Irish Share Plan expert, Seán Quill discusses the three most tax efficient share plans in the Irish market: APSS, Clog Schemes and SAYE Schemes. Topics covered: • Why these are amongst the most popular schemes in Ireland • Trends in the market • Real-life examples • Tax treatment • T&Cs • Approvals and documentation required

1. TAX EFFECTIVE SHARE PLANS
IN IRELAND
Seán Quill,
Managing Director Ireland
Aisling Riordan,
Marketing Manager

2. Welcome to Global Shares Webinar

3. EMPLOYEE SHARE PLANS
MOST COMMON PLANS OFFERED TO EMPLOYEES IN IRELAND
3
APPROVED
PROFIT SHARING
SCHEMES
Revenue approved, all
employee plans
CLIENT 1
RESTRICTED
SHARE SCHEMES
“Clog” Schemes
SAYE
SCHEMES
Revenue approved, all
employee plans
SHARE
OPTIONS
RESTRICTED
STOCK
UNITS
SHARE AWARD /
PERFORMANCE
SHARES

4. 4
APPROVED PROFIT SHARING SCHEMES
4

5. APPROVED PROFIT SHARING SCHEME (“APSS”)
5
Executive Summary
• Employees are given a right to convert a cash bonus into shares
• They may also salary forego
• Free of income tax
• Revenue maximum €12,700 p.a.
• Shares must be held in trust
• Minimum 3 years
• Shares cannot be sold, transferred or used as a charge for 2 years
• If sold or transferred before three years – claw-back of income tax charge
• Trustees have a legal ownership of the shares – employees beneficial ownership
• Shares cannot be taken away from participant
• Entitled to any dividends declared in respect of their shares
• Contributory scheme (“BOGOF”)

6. APPROVED PROFIT SHARING SCHEME (“APSS”)
No income tax on the appropriation of the shares
Value of shares appropriated subject to PRSI (@4%) and USC (max 8%)
Capital Gains Tax (@33%) on gain on disposal – annual exemption available
WHAT IS THE EMPLOYEE TAXATION TREATMENT
6
Example
Jason invests €3,000 (€2,000 bonus and €1,000 salary foregoing).
Marginal income tax 40% PRSI rate 4%, USC rate 8%
After 3 years, Jason sells his shares for €4,500
€ €
Value on date of appropriation 3,000 Sale proceeds 4,500
Taxable amount 3,000 Less: Base cost 3,000
Income tax NIL Capital Gain 1,500
PRSI @ 4% 120 Less CGT exemption* (1,270)
USC @ 8% (max) 240 Chargeable gain 230
Effective tax rate 12% CGT @ 33% 76
Assume Trustees hold shares for three years Assuming annual CGT exemption not used against other gains

7. APPROVED PROFIT SHARING SCHEME (“APSS”) (CONT.)
7
Example
Jason’s Cash value Jason’s Shares value
€ €
Bonus 3,000 Sale proceeds 4,500
Income Tax @ 40% (1,200) Less: PRSI + USC (360)
PRSI @ 4% (120) Less Capital Gain (76)
USC @ 8% (max) (240) Net Cash received 4,064
Net Cash received 1,440

8. APPROVED PROFIT SHARING SCHEME (“APSS”)
8
Employers taxation
• Saving of 10.75% as against cash bonus
• Scheme can be cost neutral / result in cost savings
• Cost of establishing and running an APSS deductible for corporation
tax purposes
APSS has taxation benefits for both the employer and the
employee compared with a cash bonus
• No employers PRSI on value of shares appropriated

9. APSS – TERMS AND CONDITIONS
9
All employee basis
• This can exclude those on probation
Similar terms
• All employees and full time directors must be offered participation in the Scheme
• Eligibility requirement – can include service for up to 3 years
• All employees must be allowed participate on similar terms
• Salary
• Service
• Performance related – corporate or personal
• Sales commission
• Combination
Shares to be purchased
• Ordinary shares in quoted company or top company

10. APSS APPROVAL AND CONSIDERATIONS
10
Approvals required
• Private company considerations
Selection of Trustees and Administrators
• Shareholders
• Parent Company
• Must complete Company Secretary Declaration
• Buying shares on stock market for public company
• Irish Revenue Commissioners
• No shares can be allocated before formal Revenue approval granted

11. DOCUMENTS REQUIRED BY REVENUE FOR APSS SCHEME
APPROVAL
11
1. Executed Trust Deed and Rules
2. An agreed Basis of Entitlement (i.e. Bonus for use in the Scheme)
3. Copies of all documents that will be issued to participants in the
Scheme
4. Minutes of the meeting at which the Directors approved the
introduction of the Scheme
5. A Declaration by the Company Secretary of the Company whose shares
are to be used for the purpose of the Scheme that the Scheme complies
with the legislation
6. Memorandum and Articles of Association of the company whose shares
are being acquired
7. Income tax and corporation tax reference number(s) for all companies
adhering to the Scheme
8. For Private company
• Valuation of shares
• Copy of the shareholders agreement (if one exists)

