New Legislation Affecting Irish Social Tax Liability for Equity Awards

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On 1 May 2012, the Irish Parliament passed further legislation (the Social Welfare and Pensions Act 2012) amending the social insurance treatment for stock options, stock purchase rights, restricted stock units and other share-based remuneration in Ireland.

The previous legislation required employers to withhold employee Pay-Related Social Insurance (PRSI) contributions as part of the employer's normal payroll withholding unless the shares subject to the stock options were held in an Employee Share Ownership Trust prior to 1 January 2011. The new legislation now provides that employers are no longer required to withhold employee PRSI contributions from any gains realized upon the exercise of options. Instead, the employees must pay and report the PRSI contributions due at exercise to the Department of Social Protection's Special Collections Unit. The amendment will become effective once the amended regulations are published and a commencement order is issued. The date of the publication of the regulations is unknown but is expected to occur in the next month.