Employment Termination

Table of Contents

TAXES CONSOLIDATION ACT

Chapter 5 Miscellaneous charging provisions (ss. 123-128F)
123.

General tax treatment of payments on retirement or removal from office or employment.

(1)This section shall apply to any payment (not otherwise chargeable to income tax) which is made, whether in pursuance of any legal obligation or not, either directly or indirectly in consideration or in consequence of, or otherwise in connection with, the termination of the holding of an office or employment or any change in its functions or emoluments, including any payment in commutation of annual or periodical payments (whether chargeable to tax or not) which would otherwise have been so made.

(2)Subjct to section 201, income tax shall be charged under Schedule E in respect of any payment to which this section applies made to the holder or past holder of any office or employment, or to his or her executors or administrators, whether made by the person under whom he or she holds or held the office or employment or by any other person.

(3)For the purposes of this section and section 201, any payment made to the spouse, civil partner, or any relative or dependant of a person who holds or has held an office or employment, or made on behalf of or to the order of that person, shall be treated as made to that person, and any valuable consideration other than money shall be treated as a payment of money equal to the value of that consideration at the date when it is given.

(4)Any payment chargeable to tax by virtue of this section shall be treated as income received on the following date –

(a)in the case of a payment in commutation of annual or other periodical payments, the date on which the commutation is effected, and

(b)in the case of any other payment, the date of the termination or change in respect of which the payment is made,

and shall be treated as emoluments of the holder or past holder of the office or employment assessable to income tax under Schedule E.

(5)In the case of the death of any person who if he or she had not died would have been chargeable to tax in respect of any such payment, the tax which would have been so chargeable shall be assessed and charged on his or her executors or administrators, and shall be a debt due from and payable out of his or her estate.

(6)Where any payment chargeable to tax under this section is made to any person in any year of assessment, it shall be the duty of the person by whom that payment is made to deliver particulars of the payment in writing to the inspector not later than 14 days after the end of that year.

124.

Tax treatment of certain severance payments.

(1)This section shall apply to the following payments –

(a)a termination allowance (other than that part of the allowance which comprises a lump sum) payable in accordance with section 5 of the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992, and any regulations made under that section, and

(b)a severance allowance or a special allowance payable in accordance with Part V (inserted by the Oireachtas (Allowances to Members) and Ministerial and Parliamentary Offices (Amendment) Act, 1992) of the Ministerial and Parliamentary Offices Act, 1938.

(2)Notwithstanding any other provision of the Income Tax Acts, payments to which this section applies shall be deemed to be –

(a)profits or gains accruing from an office or employment (and accordingly tax under Schedule E shall be charged on those payments, and tax so chargeable shall be computed under section 112(1)), and

(b)emoluments to which Chapter 4 of Part 42 is applied by section 984.

124A.

Tax treatment of payments made pursuant to an order under section 2B of Employment Permits Act 2003.

(1)Payments made pursuant to an order under section 2B of the Employment Permits Act 2003 shall be regarded as –

(a)profits or gains accruing from an office or employment (and accordingly tax under Schedule E shall be charged on those payments, and tax so chargeable shall be computed under section 112(1)), and

(b)emoluments to which Chapter 4 of Part 42 applies.

125.

Tax treatment of benefits received under permanent health benefit schemes.

(1)In this section –

“benefit” means a payment made to a person under a permanent health benefit scheme in the event of loss or diminution of income in consequence of ill health;

“permanent health benefit scheme” means any scheme, contract, policy or other arrangement, approved by the Revenue Commissioners for the purposes of this section, which provides for periodic payments to an individual in the event of loss or diminution of income in consequence of ill health.

(2)

(a)A policy of permanent health insurance, sickness insurance or other similar insurance issued in respect of an insurance made on or after the 6th day of April, 1986, shall be a permanent health benefit scheme within the meaning of this section if it conforms with a form which, at the time the policy is issued, is either –

(i)a standard form approved by the Revenue Commissioners as a standard form of permanent health benefit scheme, or

(ii)a form varying from a standard form so approved in no other respect than by making such alterations to that standard form as are, at the time the policy is issued, approved by the Revenue Commissioners as being compatible with a permanent health benefit scheme when made to that standard form and satisfying any conditions subject to which the alterations are so approved.

(b)In approving a policy as a standard form of permanent health benefit scheme in pursuance of paragraph (a), the Revenue Commissioners may disregard any provision of the policy which appears to them insignificant.

(3)

(a)Any benefit received by a person under a permanent health benefit scheme, whether as of right or not, shall be deemed to be –

(i)profits or gains arising or accruing from an employment, and

(ii)emoluments within the meaning of Chapter 4 of Part 42.

(b)Tax under Schedule E shall be charged on every person to whom any benefit referred to in paragraph (a) is paid in respect of all such benefits paid to such person, and tax so chargeable shall be computed under section 112(1).

(4)The Revenue Commissioners may nominate any of their officers, including an inspector, to perform any acts and discharge any functions authorised by this section to be performed or discharged by them.

126.

Tax treatment of certain benefits payable under Social Welfare Acts.

(1)In this section –

‘the Acts’ means the Social Welfare Acts;

‘the Act of 2005’ means the Social Welfare Consolidation Act 2005.

(2)

(a)This subsection shall apply to the following benefits payable under the Acts –

(i)widow’s (contributory) pension,

(ii)orphan’s (contributory) allowance,

(iii)retirement pension, and

(iv)old age (contributory) pension.

(b)Payments of benefits to which this subsection applies shall be deemed to be emoluments to which Chapter 4 of Part 42 applies.

(2A)

(a)This subsection shall apply to the following benefits payable on or after 1 July 2013 under the Acts –

(i)maternity benefit,

(ii)adoptive benefit,

(iii)health and safety benefit,

(iv)paternity benefit, and

(v)parent’s benefit.

(b)Amounts to be paid on foot of the benefits to which this subsection applies shall be deemed –

(i)to be profits or gains arising or accruing from an employment (and accordingly tax under Schedule E shall be charged on every person to whom any such benefit is payable in respect of amounts to be paid on foot of such benefits, and tax so chargeable shall be computed under section 112(1)), and

(ii)to be emoluments to which Chapter 4 of Part 42 applies.

(2B)Notwithstanding the provisions of section 112(1), where an increase in the amount of a pension to which section 112, 113, 117 or 157, as the case may be, of the Social Welfare Consolidation Act 2005 applies is paid in respect of a qualified adult (within the meaning of the Acts), that increase shall be treated for all the purposes of the Income Tax Acts as if it arises to and is payable to the beneficiary referred to in those sections of that Act.

(3)

(a)This subsection shall apply to the following benefits payable under the Acts –

(i)illness benefit,

(ii)jobseeker’s benefit,

(iia)jobseeker’s benefit (self-employed),

(iib)the payments, commonly known as the pandemic unemployment payments, made under section 202 of the Act of 2005 on and after 13 March 2020 to the relevant date (within the meaning of section 7 of that Act),

(iic)Covid-19 pandemic unemployment payment (within the meaning of the Act of 2005),

(iii)injury benefit which is comprised in occupational injuries benefit, and

(iv)pay-related benefit.

(b)Amounts to be paid on foot of the benefits to which this subsection applies (other than amounts so payable in respect of a qualified child within the meaning of section 2(3) of the Social Welfare Consolidation Act 2005) shall be deemed –

(ii)except in the case of amounts so payable in respect of jobseeker’s benefit (self-employed), to be emoluments to which Chapter 4 of Part 42 is applied by section 984.

(c)

(i)In this paragraph ‘ short-time employment ‘ has the same meaning as it has for the purposes of the Acts.

(ii)Notwithstanding paragraphs (a) and (b) and the Finance Act 1992 (Commencement of Section 15) (Unemployment Benefit and Pay-Related Benefit) Order 1994 (S.I. No. 19 of 1994), paragraph (b) shall not apply in relation to jobseeker’s benefit or jobseeker’s benefit (self-employed) paid or payable, to a person employed in short-time employment.

(4)

(a)In this subsection, “income tax week” means one of the successive periods of 7 days in a year of assessment beginning on the 1st day of that year, or on any 7th day after that day, and the last day of a year of assessment (or the last 2 days of a year of assessment ending in a leap year) shall be taken as included in the last income tax week of that year of assessment.

(b)Notwithstanding subsection (3), the first €13 of the aggregate of the amounts of jobseeker’s benefit or jobseeker’s benefit (self-employed) payable to a person in respect of one or more days of unemployment comprised in any income tax week (other than an amount so payable in respect of a qualified child within the meaning of section 2(3)(a) of the Social Welfare (Consolidation) Act, 1993) shall be disregarded for the purposes of the Income Tax Acts.

