share options to directors and employees in 2021, as well as the release, assignment and exercise of unapproved share options by directors and employees in 2021.

Form KEEP1 - Employers must report the grant of options under the Key Employee Engagement Programme (‘KEEP’) to directors and employees in 2021, as well as the release, assignment and exercise of KEEP options by directors and employees in 2021. Failure by the employer to file the Form KEEP1 can result in serious consequences for employees, who may no longer be entitled to avail of the favourable tax treatment under the KEEP regime.

Form ESA - Employers must report the award in 2021 of certain share-based remuneration such as restricted stock units, restricted shares, convertible shares, forfeitable shares, discounted shares, phantom shares, stock appreciation rights, growth shares and other cash awards whose value is based on share value. The reporting of the grant of restricted stock units is currently optional. The requirement to file a Form ESA is in addition to employers’ PAYE reporting obligations.

The 31 March 2022 filing deadline for returns of information also applies to Revenue-approved share incentive schemes; Approved Profit Sharing Schemes (Form ESS1), Save As You Earn Schemes (Form SRSO1) and Employee Share Ownership Trusts (Form ESOT1).

Compliance Reviews

Based on information provided by employers in the annual returns, Revenue are undertaking compliance reviews to ensure that employees are adhering to their own tax compliance obligations, and in particular, in relation to taxes arising on exercise of options and on the disposal of shares acquired under the various schemes. Revenue are communicating with both employers and employees on this matter.

Next Steps

Employers must now review their share award activity during 2021 and prepare the relevant reporting return. Employers must also ensure that they are registered for Share Scheme Reporting prior to submitting any returns to Revenue. In light of Revenue’s compliance reviews, employers may consider engaging with their employees to remind them of their personal tax obligations regarding share options and share awards.

How we can help

McCann FitzGerald LLP provides expert advice on the establishment and implementation of share incentive schemes, and have extensive experience in preparation of employer returns of information. Please contact the team below for further information on how we can assist your company.

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.