12. RESTRICTED SHARE SCHEMES (“CLOG”)
12

13. RESTRICTED SHARE SCHEME (“CLOG”)
13
Executive Summary
• Share award subject to a restriction (Clog) on sale or transfer for a pre-determined
period
• Company must offer shares i.e. employee cannot have the choice of shares or cash
• Clog period must be determined by Company
• Does not require Revenue approval
• Governed by S128D, TCA 1997
• Participants can be selected
• Most usually offered to senior executives and key employees
• Restriction or Clog can significantly reduce taxable value of the shares awarded
• Shares usually held in Trust

14. CLOG PERIOD AND ABATEMENT
14
Restricted Period Abatement
%
1 year 10
2 years 20
3 years 30
4 years 40
5 years 50
5 years + 60

15. CLOG SCHEME – EMPLOYEE TAXATION
15
Employees are liable to income tax, PRSI and the USC on the
value of the shares acquired less any abatement
Effective tax rate can be reduced from 52% to 20.8%
CGT on ultimate disposal of shares
CGT base cost:
• Abated amount where shares are purchased on the market
• Unabated amount where shares are newly issued shares

16. CLOG SCHEME – EMPLOYEE TAXATION
16
Example
Marginal income tax 40% PRSI rate 4%,USC rate 8% After 5 years and 1 month, Mary sells her shares for €6,500
€ €
Value on date of appropriation 5,000 Sale proceeds 6,500
Subscription price Nil Less: Base cost* 2,000
Gain 5,000 Capital Gain 4,500
Abatement 60% 3,000 Less CGT exemption* (1,270)
Taxable amount 2,000 Chargeable gain 3,230
Income tax @ 40% 800 CGT @ 33% 1,066
PRSI @ 4% 80
USC @ 8% 160
Effective tax rate 20.8%
*Assuming shares purchased on the market annual and CGT exemption
not used against other gains
What is the employment taxation treatment
Mary is granted “Restricted Shares worth €5,000 with a restriction on the sale of the shares for 5 years and 1 month
Capital Gains Tax (@33%) on gain on disposal

17. CLOG SCHEME – EMPLOYEE TAXATION (CONT.)
17
Mary’s Net Proceeds €
Sale Proceeds 6,500
Less income tax, PRSI and USC (1,040)
Less CGT (1,066)
Net Proceeds 4,394

18. CLOG SCHEME – EMPLOYER TAXATION
18
Employers taxation
Clog Schemes have taxation benefits for both the employer and the
employee compared with a cash bonus
• No employers PRSI on value of shares appropriated
• Savings of 10.75% as against cash bonus
• Scheme can be cost neutral / result in cost savings
• Cost of establishing and running a Clog Scheme deductible for
corporation tax purposes

19. CLOG SCHEME – CONSIDERATIONS
19
Companies can impose restrictions on:
Restrictions can align with shareholder and regulatory requirements
for executive remuneration:
• Share Awards
• Vesting of performance shares
• Vesting of an RSU
• Exercise of a share option
• Certain proportion of variable remuneration in shares
• Align executives with shareholders
• Deferred periods and holding periods
• Forfeiture provisions for leavers, performance conditions and malus
and clawback
Shares are locked in - restriction cannot be broken apart from death
or corporate restructure

20. CLOG SCHEME – REQUIREMENTS
20
Shareholder approval
If you choose a Trust – appointing Trustee and Administrator
• Quoted companies – Normally shares purchased on the market
• Private Companies
Although no Revenue approval is required the Scheme must meet
conditions set out in legislation
Private company considerations
• Valuations​
• Market​
• Leavers – memorandum and articles / shareholders agreement

21. CLOG SCHEME – INTERNATIONAL ASPECTS
21
Moving to or leaving Ireland
Align with Global Restricted Share Plan
Possible mismatch of timing of taxable events
CGT implications
• Can remain subject to CGT even if left Ireland
• Are shares specified Irish assets if non Irish domiciled

22. 22
SAYE SCHEMES
22

23. SAVE AS YOU EARN SCHEME (“SAYE”)
23
Executive Summary
• Under an SAYE Scheme:
• An employee agrees to save for a fixed amount out of net income for a
predetermined period i.e. 3, 5 or 7 years; and
• At the same time the company will grant the employee options based on the
amount the participant has agreed to save
• The savings must be held with a qualified saving carrier i.e. a bank
• At the end of a savings period the participant has the choice to:
• Use the proceeds of the savings contract to buy the shares covered by the option
• Take the proceeds as a lump sum
• The aim of an SAYE Scheme is to help the participant to exercise options
without having to borrow