(5)[deleted]

(6)

(a)Subsection (3) shall come into operation on such day or days as may be fixed for that purpose by order or orders of the Minister for Finance, either generally or with reference to any particular benefit to which that subsection applies, or with reference to any category of person in receipt of any particular benefit to which that subsection applies, and different days may be so fixed for different benefits or categories of persons in receipt of benefits.

(b)Where an order is proposed to be made under this subsection, a draft of the order shall be laid before Dáil Éireann, and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann.

(6A)A payment which is –

(a)described in column (1) of the Table to this section,

(b)paid on the basis specified in column (2) of that Table, and

(c)made by the Minister for Employment Affairs and Social Protection to an individual on or after 1 January 2019,

shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.

(6B)A payment which –

(a)is described in column (1) of the Table to this section,

(b)is paid on the basis specified in column (2) of that Table, and

(c)was made by the Minister for Employment Affairs and Social Protection to an individual before 1 January 2019,

shall be treated as if it was exempt from income tax in the year of assessment to which it relates and shall not be reckoned in computing income for the purposes of the Income Tax Acts.

(7)[deleted]

(8)[deleted]

TABLE

Description of payment

Basis on which payment is made

(1)

(2)

Basic supplementary welfare allowance

Section 189 of the Act of 2005

Back to education allowance

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Back to education allowance’

Back to work enterprise allowance

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Back to work enterprise allowance’

Back to school clothing and footwear allowance

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Back to school clothing and footwear allowance’

Carer’s support grant

Section 225 of the Act of 2005

Constant attendance allowance

Section 78 of the Act of 2005

Death benefit – funeral expenses

Section 84 of the Act of 2005

Death benefit – orphans

Section 83 of the Act of 2005

Direct provision allowance

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Direct provision allowance’

Disability allowance

Section 210 of the Act of 2005

Disablement gratuity

Section 75(8) of the Act of 2005

Domiciliary care allowance

Section 186F of the Act of 2005

Exceptional needs payment

Section 201 of the Act of 2005

Farm assist

Section 214 of the Act of 2005

Fuel allowance

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Fuel allowance’

Guardian’s payment (contributory)

Section 130 of the Act of 2005

Guardian’s payment (non-contributory)

Section 168 of the Act of 2005

Household benefit package

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Household benefit package’

Humanitarian assistance payment

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Humanitarian assistance payment’

Jobseeker’s allowance

Section 141 of the Act of 2005

Jobseeker’s transitional payment

Section 148A of the Act of 2005

Medical care

Section 86 of the Act of 2005

Part-time job incentive scheme

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Part-time job incentive scheme’

Rent allowance

Section 23 of the Housing (Private Rented Dwellings) Act 1982

Supplementary welfare allowance

Section 198 of the Act of 2005

Telephone support allowance

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Telephone support allowance’

Training support grant

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Training support grant’

Urgent needs payment (other than the payments referred to in subsection (3)(a)(iib))

Section 202 of the Act of 2005

Widowed or surviving civil partner grant

Section 137 of the Act of 2005

Working family payment

Section 228 of the Act of 2005

Youth employment support scheme

A payment made under a scheme administered by the Minister for Employment Affairs and Social Protection and known as ‘Youth employment support scheme’

127.

Tax treatment of restrictive covenants.

(1)In this section –

“accounting period” means an accounting period determined in accordance with section 27;

“basis period” means the period on the profits or gains of which income tax is to be finally computed under Schedule D or, where by virtue of the Income Tax Acts the profits or gains of any other period are to be taken to be the profits or gains of that period, that other period;

“office or employment” means any office or employment whatever such that the emoluments of that office or employment, if any, are or would be chargeable to income tax under Schedule E or under Case III of Schedule D for any year of assessment;

references to the giving of valuable consideration shall not include references to the mere assumption of an obligation to make over or provide valuable property, rights or advantages, but shall include references to the doing of anything in or towards the discharge of such an obligation.

(2)Where –

(a)an individual who holds, has held or is about to hold an office or employment gives, in connection with the holding of the office or employment, an undertaking (whether absolute or qualified and whether legally valid or not), the tenor or effect of which is to restrict the individual as to his or her conduct or activities,

(b)in respect of the giving of that undertaking by the individual, or of the total or partial fulfilment of that undertaking by the individual, any sum is paid either to the individual or to any other person, and

(c)apart from this section, the sum paid would not be treated as profits or gains from the office or employment,

the sum paid shall be deemed –

(i)to be profits or gains arising or accruing from the office or employment, and accordingly –

(I)in a case where the profits or gains from the office or employment are or would be chargeable to tax under Schedule E, tax under that Schedule shall be charged on that sum, and tax so chargeable shall be computed under section 112(1), or

(II)in a case where the profits or gains from the office or employment are or would be chargeable to tax under Case III of Schedule D, tax under that Case shall be charged on that sum,

and

(ii)in a case within paragraph (i)(I), to be emoluments to which Chapter 4 of Part 42 is applied by section 984,

for the year of assessment in which the sum is paid; but where the individual has died before the payment of the sum this subsection shall apply as if the sum had been paid immediately before the individual’s death.

(3)Where valuable consideration otherwise than in the form of money is given in respect of the giving of, or of the total or partial fulfilment of, any undertaking, subsection (2) shall apply as if a sum had instead been paid equal to the value of that consideration.

(4)Notwithstanding section 81(2), where any sum paid or valuable consideration given by a person carrying on a trade or profession is chargeable to tax in accordance with subsection (2), the sum paid or the value of the consideration given, as the case may be, may be deducted as an expense in computing for the purposes of Schedule D the profits or gains of that person’s trade or profession, as the case may be –

(a)in the case of a person chargeable to income tax, for the basis period, or

(b)in the case of a person chargeable to corporation tax, for the accounting period,

in which the sum is paid or valuable consideration is given.

(5)Where any sum paid or valuable consideration given by an investment company (within the meaning of section 83), or a company to which section 83 applies by virtue of section 707, is chargeable to tax in accordance with subsection (2), the sum paid or the value of consideration given, as the case may be, shall for the purposes of section 83 be treated as an expense of management for the accounting period in which the sum is paid or valuable consideration is given.

(6)This section shall apply in relation to any sum paid or consideration given in respect of the giving of, or the total or partial fulfilment of, any undertaking whenever given.

127A.

Tax treatment of members of the European Parliament.

(1)Notwithstanding any other provision of the Tax Acts, income arising to any individual as a member of the European Parliament and payable out of moneys provided –

(a)by the Oireachtas, shall be chargeable to tax under Schedule E, or

(b)by the budget of the European Union, shall be chargeable to tax under Case III of Schedule D.

(2)Any income tax liability arising in the State in respect of any such income referred to in subsection (1) shall be reduced by the amount of tax, if any, paid for the benefit of the budget of the European Union in respect of such income.

127B. Tax treatment of flight crew in international traffic.
(1)Income arising to any individual, whether resident in the State or not, from any employment exercised aboard an aircraft –

(a)that is operated in international traffic, and

(b)where the aircraft is so operated by an enterprise that has its place of effective management in the State,

shall be chargeable to tax under Schedule E.

(1A)Subsection (1) shall not apply for the year of assessment 2022 or any subsequent year of assessment where, for that year of assessment an individual –

(a)is not resident in the State,

(b)is resident for the purposes of tax, by virtue of the law of the territory next-mentioned in this paragraph, in a territory with the government of which arrangements are for the time being in force by virtue of section 826(1), and

(c)is subject to tax on the income referred to in subsection (1) in a territory with the government of which arrangements are for the time being in force by virtue of section 826(1).

(2)For the purposes of an arrangement to which this section and section 826 applies, ‘international traffic’, in relation to an aircraft, does not include an aircraft operated solely between places in another state.

128.

Tax treatment of directors of companies and employees granted rights to acquire shares or other assets.

(1)

(a)In this section, except where the context otherwise requires –

“branch or agency” has the same meaning as in section 4;

“company” has the same meaning as in section 4;

“director” and “employee” have the meanings respectively assigned to them by section 770(1);

“right” means a right to acquire any asset or assets including shares in any company;

“market value” shall be construed in accordance with section 548;

“shares” includes securities within the meaning of section 135 and stock.

