Global Shares provide Ireland’s number one Save as you Earn administration solution.
Transform your employees experience with an engaging Save as you Earn Scheme administration Solution. Global Shares cloud-based Save as you Earn administration software removes the complexity from share scheme administration by automating time-consuming tasks and administrative duties. Our flexible and customisable platform meets the unique requirements of each individual client. Learn more about how the Global Shares EquityGateway can help you!
A dedicated team of CEP qualified, Share Plan Analysts work with you and your team to implement and administer your chosen schemes, giving you complete confidence in plan success. Choose from a number of different administration options from full or partial administration outsourcing to a save as you earn administration solution.
What is a Revenue Approved Savings Related Share Scheme?
Under an Irish Revenue Approved Savings Related Share Scheme (Save as you earn scheme):
1. An employee agrees to save a fixed amount out of net pay for a predetermined period i.e. three, five or seven years and
2. at the same time the company will grant the employee options based on the amount the participant has agreed to save. The savings must be held under a qualified savings contract.
At the end of the savings period, the participant has the choice to:
1. Use the proceeds of the savings contract to buy some or all of the shares covered by the option
2. Take the proceeds as a lump sum.
The aim of an SAYE scheme is to help the participant to exercise options without having to borrow. This tends to result in more employees holding on to their shares rather than selling them immediately.
What documentation must be approved by Revenue?
For an SAYE Scheme, Revenue must approve the Rules and the Employee Booklet and Forms. Revenue must also be provided with a copy of the Resolution passed by the Board introducing the Scheme, and a copy of a declaration of the Company Secretary (or other suitably appointed officer of the company) with regard to the shares to be used for the purpose of the Scheme. Until Revenue give formal approval for the Scheme, no options can be granted under the Scheme.
The benefits for employees
As with any share option the benefit to the employee is that they only have to pay the option price for the shares, even if the share price has increased.
There is no income tax on any gain arising on the exercise of an SAYE option. However, the gain will be liable to employee PRSI and USC. The PRSI and USC liability is collected via the payroll system.
If the options are not in the money at the end of the savings period, the participant can just take their savings free of income tax, PRSI and the USC and the option will lapse.
Must all employees be offered participation?
Yes. All employees and full time directors who meet the eligibility criteria must be offered participation in the Scheme. The eligibility period can be a specified period, not exceeding three years.
Who determines the Option price?
The company determines the option price and under legislation, SAYE options can be granted at a discount of up to 25% of the market value of the shares, subject to the option price being a minimum of the par value of the shares.
How are shares allocated?
The number of shares granted under option will depend on the amount a participant elects to invest, and the option price. Under the legislation of governing SAYE Schemes, a participant can save a maximum of €500 per month and a minimum of €12 per month. The total expected savings as at the end of the savings period is divided by the option price, to give the number of options granted.
In order to satisfy the shares under option, a company can issue new shares, acquire shares on the market, or establish a company or trust to hold the shares for the purpose of the Scheme. There are legal, financial and tax issues where shares are acquired by purchase by the company, subsidiary or by trust.
What type of company can establish an SAYE Scheme?
Practically all companies, whether private or public can establish an SAYE Scheme, irrespective of where its parent is based.
What are the taxation implications for the employee?
There is no income tax, PRSI or USC payable on the grant of an SAYE option.
No income tax arises on the exercise of the option. However, the participant will be liable for PRSI and USC on any gain arising on exercise. Any PRSI and USC applicable is deducted via the PAYE system. Where the exercise is by a former employee, the option holder must self-assess for any PRSI and USC payable.
The participant may, depending on their personal circumstances, be liable to capital gains tax on the subsequent disposal of the shares.
What are the taxation implications for the employer?
Any costs associated with establishing and administrating the Scheme are allowable for corporation tax purposes. However, the cost of funding the options is not allowed.
There is no employer PRSI on the gain arising on the exercise of the options.
What are the reporting requirements?
The Company: The company, Irish branches and agencies granting SAYE options must file a return of information (Form SRSO) by 31 March following the end of the relevant tax year. Form SRSO must contain information on grants of options, the exercise of options, corporate restructures etc.
The participant: A participant is required to return details of the exercise of options and the subsequent disposal of shares and to pay any capital gains tax due on the disposal of shares.
Are there any implications for pension benefits?
Revenue have declared that any gains arising on the exercise of an SAYE option can be included when calculating Revenue maximum benefits and the monetary limits for AVCs.
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