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Share schemes reporting – Overhaul and expansion

  • Ireland
  • Tax planning and consultancy
  • The future of funds - Tax

05-07-2021

Share schemes reporting – Current regime

Irish Revenue have recently published an eBrief confirming that employers are now required to engage in mandatory electronic reporting of certain share-based remuneration, which will apply from the 2020 tax year onwards. This marks a significant overhaul and expansion of share scheme reporting requirements. The relevant return form, known as the Employer Share Awards Return (“Form ESA”), was published on Irish Revenue’s website on 21 June 2021.

Until recently, share scheme reporting was only required for submission to Irish Revenue by 31 March each year in relation to the following items:

  • Unapproved share option schemes – Form RSS1
  • Approved Profit Sharing Schemes (APSS) – Form ESS1
  • Save As You Earn (SAYE) share option schemes – Form SRSO1
  • Key Employee Engagement Programme (KEEP) schemes – Form KEEP1
  • Employee Share Ownership Trust transactions – Form ESOT1

Any awards granted and/or exercised which arose under the above headings during 2020 were required to be reported by 31 March 2021.

New reporting requirements

Finance Act 2020 provides for the mandatory electronic reporting of certain share-based remuneration, including:

  • Restricted Stock Units (RSUs)
  • Restricted Shares
  • Convertible Shares
  • Forfeitable Shares
  • Discounted Shares, and
  • any other award with cash-equivalent of shares

The deadline for filing Form ESA generally will be 31 March following the end of the tax year (ending 31 December) during which the reportable events occurred. However, for the tax year ending 31 December 2020, employers must submit Form ESA to reflect reportable events occurring during the 2020 calendar year no later than 31 August 2021. Failure to comply with this mandatory filing obligation can result in a monetary penalty.

The Form ESA is in a pre-formatted template, similar to KEEP1, RSS1 and ESS1, which can be uploaded through the Revenue Online Service (ROS). Information on how to submit the form is contained in the form itself and in the relevant tax and duty manual. Chapter 15 of the Share Schemes Manual has been updated and includes guidance on filing the Form ESA, as well as the other returns mentioned above.

Impact on employers

With only two months remaining until the first returns are due, employers now need to review award activity for their employees during the calendar year ended 31 December 2020. Employers will also need to ensure that they have systems and processes in place for returns due 31 March 2022 for awards granted in the year 2021.

Employers should also remain cognisant of the fact that failure to report may result in penalties.

How we can help

The team at Eversheds Sutherland have the expertise to advise on all aspects of share based awards and can provide assistance in the context of this new Irish Revenue reporting requirement. Please contact the team below and we would be delighted to discuss.

Alan Connell, Managing Partner and Head of Tax - AlanConnell@eversheds-sutherland.ie

Tim Kiely, Partner – Tax and Commercial – TimKiely@eversheds-sutherland.ie

Melissa Daly, Senior Associate – Tax and Commercial – MelissaDaly@eversheds-sutherland.ie

Robert Dever, Senior Associate – Tax and Commercial - RobertDever@eversheds-sutherland.ie

Niall Pilkington, Solicitor – Tax and Commercial – NiallPilkington@eversheds-sutherland.ie

Aoife Noone, Solicitor – Tax and Commercial – AoifeNoone@eversheds-sutherland.ie