(b)In this section –

(i)references to the release of a right include references to agreeing to the restriction of the exercise of the right;

(ii)a person shall be regarded as acquiring a right as a director of a company or as an employee –

(I)if by reason of the person’s office or employment it is granted to the person, or to another person who assigns the right to the person, and

(II)if section 71(3) does not apply in charging to tax the profits or gains of that office or employment,

and clauses (I) and (II) shall apply to a right granted by reason of a person’s office or employment before the person has commenced to hold it or after the person has ceased to hold it as they would apply if the person had commenced to hold the office or employment or had not ceased to hold the office or employment, as the case may be.

(2)Where a person realises a gain by the exercise of, or by the assignment or release of, a right obtained by the person on or after the 6th day of April, 1986, as a director of a company or employee, the person shall be chargeable to tax under Schedule E for the year of assessment in which the gain is so realised on an amount equal to the amount of his or her gain as computed in accordance with this section and shall be so chargeable notwithstanding that he or she was not resident in the State on the date on which the right was obtained.

(2A)Notwithstanding any other provision of the Tax Acts and subject to subsection (2B), where a person is, by virtue of this section, chargeable to tax under Schedule E for a year of assessment in respect of an amount equal to the gain realised from the exercise, assignment or release of a right, he or she shall be a chargeable person for that year for the purposes of Part 41A, unless –

(a)[deleted]

(b)the person has been exempted by an inspector from the requirements of Chapter 3 of Part 41A by reason of a notice given under section 959N.

(2B)Where a gain is realised by the exercise of, or by the assignment or release of, a right on or after 1 January 2024 and a charge to tax arises under this section, Chapter 4 of Part 42 shall apply in respect of the gain.

(3)Subject to subsection (5), where tax may by virtue of this section become chargeable in respect of any gain which may be realised by the exercise of a right, tax shall not be chargeable under any other provision of the Tax Acts in respect of the receipt of the right.

(4)The gain realised by –

(a)the exercise of any right at any time shall be taken to be the difference between the market value of the asset or assets, as the case may be, at the time of acquisition and the aggregate amount or value of the consideration, if any, given for the asset or assets and for the grant of the right, and

(b)the assignment or release of any right shall be taken to be the difference between the amount or value of the consideration for the assignment or release and the amount or value of the consideration, if any, given for the grant of the right,

and for this purpose the inspector may make a just apportionment of any entire consideration given for the grant of the right or for the grant of the right and for something besides; but neither the consideration given for the grant of the right nor any such entire consideration shall be taken to include the performance of any duties in or in connection with an office or employment, and no part of the amount or value of the consideration given for the grant shall be deducted more than once under this subsection.

(5)

(a)Where a right mentioned in subsection (2) is obtained as mentioned in that subsection and the right is capable of being exercised later than 7 years after it is obtained, subsection (3) shall not prevent the charging of tax under any other provision of the Tax Acts in respect of the receipt of the right; but where tax is charged under such provision it shall be deducted from any tax which under subsection (2) is chargeable by reference to the gain realised by the exercise, assignment or release of the right.

(b)For the purpose of any charge to tax enabled to be made by this subsection, the value of a right shall be taken to be not less than the market value at the time the right is obtained of the asset or assets which may be acquired by the exercise of the right or of any asset or assets for which the asset or assets so acquired may be exchanged, reduced by the amount or value (or, if variable, the least amount or value) of the consideration for which the asset or assets may be so acquired.

(6)

(a)Subject to subsection (7), a person shall, in the case of a right granted by reason of the person’s office or employment, be chargeable to tax under this section in respect of a gain realised by another person –

(i)if the right was granted to that other person,

(ii)if the other person acquired the right otherwise than by or under an assignment made by means of a bargain at arm’s length,

(iii)if the 2 persons are connected persons at the time when the gain is realised, or

(iv)if the person benefits directly or indirectly from the exercise, assignment or release of the right by the other person;

but in a case within subparagraphs (ii), (iii), or (iv), the gain realised shall be treated as reduced by the amount of any gain realised by a previous holder on an assignment of the right.

(b)For the purposes of this subsection, a gain realised by another person shall include a gain realised on the exercise of a right by the person in respect of whose office or employment the right was granted, where that person exercises the right as nominee or bare trustee of the other person, or otherwise on behalf of the other person.

(7)A person shall not be chargeable to tax by virtue of subparagraph (ii) or (iii) of subsection (6)(a) in respect of any gain realised by another person if the first-mentioned person was divested of the right by operation of law on the first-mentioned person’s bankruptcy or otherwise, but the other person shall be chargeable to tax in respect of the gain under Case IV of Schedule D.

(8)

(a)Where a right (referred to in this subsection as the ‘original right’) is assigned or released and the whole or part of the consideration for the assignment or release consists of or comprises another right (referred to in this subsection as the ‘new right’) the new right shall not be treated as consideration for the assignment or release; but this section shall apply in relation to the new right as it applies in relation to the original right and as if the consideration for its acquisition did not include the value of the original right but did include the amount or value of the consideration given for the grant of the original right in so far as that has not been offset by any valuable consideration for the assignment or release other than the consideration consisting of the new right.

(b)The operation of paragraph (a) shall not prevent a charge arising under this section on a gain realised by the exercise of the original right.

(9)

(a)Where as a result of 2 or more transactions a person ceases to hold a right and the person or a connected person comes to hold another right (whether or not acquired from the person to whom the other right was assigned) and any of those transactions was effected under arrangements to which 2 or more persons holding rights in respect of which tax may be chargeable under this section were parties, those transactions shall be treated for the purposes of subsection (8) as a single transaction whereby the one right is assigned for a consideration which consists of or comprises the other right.

(b)This subsection shall apply in relation to 2 or more transactions, whether they involve an assignment preceding, coinciding with, or subsequent to, an acquisition.

(10)Where a gain chargeable to tax under subsection (2) or (6) is realised by the exercise of a right, section 552 shall apply as if a sum equal to the amount of the gain so chargeable to tax formed part of the consideration given by the person acquiring the shares for their acquisition by that person.

(11)Where in any year of assessment a person grants a right in respect of which tax may be chargeable under this section, or allots any shares or transfers any asset in pursuance of such a right, or gives any consideration for the assignment or release in whole or in part of such a right, or receives written notice of the assignment of such a right, the person shall deliver particulars thereof to the Revenue Commissioners, in an electronic format approved by them, not later than 31 March in the year of assessment following that year.

(12)Where in relation to any right –

(a)the person referred to in subsection (11) is not resident in the State, and

(b)the person who obtains the right is a director or employee of a company which is either –

(i)resident in the State, or

(ii)not resident in the State but carries on a trade, profession or vocation in the State through a branch or agency in which the director or employee is employed,

subsection (11) shall, as regards a company referred to in paragraph (b)(i) apply to the company, and, as regards a company referred to in paragraph (b)(ii) apply to its agent, manager, factor or other representative.

128A.

Deferral of payment of tax under section 128.

(1)Subject to subsection (2), in any case where –

(a)for any year of assessment a person is chargeable to tax under Schedule E, by virtue of section 128, on an amount equal to a gain realised by the exercise of a right to acquire shares in a company (‘the relevant shares’), which right was exercised in the period from 6 April 2000 to the date of the passing of the Finance Act 2003, and

(b)following an assessment for the year in which that right was exercised (‘the relevant year’) an amount of tax, chargeable by virtue of section 128 in respect of the amount referred to in paragraph (a), is payable to the Collector-General, and

(c)the person concerned makes an election in accordance with subsection (3),

he or she shall be entitled to defer payment of the tax in accordance with subsection (4).

(2)Subsection (1) shall not apply where the relevant shares are disposed of by the person concerned in the relevant year.

(3)An election under this section shall be made by notice in writing to the inspector on or before –

(a)where the relevant year is the year of assessment 2000-2001, 31 January 2002, and

(b)where the relevant year is the year of assessment 2001 or any subsequent year of assessment, 31 October in the year of assessment following the relevant year.

(4)Where an election has been made under this section the tax referred to in subsection (1)(b) shall notwithstanding any other provision of the Income Tax Acts, but subject to the provisions of this section, be paid on or before the earlier of –

(a)31 October in the year of assessment following the year of assessment in which the relevant shares are disposed of, or

(b)31 October in the year of assessment following the year of assessment beginning 7 years after the relevant year.

