Share schemes and electronic reporting requirements

Irish Revenue have introduced new reporting requirements for certain share schemes. The deadline for submitting the new electronic return is 31 August 2020.

Finance Act 2020 provided for the mandatory electronic reporting of certain share-based remuneration. Up to now, the legislation included a requirement for all share awards to be reported by 31 March, unless they were reportable under any other provision of legislation. Where share awards were reported via payroll, employers relied on this as satisfying the reporting requirements. 

Finance Act 2020 amends the existing reporting requirements for the award of convertible securities, restricted shares and forfeitable shares to provide for mandatory electronic reporting of these awards and extends the scope of reporting requirements for employers to include:

• Awards given to directors and employees in the form of a cash equivalent of shares; and
• Where a discount on shares is provided.

The new electronic Employer’s Share Awards return (Form ESA) 2020 will be available on the Revenue website shortly and it is expected that it will have a format similar to the existing KEEP1, RSS1 and ESS1 electronic returns – a pre-formatted spreadsheet which can be uploaded through the Revenue Online Service (ROS).

Revenue have updated their guidance notes to include instructions and explanatory notes for employers and their agents on the completion and filing of the new return.

We understand from the guidance provided so far that details will be required for restricted stock units (RSUs), discounted free matching ESPPs, restricted shares, convertible securities, forfeitable shares, phantom SAR (stock appreciation rights) cash, growth hurdle flowering shares and any other share remuneration not falling withing the existing RSS1 or approved scheme returns.

The new Form ESA will apply for the tax year 2020 onwards, with a filing deadline of 31 August 2021 for the 2020 return only. For subsequent years, the reporting date of 31 March following the relevant tax year will apply.

We are still waiting on the Form ESA to be issued by Revenue so that we can advise of the specific data that is required to be entered on the return. Given the fast-approaching deadline of 31 August 2021, we would recommend that clients who offer share awards to their employees begin compiling the information they have on record for awards made in 2020 and allow for the time that will be involved in completing this return, which could be significant for many employers. 

Our tax team can provide you with expert knowledge and support to ensure that the complex compliance requirements of employment tax and payroll are met. Contact our team to discuss your needs.