Relevant Tax on Share Options (RTSO)

This guide will explain how to process relevant tax on share options (RTSO) through payroll.

Prior to 1st January 2024, it was the responsibility of the ‘chargeable person’ to calculate and pay any tax due on the gains from share options.

From 1st January 2024, it is the responsibility of the employer to calculate the gain and apply the taxation as per the employees’ RPN (Revenue Payroll Notification).

Further information can be found here.

The first step is to calculate the relevant gain for the employee and agree the number of periods this gain will be applicable to for payroll purposes.

For example, if the employee gain is €1,000.00 and they wish to pay over five periods, the gain will be split over five payslips. Where the employee is paid on a monthly pay cycle, it is split over five months at €200.00 each month.

The tax is calculated on the €200.00 per payslip.

New Benefit Type for Share Gains

Next, you must set up a new Benefit type. Please refer to our guide.

Employer PRSI does not apply to share-based remuneration if the shares are in the employer company or a company that controls that company. This is taken from Revenue guidance here.

You should check with your accountant/tax adviser to ensure this is true for your particular case.

Application to the Employee Payslip

You can add the item to the individual payslip each period.

Alternatively, You can choose to add the new benefit to the employee payslip template if it will be applied over more than one pay period. Please note this will continue to apply until it is removed from the employee payslip template.

Choose ‘+‘ under the Benefits heading on the payslip. Choose the ‘Share gains‘ option (or the name you decided to call the option) from the drop-down menu and enter the gain amount.

The amount entered will be included in the taxable earnings on the payslip.