(4A)

(a)Notwithstanding subsection (4), where an election has been made in accordance with subsection (3) and

(i)relevant shares are disposed of (in this subparagraph referred to as the ‘first-mentioned disposal’), and

(I)but for this subparagraph, tax would be payable, by reference to the first-mentioned disposal, in accordance with subsection (4)(a), and

(II)the market value of those shares at the date of the first-mentioned disposal is less than the tax chargeable under section 128, by reference to the exercise of an option to acquire those shares,

then an amount, being an amount equal to that market value, shall be due and payable to the Collector-General within 30 days after the date of the first-mentioned disposal or, if later, on or before 30 June 2003, and the balance of the tax chargeable remaining unpaid after that payment shall be payable in the event of, and by reference to, disposals of any shares in a company in a year of assessment, in accordance with paragraph (d), being disposals after the date of the first-mentioned disposal, or

(ii)relevant shares are held at 31 December in the year of assessment beginning 7 years after the relevant year (in this subparagraph referred to as the ‘first-mentioned date’), and

(I)but for this subparagraph, tax would be payable in accordance with subsection (4)(b), and

(II)the market value of the relevant shares is, at the first-mentioned date, less than the tax chargeable under section 128, by reference to the exercise of an option to acquire those shares,

then an amount, being an amount equal to that market value, shall be due and payable to the Collector-General within 30 days after the date of the first-mentioned date and the balance of the tax chargeable remaining unpaid after that payment shall be payable in the event of, and by reference to, disposals of any shares in a company in a year of assessment, in accordance with paragraph (d), being disposals after the first-mentioned date.

(b)Where a person who is entitled to make an election in accordance with subsection (3), after 6 February 2003 and on or before 31 October in the year of assessment following the relevant year in respect of relevant shares, does not do so, or tax chargeable under section 128, in respect of any gain realised by the exercise before 6 February 2003 of a right to acquire shares, is due after 6 February 2003 but on or before 31 October in the year of assessment following the relevant year, and the market value of the shares on –

(i)that 31 October, or

(ii)where the shares are disposed of before that date, the date of the disposal (referred to in this paragraph as the ‘first-mentioned disposal’) of the shares,

is less than the tax chargeable under section 128, then an amount, being an amount equal to that market value, shall be due and payable to the Collector-General within 30 days after the said 31 October, and the balance of the tax chargeable remaining unpaid after that payment shall be payable in the event of, and by reference to, disposals of any shares in a company in a year of assessment, in accordance with paragraph (d), being disposals after the said 31 October or the date of the first-mentioned disposal of the shares, as the case may be.

(c)In all cases other than those referred to in paragraph (a) or (b), where tax is chargeable under section 128 on an amount equal to a gain realised by the exercise, at any time before 6 February 2003, of a right to acquire shares in a company, and the market value of the shares on –

(i)that date, or

(ii)where the shares are disposed of before that date, the date of the disposal of the shares,

is less than the tax chargeable under section 128, then an amount, being an amount equal to that market value, shall be due and payable to the Collector-General on or before 30 June 2003, and the balance of the tax chargeable remaining unpaid after that payment shall be payable in the event of, and by reference to, disposals of any shares in a company in a year of assessment, in accordance with paragraph (d), being disposals after 6 February 2003.

(d)

(i)A payment that is to be made in the event of, and by reference to, disposals of any shares in a year of assessment shall be a payment which is the lesser of –

(I)the aggregate of the balances of unpaid tax referred to in paragraphs (a), (b) and (c), as reduced by tax payable in accordance with this paragraph by reference to disposals of shares in a previous year of assessment, and

(II)half of the aggregate of the net gains (if any) arising in respect of disposals of shares in the year of assessment.

(ii)For the purposes of subparagraph (i)(II), the net gain arising in relation to a disposal of shares shall be the market value at the date of disposal of those shares reduced by so much of the aggregate of –

(I)the amount of the consideration, if any, given for the shares (including, where relevant, the grant of a right to acquire the shares),

(II)

(A)where this subsection does not apply to the payment of income tax chargeable under section 128 by reference to the acquisition of the shares, the amount of the income tax so chargeable, or

(B)where this subsection does apply to the payment of income tax chargeable under section 128 by reference to the acquisition of the shares, the total amount paid, before the date of the disposal, in respect of that income tax,

and

(III)capital gains tax chargeable by reference to the disposal of the shares, as does not exceed that market value.

(iii)For the purposes of subparagraph (ii), the income tax or capital gains tax, as the case may be, so chargeable shall be the amount by which the income tax or capital gains tax, as the case may be, chargeable on the taxpayer for the year of assessment would have been reduced if the acquisition or disposal of the shares, as the case may be, had not taken place.

(iv)Payments referred to in paragraph (d)(i) which are to be made by reference to disposals of shares shall be due and payable to the Collector-General on or before 31 October in the year following the year of assessment in which the disposal of those shares takes place.

(e)

(i)A taxpayer who wishes to be entitled to avail of the provisions of this subsection shall so elect, by giving notice in writing to the inspector, on or before 1 June 2003 in a form prescribed or authorised by the Revenue Commissioners, and the notice shall contain details of –

(I)the date of exercise of the option,

(II)the number of shares acquired by exercise of the option,

(III)the market value of the shares at date of exercise of that option, and

(IV)such further particulars for the purposes of this subsection as may be required or indicated by the Revenue Commissioners.

(ii)The inspector or such other officer as the Revenue Commissioners shall appoint in that behalf may admit a late election under subparagraph (i) in circumstances where he or she is satisfied that the delay in making the election was due to absence, illness or other reasonable cause.

(f)In any case where, at any time, the requirements of this subsection have not been fully complied with, any amount of tax chargeable under section 128 which is unpaid shall be due and payable as if this subsection had not been enacted.

(g)Any tax chargeable under section 128 which is due and payable in accordance with subsection (4) or this subsection, which remains unpaid at the date of death of the chargeable person, shall be discharged by the Revenue Commissioners.

(h)Any amount paid before 6 February 2003 in respect of tax chargeable under section 128 shall not be repaid by reference to any provision of this subsection.

(i)The reference in paragraph (d) to the disposal of shares includes a reference to the disposal of shares by the spouse or civil partner of the person chargeable –

(I)in a case where section 1017 or 1031C, as the case may be, applies,

(II)in a case where section 1017 or 1031C, as the case may be, does not apply, but the disposal –

(A)is a disposal by the spouse subsequent to a transfer, on or after 25 February 2003, of the shares from the other spouse, except where the spouses are separated in the circumstances referred to in paragraph (a) or (b) of section 1015(2), or their marriage has been dissolved under either section 5 of the Family Law (Divorce) Act 1996, or the law of a country or jurisdiction other than the State, being a dissolution that is entitled to be recognised as valid in the State, or

(B)is a disposal by a civil partner subsequent to a transfer of the shares from his or her civil partner, except where the civil partnership has been dissolved either under section 110 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010, or the law of a country or jurisdiction other than the State, being a dissolution that is entitled to be recognised as valid in the State.

(j)A person shall not, at any time, be entitled to avail of the provisions of this subsection where, at that time, he or she has not paid, or agreed an arrangement acceptable to the Collector-General for the payment of, tax due and payable which is chargeable under section 128 in respect of the exercise of a right to acquire shares to which this subsection does not apply.

(k)In this subsection –

‘market value’ shall be construed in accordance with section 548;

‘shares’ includes securities within the meaning of section 135 and stock.

(4B)In any case where the provisions of subsection (4A) apply, the amount by which the market value of the shares at the time of acquisition exceeds the market value at the date of disposal of those shares, or any part of that amount, shall not be an allowable loss for the purposes of the Capital Gains Tax Acts until such time as the tax liability of the person under section 128 has been paid in full to the Collector-General.

(5)The reference in subsections (4)(a) and (4A) to the relevant shares being disposed of includes a part disposal of such shares, and in the case of a part disposal, the tax to bepaid shall be determined in a manner that is just and reasonable.

(6)Subject to any other provision of the Income Tax Acts requiring income of any description to be treated as the highest part of a person’s income, in determining for the purposes of paragraph (b) of subsection (1) what tax is chargeable on a person by virtue of section 128 in respect of an amount referred to in paragraph (a) of that subsection, that amount shall be treated as the highest part of his or her income for the relevant year.

(7)Notwithstanding any other provision of the Income Tax Acts, the due date in relation to tax, the payment of which has been deferred by virtue of an election under this section, shall, for the purposes of section 1080, be the date when the amount becomes due and payable under subsections (4) and (4A) but notwithstanding any provisions of subsection (4A) that subsection shall have no effect as respects the payment of any tax in relation to a gain realised by the exercise on or after 6 February 2003 of a right to acquire shares.

128B.

Payment of tax under section 128.

(1)This section applies where, by virtue of section 128, a person (in this section referred to as a ‘taxable person’) is chargeable to tax under Schedule E for a year of assessment on an amount equal to the gain realised by the exercise, on or after 30 June 2003 and before 1 January 2024, of a right to acquire shares (in this section referred to as ‘relevant shares’) in a company.

