Capital Gains Tax (CGT) for Tech Employees in Ireland: ESPPs and RSUs Explained

If you’re a tech employee in Ireland receiving Employee Stock Purchase Plans (ESPPs) or Restricted Stock Units (RSUs) as part of your remuneration package, it’s important to understand how these shares are taxed and your obligations under the Irish tax system.

Recent changes have simplified the process for employees, but there are still key points to keep in mind, particularly regarding Capital Gains Tax (CGT).

Taxation of ESPPs and RSUs Since 1 January 2024

As of 1 January 2024, the taxation of ESPPs has undergone significant changes, bringing taxation of ESPPs in line with that of RSUs. Previously, employees were required to file RTSO1 forms and pay income tax, Universal Social Charge (USC), and PRSI on gains realised from share options/ESPPs. However, under the new system:

• Income tax, USC, and PRSI on ESPPs as well as RSUs are now deducted at source via payroll by your employer.

  
  

• This means you no longer need to file RTSO1 forms or make separate payments for these taxes.

  
  

While this change has streamlined the process, it’s important to note that Capital Gains Tax (CGT) obligations still apply when you dispose of your shares.

Capital Gains Tax (CGT) Obligations

When you sell shares acquired through ESPPs or RSUs, you may be liable for CGT on any gains made. CGT is calculated on the difference between the sale proceeds and the cost of acquisition (which includes the amount you were already taxed on as income when the shares vested or were purchased).

Key CGT Filing and Payment Dates

• CGT Payment Deadlines:

  • For disposals made between 1 January and 30 November, CGT must be paid by 15 December of the same year.
    

  • For disposals made between 1 December and 31 December, CGT must be paid by 31 January of the following year.

    
    

• Filing Obligations:

  • You must report the disposal of shares to Revenue in your annual tax return, even if no CGT is due (e.g., if the gain is covered by reliefs or exemptions - including the annual exemption from CGT of €1,270).

Using Share Sales Strategically

If you’re considering selling shares in just one company, it’s worth thinking strategically about how to use the proceeds. Here are some options to maximise your financial benefits:

1. Investing Elsewhere:

   • Selling shares in one company and reinvesting in a diversified portfolio can help reduce risk and improve long-term returns.
     

2. Maximising AVCs for Tax Relief:

   • You could use the proceeds from your share sale to maximise your Additional Voluntary Contributions (AVCs) to your pension. AVCs qualify for income tax relief at your marginal rate (20% or 40%), making this a tax-efficient way to save for retirement.
     

3. Utilising the Annual CGT Exemption:

   • Don’t forget to use your annual CGT exemption, which allows you to realise gains of up to €1,270 tax-free each year. By carefully planning your share disposals, you can minimise your CGT liability.

   
   

Conclusion

The taxation of ESPPs and RSUs has become more straightforward since 1 January 2024, with income tax, USC, and PRSI now deducted at source via payroll. However, CGT obligations remain when you sell your shares, and it’s crucial to understand the filing and payment deadlines to avoid penalties. By planning your share disposals strategically—whether to reinvest, maximise your AVCs, or utilise your annual CGT exemption—you can make the most of your financial opportunities while staying compliant with Irish tax laws.

If you have any questions about CGT or need help with tax planning, don’t hesitate to get in touch.

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Alan is a Chartered Accountant and Tax Adviser and the founder of CloudAccounts, a remote practice that provides support for business owners, PAYE workers and anyone who requires professional assistance with their tax and accounting matters.

Alan also offers consultations and corporate seminars, to offer businesses and their employees' simple practical advice in easy-to-understand presentations, allowing employees to feel valued, supported and make the most of the company benefits. If you require further information please contact CloudAccounts today.

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