Introduction
⚠️ The tax information below is an extremely brief summary for standard situations of the referred relationship, and each situation may of course be different from the norm and have its own specificities. ⚠️
A more comprehensive set of information for this country and work relationship is available on Easop.
If you’re looking for more detailed information in this country (or if you are just curious about our global compliance offering and pricing), get in touch with us and we’ll tell you more about it! 💡
Regular employee
✅ Yes, you can grant non-qualified stock-options (NSO) to employees in Ireland.
There are a few things to do to be compliant.
In a nutshell, what does taxation look like?
- At grant 👉 There’s no taxation at the time of grant, except under certain conditions.
- At exercise 👉 The spread (i.e. the difference between the FMV at exercise and the exercise price) is treated as an income subject to progressive income tax rates.
- At sale 👉 The sale gain (i.e. the difference between the sale price and the FMV at exercise) as capital gain.
💡 A way to reduce taxation for the grantee would be to allow the grantee to “early exercise” the stock options (i.e. exercising stock options that have not vested yet) but early exercises are not always easy to manage from the company’s perspective and on the grantee's side it may increase the risks of paying an exercise price (and taxes thereon) on something which may happen to be eventually worth nothing later down the road.
Employee via EoR
✅ Yes, you can grant non-qualified stock-options (NSO) to EoR employees in Ireland.
There are a few things to do to be compliant.
In a nutshell, what does taxation look like?
- At grant 👉 There’s no taxation at the time of grant, except under certain conditions.
- At exercise 👉 The spread (i.e. the difference between the FMV at exercise and the exercise price) is treated as an income subject to progressive income tax rates.
- At sale 👉 The sale gain (i.e. the difference between the sale price and the FMV at exercise) as capital gain.
💡 A way to reduce taxation for the grantee would be to allow the grantee to “early exercise” the stock options (i.e. exercising stock options that have not vested yet) but early exercises are not always easy to manage from the company’s perspective and on the grantee's side it may increase the risks of paying an exercise price (and taxes thereon) on something which may happen to be eventually worth nothing later down the road.
Contractor
✅ Yes, you can grant non-qualified stock-options (NSO) to contractors in Ireland.
Note that granting stock options to contractors could increase the misclassification risk (i.e. the contractor relationship being requalified as an employer-employee relationship, with all tax consequences that can go with it). This will never be the only factor though, what counts primarily for determining the degree of misclassification risk are factors relating to the modalities of the services performed (control over the contractor’s work, exclusivity, term of the services, etc.).
In a nutshell, what does taxation look like?
- The tax treatment of the gain made upon exercise of the stock options is not clear and depends on the individual circumstances of the contractor.
- It’s likely that taxation should take place at the time of exercise (with the spread to be reported as a trading income) and at the time of sale (with the sale gain to be reported as a capital gain).