(2)Where this section applies for a year of assessment, the taxable person shall pay an amount of tax (in this section referred to as ‘relevant tax’) in respect of the gain realised by the exercise of the right to acquire relevant shares, and that amount of tax shall be determined by the formula –

A × B

where –

Ais the amount of that gain computed in accordance with section 128(4), and

Bis the percentage which is equal to the higher rate in force for the year of assessment in which the taxable person exercises the right to acquire the relevant shares.

(3)Relevant tax shall be due and payable to the Collector-General within 30 days after the exercise of the right to acquire the relevant shares, and shall be so due and payable without the making of an assessment, but relevant tax which has become so due and payable may be assessed on the taxable person (whether or not it has been paid when the assessment is made) if the tax or any part of it is not paid on or before the due date.

(4)Each payment of relevant tax shall be accompanied by a return containing, in relation to the taxable person by whom the payment is made, details of the amount of the gain referred to in subsection (1) and of the relevant tax due in respect of that gain and such other particulars as may be required by the return.

(5)Every return under this section shall be in a form prescribed or authorised by the Revenue Commissioners, and shall include a declaration to the effect that the return is correct and complete.

(6)The Collector-General shall give the taxable person a receipt for the amount of relevant tax paid by the taxable person.

(7)Where it appears to an officer of the Revenue Commissioners that there is any amount of relevant tax which ought to have been but has not been included in a return under subsection (4), or where such officer is dissatisfied with any such return, such officer may make an assessment on the taxable person concerned to the best of such officer’s judgement, and any amount of relevant tax due under an assessment made by virtue of this subsection shall be treated for the purposes of interest on unpaid tax as having been payable at the time specified in subsection (3).

(8)Where any item has been incorrectly included in a return under subsection (4) as a gain in respect of which relevant tax is required to be paid, an officer of the Revenue Commissioners may make such assessments, adjustments or set-offs as may in his or her judgement be required for securing that the resulting liability to relevant tax, including interest on unpaid tax, of the taxable person is, in so far as possible, the same as it would have been if the item had not been so included.

(9)

(a)The provisions of the Income Tax Acts relating to –

(i)assessments to income tax, and

(ii)the collection and recovery of income tax,

shall, in so far as they are applicable, apply to the assessment, collection and recovery of relevant tax.

(b)Any amount of relevant tax payable in accordance with this section without the making of an assessment shall carry interest at the rate of 0.0219 per cent for each day or part of a day from the date when the amount becomes due and payable until payment.

(c)Subsections (3) and (5) of section 1080 shall apply in relation to interest payable under paragraph (b) as they apply in relation to interest payable under that section.

(d)In its application to any relevant tax charged by any assessment made in accordance with this section, section 1080 shall apply as if subsection (2)(b) of that section were deleted.

(9A)A person aggrieved by an assessment made on that person under this section may appeal the assessment to the Appeal Commissioners, in accordance with section 949I, within the period of 30 days after the date of the notification of the assessment.

(10)Where a taxable person has paid relevant tax in respect of a gain realised by the exercise, in any year of assessment, of a right to acquire relevant shares, the taxable person may claim to have that relevant tax set against the income tax chargeable on the taxable person for that year of assessment and, where that relevant tax exceeds such income tax, to have the excess refunded to the taxable person.

(11)Relevant tax payable by a taxable person in respect of a gain realised by the exercise, in any year of assessment, of a right to acquire relevant shares shall not be regarded as a payment of, or on account of, preliminary tax for the purposes of Chapter 7 of Part 41A.

(12)Relevant tax payable by a taxable person in respect of a gain realised by the exercise, in any year of assessment, of a right to acquire relevant shares –

(a)shall not, for the purpose of section 959AN(2), form part of the income tax which in the opinion of the taxable person is likely to become payable by that person for that year of assessment, and

(b)[deleted]

(c)shall not, for the purposes of section 959AO(3), be regarded as income tax payable by the taxable person for that year of assessment.

(13)Notwithstanding any other provision of this section, any gain realised by the exercise, in any year of assessment, of a right to acquire relevant shares and in respect of which relevant tax is payable by a taxable person shall be included in the return required to be delivered by that person under section 959I.

(14)Where, on an application in writing having been made to them in that behalf, the Revenue Commissioners are satisfied that an individual is likely to be chargeable to income tax for a year of assessment at the standard rate only, the reference in the meaning of B in subsection (2) to the higher rate shall be construed for the purposes of the payment or payments required to be made by the individual for that year in accordance with subsection (2), as a reference to the standard rate.

128C.

Tax treatment of directors and employees who acquire convertible securities.

(1)In this section –

‘chargeable amount’ has the same meaning as it has in subsection (6), computed in accordance with subsection (8);

‘chargeable event’ has the meaning given in subsection (7);

‘collective investment scheme’ means any scheme or arrangement made for the purpose, or having the effect, of providing facilities for the participation by persons, as beneficiaries, in profits or income arising from the acquisition, holding, management or disposals of assets;

‘convertible securities’ shall be construed in accordance with subsection (4);

‘director’ and ’employee’ have the meanings respectively assigned to them by section 770(1);

‘interest’, in relation to securities, includes an interest in securities which is less than full beneficial ownership and an interest in the proceeds of the sale of them, but does not include a right to acquire securities;

‘market value’ shall be construed in accordance with section 548;

‘securities’ includes –

(a)shares,

(b)securities within the meaning of section 135,

(c)debentures, debenture stock, loan stock, bonds, certificates of deposit, and other instruments (including certificates and warrants) creating or acknowledging indebtedness, including certificates and other instruments providing for a share in the profits of a company,

(d)options (other than options to acquire securities, except where such options are acquired under arrangements of which the main purpose or one of the main purposes is the avoidance of income tax, corporation tax or capital gains tax) and financial and commodity futures (within the meaning of the Investment Intermediaries Act 1995),

(e)warrants and other instruments entitling their holders to subscribe for securities,

(f)certificates and other instruments conferring rights in respect of securities held by persons other than persons on whom the rights are conferred and the transfer of which may be effected without the consent of those persons, and

(g)units in a collective investment scheme,

but does not include cheques or other bills of exchange, bankers’ drafts or letters of credit, statements showing balances in current, deposit or savings accounts, or leases and other dispositions of property;

‘shares’ includes securities (within the meaning of section 135) and stock.

(2)References in this section to an employee or director acquiring securities in a company as a director or employee of that company or of another company, includes references to securities acquired by any other person by reason of the director’s or employee’s office or employment, and for this purpose ’employment’ includes a former or prospective employment, and ‘office’ includes a former or prospective office.

(3)This section applies where –

(a)an employee or director acquires securities in a company as a director or employee of that company or of another company (in this section referred to as ’employment-related securities’), and

(b)at the time of acquisition, the securities are convertible securities or an interest in convertible securities.

(4)For the purposes of this section securities are convertible securities if –

(a)they confer on the holder an entitlement (whether immediate or deferred and whether conditional or unconditional) to convert them –

(i)into securities of a different description, or

(ii)into money or money’s worth,

(b)a contract, agreement, arrangement or condition –

(i)authorises or requires the grant of such an entitlement as is referred to in paragraph (a) to the holder if certain circumstances arise or do not arise, or

(ii)provides for the conversion of the securities, otherwise than by the holder, into securities of a different description or into money or money’s worth.

(5)

(a)For the purposes of –

(i)any charge to income tax under Schedule E and computed in accordance with section 112 or 128 on the acquisition of the employment-related securities, or

(ii)the operation of section 122A,

the market value of the employment-related securities shall be determined as if they were not convertible securities.

(b)Paragraph (a) does not apply if the employment-related securities are acquired under arrangements of which the main purpose or one of the main purposes is the avoidance of income tax, corporation tax or capital gains tax, unless the market value of the employment-related securities determined in accordance with paragraph (a) is greater than that determined under paragraph (c).

(c)Where paragraph (a) does not apply, the market value of the employment-related securities shall be determined –

(i)in the case of securities that fall within subsection (4)(a)(i) and the entitlement to convert is not both immediate and unconditional, as if it were both immediate and unconditional,

(ii)in the case of securities that fall within subsection (4)(b)(i), as if the circumstances are such that an entitlement to convert arises immediately,

(iii)in the case of securities that fall within paragraph (a)(ii) or (b)(ii) of subsection (4), as if provision were made for their immediate conversion,

and in each case, as if they were immediately and fully convertible.

(d)For the purposes of paragraph (c) ‘immediately and fully convertible’ means convertible immediately after the acquisition of the employment-related securities so as to obtain the maximum gain that would be possible on a conversion at such time without giving any consideration for the conversion or incurring any expenses in connection with it.

