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Revenue is currently working on the design and issue of a new share scheme return – Employer’s Share Awards (ESA). This new return will cover awards not otherwise captured in pre-existing returns. For the avoidance of doubt, the most well known pre-existing return, the Form RSS1, will remain and will continue to capture information regarding stock options.
Revenue has confirmed that the ESA return will apply in respect of share awards for the 2020 tax year onwards. The ESA return is still in the development phase and based on discussions with Revenue, a launch date of mid-June 2021 is anticipated, with a filing deadline of 31 August 2021. For the tax years 2021 onwards, the ESA will have a filing deadline of 31 March following the end of the relevant tax year.
By way of background, the Finance Act 2020 contained an amendment to give Revenue power to request electronic reporting on certain share schemes that it did not already have, in addition to certain additional reporting for discounted shares awarded to employees/directors. The aim is for Revenue to gain a fuller picture of share-based remuneration, which forms part of the overall remuneration packages of employees/directors, in order for them to assist taxpayers with their compliance obligations resulting from such arrangements. Revenue is seeking to capture details of all share-based schemes implemented by employers.
Broadly, the ESA return will capture:
Share based awards not currently reported on a separate share scheme return. Accordingly, this means RSUs, convertible securities, ESPP Plans, restricted shares, cash-settled share based awards, forfeitable shares, growth shares, phantom shares are now in scope for this new filing;
Additional information employers are not currently required to provide on any other return filed with Revenue. At present, to the extent an employer is required to report share awards via payroll, the only information Revenue receives is one line item labelled “share based remuneration”. This item does not identify what type of share award this relates to, if more than one type of award is included in the figure or how the taxable amount has been calculated. From their perspective this is very narrow in its overall scope and does not provide enough information for them to assess whether the arrangements have been taxed correctly.
The new form will operate in a similar manner to the Form RSS1. All existing returns will remain and currently it is not intended to replace the RSS1. We will release a further bulletin once more information in relation to the ESA return is available.