Employer Share Scheme Reporting - Ireland

Employer Share Scheme Reporting

There are several annual reporting obligations for employers who operate share schemes for their employees which are normally due by 31 March following year end. The 2020 share scheme reporting deadline is 31 March 2021.

Also, Finance Act 2020 introduced new mandatory electronic reporting requirements for various share schemes. The new form in respect of these new electronic requirements is not yet available. It is expected that the 2020 share scheme electronic reporting deadline for non-approved schemes and non-options will be extended to some date after June 2021.

Share options and KEEP option schemes

In respect of share options and other rights granted to directors and employees, employers are obliged to provide information to Revenue in relation to the grant, assignment or release of rights, allotment of shares on the exercise of a right, or the transfer of any asset under rights granted. This requirement is applicable regardless of whether the share options are in the form of market value options, discounted options or nil cost options. The information is required to be provided on Form RSS1.

The Key Employee Engagement Programme (KEEP) provides for share options to employees and directors of certain small and medium enterprises. The form reports the grant, release, assignment and exercise of KEEP options by employees and directors. Complexities can arise where share options have been granted to cross-border employees and advice should be sought in this regard.

The 2020 RSS1 and KEEP1 forms must be filed by 31 March 2021.

Employers must, if not already registered, register with Revenue to confirm that they have a share scheme reporting requirement (SSR) via ROS in advance of filing the returns. Employers should allow sufficient time for SSR registrations in advance of the filing deadline to complete the additional registration as the process can take 2-3 working days.

APSS, ESOT and SAYE share schemes

In respect of Approved Profit Sharing Scheme (APSS), the trust of the scheme must normally file a Form ESS1 by 31 March following the end of the year in which the shares are allocated, or within 30 days of request by the Revenue.

Similar to last year, the Form ESS1 for 2020 must be filed online. The 2020 filing deadline for ESS1 forms is 31 March 2021. The trust must register for the SSR via ROS, similar to the process for RSS1/KEEP1 forms outlined above. In order to complete this registration, the trust must be registered for income tax.

In relation to Save As you Earn (SAYE) schemes, an employer must file a Form SRSO1 by 31 March of the year following the grant/exercise of the share options, or within 30 days of request by Revenue. The 2020 filing deadline for SRSO1 forms is 31 March 2021.

For Employee Share Ownership Trust (ESOT), the trust must file a Form ESOT1 by 31st March following the end of the year, or within 30 days of request by the Revenue. The 2020 filing deadline for ESOT1 forms is 31 March 2021.

Revenue approval of a share scheme may be withdrawn for failure to comply with the reporting obligations above. Trusts must also file a Form 1 as a declaration of trust income and capital gains.

New Electronic Reporting

Historically the relevant section of legislation included a requirement for all share awards to be reported by 31 March unless the particulars were reportable under any other provision of legislation. Where share awards were reported via payroll employers typically relied on this as satisfying their reporting requirements. Finance Act 2020 extended 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 legislation following the enactment of the Finance Act provides for mandatory electronic reporting of the information in a format prescribed by Revenue.

The Finance Act also 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.

The deadline for filing the electronic return will be 31 March following year end. We understand from Revenue that the electronic return is under development and that it is expected that the 2020 share scheme electronic reporting deadline will be extended to a date after June 2021.

Deloitte’s view

We understand from Revenue that the new electronic form will seek details across all share awards, and awards settled in cash, not falling within the existing RSS1 or approved schemes returns. It would seem excessive to request employers to complete reporting outside of payroll for those awards reported in payroll. If additional details were required in respect of share awards reported via payroll it would seem more intuitive to include such details in the payroll submissions rather than having a separate requirement.

It is not helpful that the requirement is retrospective particularly when the required form has not yet been developed. The reporting will apply for 2020 but was only introduced in Finance Act 2020 which was signed into law in December 2020. It would have been preferable for any new requirements to apply for awards on or after 1 January 2021. There is uncertainty for employers as to what details will be required and when the return will actually be due.

There will, for employers with a range of schemes, be a range of forms to complete which will create complexity in process for these employers.

Employers should focus on their obligations for 31 March 2021 at the earliest opportunity. The Global Employer Services team in Deloitte can assist you with all Revenue reporting obligations for share schemes.