(6)Subject to subsection (11), where, at a time when an employee or director (or any other person who acquired the employment-related securities by reason of the director’s or employee’s office or employment) has a beneficial interest in employment-related securities, a chargeable event occurs, then the employee or director shall be chargeable to income tax under Schedule E, in the year in which the chargeable event occurs, on an amount (referred to in this section as the ‘chargeable amount’) computed in accordance with subsection (8).

(7)A ‘chargeable event’ means –

(a)the conversion of the employment-related securities (or the securities in which they are an interest) into securities of a different description in circumstances in which the employee or director (or any other person who acquired the employment-related securities by reason of the director’s or employee’s office or employment) is beneficially entitled to the securities into which the employment-related securities are converted,

(b)the release for consideration of the entitlement to convert the employment-related securities (or the securities in which they are an interest) into securities of a different description,

(c)the disposal for consideration of the employment-related securities or any interest in them by the director or employee (or by any other person who acquired the employment-related securities by reason of the director’s or employee’s office or employment), at a time when such securities are still convertible securities, or

(d)the receipt by the employee or director (or by any other person who acquired the employment-related securities by reason of the director’s or employee’s office or employment) of a benefit in money or money’s worth in connection with the entitlement to convert (other than securities acquired on the conversion of the employment-related securities or consideration referred to in paragraphs (b) and (c)).

(8)

(a)For the purposes of subsection (6), the chargeable amount is to be determined by the formula –

A – B

where –

Ais the amount of any gain realised on the occurrence of a chargeable event, and

Bis the total of any consideration given for the entitlement to convert the employment-related securities and the amount of any expenditure incurred by the holder of the employment-related securities in connection with the conversion, disposal, release of the entitlement to convert, or receipt of a benefit in connection with the entitlement to convert the employment-related securities, as the case may be.

(b)The amount of the gain realised on the occurrence of a chargeable event is –

(i)in the case of an event to which subsection (7)(a) applies, to be determined by the formula –

C – (D + E)

where –

Cis the market value at the time of the chargeable event of the securities into which the employment-related securities are converted and where those securities are themselves convertible, the market value is to be determined as if they were not convertible; and where the employment-related securities are an interest in securities, then C is the same proportion of that market value as the market value of the interest in the securities in which the employment-related securities are an interest bears to the market value of those securities,

Dis the market value of the employment-related securities at the time of the chargeable event, determined as if they were not convertible securities or an interest in convertible securities, and

Eis the amount of the consideration given for the conversion of the employment-related securities,

(ii)in the case of a chargeable event to which subsection (7)(b) applies, the amount of the consideration received in respect of the release,

(iii)in the case of a chargeable event to which subsection (7)(c) applies, to be determined by the formula –

F – G

where –

Fis the amount of consideration given on disposal of the employment-related securities, and

Gis the market value of the employment-related securities at the time of the chargeable event, determined as if they were not convertible securities or an interest in convertible shares,

(iv)in the case of an event to which subsection (7)(d) applies, the amount or market value of the benefit received, as the case may be.

(c)If, because of paragraph (b) of subsection (5), paragraph (a) of that subsection did not apply in relation to employment-related securities, the chargeable amount is to be reduced by the amount determined by the formula –

H – I

where –

His the amount by which the market value of the employment-related securities for the purposes specified in paragraph (a) of subsection (5), exceeded what it would have been had that paragraph applied, and

Iis the aggregate of any amount by which the chargeable amount on any previous chargeable event relating to the employment-related securities has been reduced under this subsection.

(9)

(a)For the purposes of calculating B in the formula in subsection (8)(a), consideration is to be treated as given for the entitlement to convert the employment-related securities only if the amount of any consideration given for the acquisition of the employment-related securities exceeds the market value of such securities (determined as if the employment-related securities were not convertible securities) at the time of their acquisition.

(b)Where the consideration is in excess of the market value, the amount of such excess shall be treated as the amount of consideration given for the entitlement to convert the employment-related securities.

(10)For the purposes of this section, any consideration given for the acquisition of employment-related securities and any consideration given for the entitlement to convert shall not be taken to include the performance of any duties in or in connection with the office or employment, and no part of the amount or value of the consideration shall be deducted more than once.

(11)

(a)This section does not apply in relation to employment-related securities, where –

(i)the employment-related securities are shares in a company of a class,

(ii)all the company’s shares of the class are convertible securities,

(iii)all the company’s shares of the class are affected by an event similar to that which is a chargeable event in relation to the employment-related securities, and

(iv)immediately before the event that would, but for the provisions of this subsection, be a chargeable event, the majority of the company’s shares of the class are not employment-related securities,

or,

(b)if, at the time of the acquisition of the employment-related securities, the emoluments from the office or employment are not within the charge to tax under Schedule E or Schedule D.

(12)For the purposes of subsection (11)(a)(iii), shares are affected by an event similar to that which is a chargeable event in relation to employment-related securities, if –

(a)in the case of a chargeable event to which subsection (7)(a) applies, they are converted into securities of a different class,

(b)in the case of a chargeable event to which subsection (7)(b) applies, the entitlement to convert them into securities of a different description is released,

(c)in the case of a chargeable event to which subsection (7)(c) applies, they are disposed of,

(d)in the case of a chargeable event to which subsection (7)(d) applies, a similar benefit is received in respect of the entitlement to convert them.

(13)Notwithstanding any other provision of the Tax Acts, where a person is, by virtue of this section, chargeable to tax under Schedule E for a year of assessment in respect of a chargeable amount computed in accordance with subsection (8), then he or she shall be a chargeable person for that year for the purposes of Part 41A, unless the person has been exempted by an officer of the Revenue Commissioners from the requirement of Chapter 3 of Part 41A by reason of a notice given under section 959N.

(14)Where a person is charged to tax under this section on a chargeable amount computed in accordance with subsection (8), then section 552 shall apply as if a sum equal to the amount so charged formed part of the consideration given by the person acquiring securities for their acquisition by that person.

(15)Where in any year –

(a)a person awards employment-related securities to an employee or director (or to any other person by reason of the director’s or employee’s office or employment) to which this section applies, or

(b)a chargeable event occurs in relation to employment-related securities so awarded,

then the person shall deliver to the Revenue Commissioners in an electronic format approved by them on or before 31 March in the year following the year in which the award was made or the chargeable event occurred, as the case may be, particulars of the awards or the chargeable event, as the case may be.

128D.

Tax treatment of directors of companies and employees who acquire restricted shares.

(1)In this section –

‘director’ and ’employee’ have the meanings, respectively, given to them by section 770(1);

‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by all subsequent amendments to that Agreement;

‘EEA state’ means a state, other than the State, which is a Contracting Party to the EEA Agreement;

’employer’ means the company in which the director or employee holds his or her office or employment;

‘market value’ shall be construed in accordance with section 548;

‘restricted shares’ shall be construed in accordance with subsection (3);

‘shares’ includes stock;

‘specified period’ has the same meaning as in subsection (3)(a);

‘trust’ means a trust established in the State or in an EEA state or in the United Kingdom and the trustees of which are resident in the State or in an EEA state or in the United Kingdom.

(2)Subject to subsection (7), this section applies where –

(a)a director or employee acquires shares (including shares acquired on the exercise of a right to which section 128 applies) in a company as a director or employee of that company or of another company,

(b)the shares are shares in the company in which the director or employee holds his or her office or employment or in a company which has control (within the meaning of section 432) of that company, and

(c)at the time of acquisition, the shares are restricted shares.

(3)For the purposes of this section, shares are restricted shares if –

(a)there is a written contract or agreement in place under the terms of which there is a restriction on the freedom of the director or employee by whom the shares are held to assign, charge, pledge as security for a loan or other debt, transfer, or otherwise dispose of the shares for a period of not less than one year (in this section referred to as the ‘specified period’),

(b)the contract or agreement is in place for bona fide commercial purposes and does not form part of a scheme or arrangement of which the main purpose or one of the main purposes is the avoidance of tax,

(c)the shares cannot be assigned, charged, pledged as security for a loan or other debt, transferred, or otherwise disposed of in any circumstances during the specified period, other than –

(i)on the death of the director or employee, or

(ii)as a consequence of the director or employee agreeing to –

(I)accept an offer for the shares (in this clause referred to as the ‘original shares’) if the acceptance or agreement would result in a new holding (within the meaning of section 584) being equated with the original shares for the purposes of capital gains tax,

(II)a transaction affecting the shares or such of the shares as are of a particular class if the transaction would be entered into pursuant to a compromise, arrangement or scheme applicable to or affecting all the ordinary share capital of the company in question or, as the case may be, all the shares of the same class as the shares acquired by the director or employee, or

(III)accept an offer of cash, with or without other assets, for the shares if the offer forms part of a general offer made to holders of shares of the same class as the shares acquired by the director or employee or of shares in the same company and made in the first instance on a condition such that if it is satisfied the person making the offer will have control (within the meaning of section 432) of that company,

and

(d)during the specified period, the shares are held in a trust established by the employer for the benefit of employees and directors, or held under such other arrangements as the Revenue Commissioners may allow.