24. SAVE AS YOU EARN SCHEME (“SAYE”)
24
The benefits to employees
• As with any share option the benefit to the employee is that
they only have to pay the option price for the shares even if
the share price has increased
• There is no income tax on any gain arising on the exercise of
an SAYE option
• However the gain is liable to PRSI and the USC
• Any PRSI and USC due is collected through the payroll system
• If the option is not in the money (underwater) at the end of
the savings period, the participant can take their savings as a
lump sum and their options will lapse

25. SAVE AS YOU EARN SCHEME (“SAYE”)
25
Implications for the Employer
• Any costs associated with establishing and administering the Scheme
are allowable for corporation tax purposes
• However, the cost of funding the options is not allowable
• There is no employers PRSI on the gain arising on the exercise of the
SAYE options

26. SAYE – TERMS AND CONDITIONS
26
All employee basis
Similar terms
• All employees and full time directors must be offered participation in the
Scheme
• Eligibility requirement – can include service for up to 3 years
• This can exclude those on probation
• Part-time and temporary employees (who meet the eligibility criteria) must be
allowed participate
• All employees must be allowed participate on similar terms
• Saving between €12 per month and €500 per month
Shares to be purchased
• Ordinary shares in quoted company or top company

27. SAYE – APPROVAL AND CONSIDERATIONS
27
Approvals required
Selection of Administrators
• Shareholders
• Private company considerations
• Parent Company
• Must complete Company Secretary Declaration
• Irish Revenue Commissioners
• No options can be granted before formal Revenue approval granted

28. DOCUMENTS REQUIRED BY REVENUE FOR SAYE SCHEME
APPROVAL
28
1. A certified copy of the Scheme Rules
2. Copies of all documents that will be issued to participants in the Scheme
3. Minutes of the meeting at which the Directors approved the introduction of
the Scheme
4. A Declaration by the Company Secretary of the Company whose shares are to
be used for the purpose of the Scheme that the Scheme complies with the
legislation
5. A copy of the Memorandum and Articles of Association of the company whose
shares are being used for the purposes of the Scheme
6. Income tax and corporation tax reference number(s) for all companies adhering
to the Scheme

29. DOCUMENTS REQUIRED BY REVENUE FOR SAYE SCHEME
APPROVAL (CONT.)
29
7. For Private company
• Valuation of shares
• A copy of the shareholder agreement (if one exists)
8. A copy of save-as-you-earn certified contractual savings scheme Application
Form together with a copy of the letter of certification issued by the Revenue
Commissioners approving the savings institutions save-as-you-earn certified
contractual savings scheme
9. The name and address of the person who will be responsible for submitting the
annual Return of Information

30. SAYE EXAMPLE
30
1. Jane elects to saves €100 per month for a three-year’s period at a time when the market value of the
shares is €10.00 and the company offers a 25% discount (i.e. €7.50)
2. There is no bonus applied to the three-year savings scheme.
3. Jane will be granted options over 480 shares (i.e., total savings €3,600 / €7.50)
4. If when the options vest in three years’ time the share price per share is €6.00 – Jane should not
exercise her options as her options are underwater, but should elect to take a refund of her savings.
• As the savings were from after tax income there is no further income tax, PRSI or USC to
pay on the savings.
5. If when the options vest in three years’ time the share price per share is €12.00. Jane should exercise
her options as she can buy shares worth €12.00 for an option price of €7.50
6. Assuming Jane exercises her options when the market value of the shares was €12.00 and
subsequently sells her shares when the shares are worth €14.00.

31. SAYE EXAMPLE (CONT.)
31
GAIN ON EXERCISE Market value as at date of exercise €12.00 x 480 €5,760
Option price €7.50 x 480 €3,600
Income Tax NIL
Gain on exercise €2,160
PRSI @ 4% €2,160 @ 4% €86
USC @ 8% (max) €2,160 @ 8% €173
GAIN ON DISPOSAL Sale proceeds 480 @ €14 €6,720
Cost (i.e. option price paid) 480 @ €7.50 €3,600
Capital gain €3,120

32. SAYE EXAMPLE (CONT.)
32
TAX ON DISPOSAL Capital gain €3,120
Annual GCT exemption* €1,270
Taxable gain €1,850
Capital gains tax @ 33% €611
Sale Proceeds €6,720NET GAIN ON SAYE
Cost of Options €3,600
PRSI & USC on gain on exercise €259
Capital gains tax @ 33% €611
Net gain on SAYE Scheme €2,250

33. Share Plans in Ireland
33
SUMMARY
• Highly developed
• Tax efficient for employer and employee
• Can be cost effective
• Designed around each company’s unique requirements

34. THANK YOU!
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squill@globalshares.com
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