(4)Where this section applies –

(a)any amount chargeable to income tax under Schedule E (and computed in accordance with section 112 or 128, as the case may be), or under Schedule D, on the acquisition of the shares, shall be reduced by an amount determined by the formula –

where –

Ais the amount of the income chargeable to tax under Schedule E or Schedule D, as the case may be, and

Bis –

(i)where the specified period is one year, 10,

(ii)where the specified period is 2 years, 20,

(iii)where the specified period is 3 years, 30,

(iv)where the specified period is 4 years, 40,

(v)where the specified period is 5 years, 50,

(vi)where the specified period is more than 5 years, 60,

(b)the amount chargeable to income tax referred to in paragraph (a) shall be computed by reference to the market value of the shares at the date of acquisition but without regard to the restriction on the freedom of the director or employee by whom the shares are held to assign, charge, pledge as security for a loan or other debt, transfer, or otherwise dispose of the shares.

(5)Where an amount chargeable to income tax under Schedule E or Schedule D on the acquisition of shares by a director or employee is reduced in accordance with subsection (4), and –

(a)the restriction on the freedom of the director or employee to assign, charge, pledge as security for a loan or other debt, transfer, or otherwise dispose of the shares acquired by him or her is subsequently removed or varied, or

(b)the shares are disposed of in any of the circumstances mentioned in subparagraphs (i) and (ii) of subsection (3)(c) before the specified period expires,

then, notwithstanding any limitation in the Income Tax Acts on the time within which assessments may be made, the amount chargeable to income tax on the acquisition of the shares shall be adjusted to take account of the actual period during which there was a restriction on the freedom of the director or employee to assign, charge, pledge as security for a loan or other debt, transfer or otherwise dispose of the shares. The adjustment of liability to tax as may be necessary for the purposes of this subsection shall be made at any time, whether by means of an assessment, an amended assessment or otherwise.

(6)Where this section applies and an amount chargeable to income tax on the acquisition of shares by a director or employee is, for the purposes of section 552, to be treated as forming part of the consideration given by the director or employee for the acquisition of the shares, then the amount chargeable to income tax to be so treated shall be the amount as reduced in accordance with subsection (4), together with any additional amount charged as a consequence of an adjustment made in accordance with subsection (5).

(7)This section does not apply to shares acquired by a director or employee under the terms of a scheme approved of by the Revenue Commissioners under Schedule 11, 12, 12A or 12C.

(8)Where in any year –

(a)a person awards restricted shares to a director or employee, or

(b)an event that comes within paragraph (a) or (b) of subsection (5) occurs in relation to restricted shares awarded,

then the person shall deliver to the Revenue Commissioners in an electronic format approved by them on or before 31 March in the year of assessment following the year in which the award was made or the event occurred, as the case may be, particulars of the award or the event, as the case may be.

(9)For the purposes of subsection (8), a person shall be deemed to award restricted shares to a director or employee where the director or employee acquires the restricted shares on the exercise of a right to which section 128 applies, and the right was granted to the director or employee by the person.

128E.

Tax treatment of directors of companies and employees who acquire forfeitable shares.

(1)In this section –

‘director’ and ’employee’ have the meanings, respectively, given to them by section 770(1);

‘market value’ shall be construed in accordance with section 548;

‘forfeitable shares’ shall be construed in accordance with subsection (3);

‘shares’ includes stock.

(2)This section applies where –

(b)at the time of acquisition, the shares are forfeitable shares.

(3)Subject to subsection (4), for the purposes of this section, shares are forfeitable shares if –

(a)there is a written contract or agreement in place under the terms of which –

(i)there will be a forfeiture of the shares, if certain circumstances arise or do not arise,

(ii)as a result of the forfeiture, the director or employee will cease to have any beneficial interest in the shares, and

(iii)the director or employee will not be entitled to receive, directly or indirectly, consideration in money or money’s worth in respect of the shares on their forfeiture in excess of the consideration given by the director or the employee for the acquisition of the shares,

and,

(4)Shares shall not be forfeitable shares by reason only that the shares are unpaid or partly paid shares which may be forfeited for non-payment of calls.

(5)Where this section applies, any charge to income tax under Schedule E (and computed in accordance with section 112 or 128, as the case may be), or under Schedule D, on the acquisition of the shares, shall be computed by reference to the market value of the shares at the date of acquisition but without regard to provision in a contract or agreement referred to in subsection (3) for the forfeiture of the shares.

(6)If under the terms of a contract or agreement referred to in subsection (3) the shares are forfeited, then –

(a)the director or employee shall, for the purposes of income tax, income levy and universal social charge, be treated, for the year of assessment in which the shares were acquired, as if he or she did not acquire the shares, and

(b)such adjustment shall be made by repayment or otherwise as the case may require, on receipt of a claim from the director or employee, which shall be made within 4 years from the end of the year of assessment in which the shares are forfeited.

(7)Subsection (6) applies notwithstanding any limitation in section 865(4) on the time within which a claim for a repayment of tax is required to be made. Section 865(6) does not prevent the Revenue Commissioners from repaying an amount of tax as a consequence of any adjustment made in accordance with subsection (6).

(8)Notwithstanding section 546(2), where subsection (6) of this section applies, the amount of a loss accruing on the forfeiture of the shares shall not exceed the amount of consideration given by the director or employee for the acquisition of the shares less any amount received by the director or employee on the forfeiture of the shares.

(9)Where in any year –

(a)a person awards forfeitable shares to a director or employee, or

(b)shares awarded to a director or employee are forfeited,

then the person shall deliver to the Revenue Commissioners in an electronic format approved by them on or before 31 March in the year of assessment following the year in which the award was made or the shares were forfeited, as the case may be, particulars of the award or the forfeiture, as the case may be.

128F.

Key Employee Engagement Programme.

(1)In this section –

‘connected persons’ shall be construed in accordance with section 10;

‘control’ shall be construed in accordance with section 432;

‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by all subsequent amendments to that Agreement;

‘EEA state’ means a state which is a contracting party to the EEA Agreement;

’emoluments’ has the same meaning as in section 983;

‘excluded activities’ means –

(a)adventures or concerns in the nature of trade,

(b)dealing in commodities or futures in shares, securities or other financial assets,

(c)financial activities,

(d)professional services companies,

(e)dealing in or developing land,

(f)building and construction,

(g)forestry, and

(h)operations carried out in the coal industry or in the steel and shipbuilding sectors;

‘financial activities’ has the same meaning as in section 489;

‘market value’ shall be construed in accordance with section 548;

‘option price’ means a predetermined price at which an employee or director can purchase a share at some time in the future;

‘ordinary shares’ means shares forming part of a company’s ordinary share capital;

‘professional services’ means –

(a)services of a medical, dental, optical, aural or veterinary nature,

(b)services of an architectural, quantity surveying or surveying nature, and related services,

(c)services of accountancy, auditing, taxation or finance,

(d)services of a solicitor or barrister and other legal services, and

(e)geological services;

‘qualifying company’ means, subject to subsection (10), a company that –

(a)is incorporated in the State, or in an EEA state other than the State or in the United Kingdom, and is resident in the State, or is resident in an EEA state other than the State or in the United Kingdom and carries on business in the State through a branch or agency,

(b)exists wholly or mainly for the purpose of carrying on a qualifying trade on a commercial basis with a view to the realisation of profit, the profits or gains of which are charged to tax under Case I of Schedule D,

(c)throughout the entirety of any relevant period –

(i)is an unquoted company none of whose shares, stock or debentures are listed in the official list of a stock exchange, or quoted on an unlisted securities market of a stock exchange other than –

(I)on the market known as the Euronext Growth market operated by the Irish Stock Exchange plc trading as Euronext Dublin, or

(II)on any similar or corresponding market of the stock exchange –

(A)in a territory other than the State with the government of which arrangements having the force of law by virtue of section 826(1) have been made, or

(B)in an EEA state other than the State or in the United Kingdom,

and

(ii)is not regarded as a company in difficulty for the purposes of the Commission Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty ,

and

(d)at the date of grant of the qualifying share option –

(i)is a micro, small or medium sized enterprise within the meaning of the Annex to Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium sized enterprises, and

(ii)the total market value of the issued but unexercised qualifying share options of the company does not exceed €6,000,000;

‘qualifying individual’ , in relation to a qualifying share option, means an individual who throughout the entirety of the relevant period is –

(a)in the case of a qualifying group, an employee or director of a qualifying company within the group, and who is required to work at least 20 hours per week for such a qualifying company or to devote not less than 75 per cent of his or her working time to such a qualifying company, and

(b)in the case of a qualifying company not being a member of a qualifying group, an employee or director of the qualifying company, and who is required to work at least 20 hours per week for the qualifying company or to devote not less than 75 per cent of his or her working time to the qualifying company;

‘qualifying share option’, means a right granted to an employee or director of a qualifying company to purchase a predetermined number of shares in the qualifying company or, in the case of a qualifying group, in the qualifying holding company of the qualifying group, at a predetermined price, by reason of the individual’s employment or office in the qualifying company, where –

(a)the shares which may be acquired by the exercise of the share option are ordinary fully paid up shares in the qualifying company or, in the case of a qualifying group, in the qualifying holding company,

(b)the option price at date of grant is not less than the market value of the same class of shares at that time,

(c)there is a written contract or agreement in place specifying –

(i)the number and description of the shares which may be acquired by the exercise of the share option,

(ii)the option price, and

(iii)the period during which the share options may be exercised,

(d)the total market value of all shares, in respect of which qualifying share options have been granted in the qualifying company or, in the qualifying holding company, to an employee or director does not exceed –

(i)€100,000 in any year of assessment,

(ii)€300,000 in all years of assessment, or

(iii)the amount of annual emoluments of the qualifying individual in the year of assessment in which the qualifying share option is granted,

(e)the share option is exercised by the qualifying individual in the relevant period,

(f)the shares are in a qualifying company or, in the case of a qualifying group, in the qualifying holding company, and

(g)the share option cannot be exercised more than 10 years from the date of grant of that option;

‘qualifying trade’ means trading activities other than excluded activities;

‘qualifying group’ means, subject to subsection (2A), a group of companies that consists of the following (and no other companies):

(a)a qualifying holding company;

(b)its qualifying subsidiary or subsidiaries;

(c)as the case may be, its relevant subsidiary or subsidiaries;

‘qualifying holding company’ means a company –

(a)which is not controlled either directly or indirectly by another company,

(b)which does not carry on a trade or trades, and

(c)whose business consists wholly or mainly of the holding of shares only in the following (and no other companies), namely, its qualifying subsidiary or subsidiaries and where it has a relevant subsidiary or subsidiaries, in that subsidiary or in each of them;

‘qualifying subsidiary’, in relation to a qualifying holding company, means a company in respect of which more than 50 per cent of its ordinary share capital is owned directly by the qualifying holding company;

‘relevant period’ means a period of not less than 12 months beginning on the date a qualifying share option is granted to an employee or director of the qualifying company and ending on the date the share option is exercised by the qualifying individual;

‘relevant subsidiary’, in relation to the qualifying holding company, means a company in respect of which more than 50 per cent of its ordinary share capital is owned indirectly by the qualifying holding company, but for the purposes of this section a relevant subsidiary in relation to a qualifying holding company shall not be regarded as a qualifying company.

(2)For the purposes of this section –

(a)an individual shall not be a qualifying individual if his or her employment or office is not capable of lasting at least 12 months from the date on which the qualifying share option is granted,

(b)an individual shall cease to be a qualifying individual if he or she, together with any connected persons, acquire beneficial ownership of, or the ability to control, directly or indirectly, or through the medium of a connected company or connected companies or by any other indirect means, more than 15 per cent of the ordinary share capital of the qualifying company or, in the case of a qualifying group, of the qualifying holding company, and

(c)where a qualifying individual is permitted to exercise a qualifying share option despite having ceased to be an employee or director of a qualifying company, the individual shall be deemed to satisfy the requirements as set out in the definition of ‘qualifying individual’ in subsection (1) in respect of the period the individual is not employed by a qualifying company, where the individual exercises the option within 90 days of the individual ceasing to hold the employment or office concerned with the qualifying company.

(2A)For the purposes of this section, a group of companies shall be treated as a qualifying group only where –

(a)throughout the entirety of the relevant period –

(i)there is at least one qualifying company in the group which is a qualifying subsidiary,

(ii)the activities of the qualifying group, excluding the qualifying holding company, consist wholly or mainly of the carrying on of a qualifying trade,

(iii)each company in the qualifying group is an unquoted company none of whose shares, stock or debentures are listed on the official list of a stock exchange, or quoted on an unlisted securities market of a stock exchange, other than on –

(I)the market known as the Euronext Growth market operated by the Irish Stock Exchange plc trading as Euronext Dublin, or

(II)any similar or corresponding market of the stock exchange in –

(A)a territory, other than the State, with the government of which arrangements having the force of law by virtue of section 826(1) have been made, or

(B)an EEA state other than the State,

and

(iv)each company in the qualifying group is not regarded as a company in difficulty for the purposes of the Commission Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty ,

and

(b)at the date of grant of the qualifying share option –

(i)the qualifying group is a micro, small or medium-sized enterprise within the meaning of the Annex to Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises, and

(ii)the total market value of the issued, but unexercised, qualifying share options of the qualifying holding company does not exceed €6,000,000.

(3)Any gain realised on the exercise of a qualifying share option granted on or after 1 January 2018 and before 1 January 2026 shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.

(4)[deleted]

(5)A period of less than 12 months shall be deemed to be a relevant period where, following the grant of a share option, during that period –

(a)a transaction is entered into pursuant to a compromise, arrangement or scheme applicable to or affecting all the ordinary share capital of the qualifying company or, in the case of a qualifying group, of the qualifying holding company,

(b)a transaction takes place that forms part of a general offer made to holders of shares of the same class as the shares acquired by the director or employee or of shares in the same company or, in the case of a qualifying group, in the qualifying holding company and made in the first instance on a condition such that if it is satisfied the person making the offer will have control of that company or, in the case of a qualifying group, in the qualifying holding company, or

(c)the qualifying company allows an issued but unexercised qualifying share option to transfer to an individual’s estate on their death, where –

(i)the qualifying share option is exercised within 12 months of the individual’s death,

(ii)the deceased would have satisfied the requirements set out in the definition of ‘qualifying individual’ in subsection (1) up to the date of his or her death, and

(iii)throughout the relevant period, the company is a qualifying company or, in the case of a qualifying group, the holding company is a qualifying holding company.

(6)Notwithstanding section 547(1)(a), the qualifying individual shall be deemed for the purposes of the Capital Gains Tax Acts to have acquired the shares, acquired by the exercise of the qualifying share option, for a consideration equal to the amount paid for their acquisition.

(6A)Where –

(a)shares in a company are acquired on foot of a qualifying share option granted on or after 1 January 2018 and before 1 January 2026,

(b)those shares are subsequently redeemed, repaid or purchased by the company, and

(c)subsection (1) of section 176 would apply in respect of the payment made by the company on the redemption, repayment or purchase of those shares, but for paragraph (a)(i)(I) of that subsection not being satisfied,

subsection (1) of section 176 shall be deemed to apply in respect of the payment, notwithstanding that paragraph (a)(i)(I) of that subsection is not satisfied.

(7)Where in any year of assessment a qualifying company grants a qualifying share option under this section, allots any shares or transfers any asset in pursuance of such a right, or gives any consideration for the assignment or release in whole or in part of such a right, or receives notice of the assignment of such a right, the qualifying company shall deliver particulars thereof to the Revenue Commissioners, in a format approved by them, not later than 31 March in the year of assessment following that year.

(7A)Where in any year of assessment a company within a qualifying group grants a qualifying share option under this section, allots any shares or transfers any asset in pursuance of such a right, or gives any consideration for the assignment or release in whole or in part of such a right, or receives notice of the assignment of such a right, a qualifying company designated by the qualifying group shall deliver particulars thereof on behalf of the qualifying group to the Revenue Commissioners, in a format approved by them, not later than 31 March in the year of assessment following that year.

(8)The Revenue Commissioners may publish the following information in relation to all qualifying companies, or, as the case may be, qualifying groups:

(a)the name of the company or, in the case of a qualifying group, of each member of it (and a subsequent reference in this subsection to a ‘company’ shall, as appropriate, in the case of a qualifying group be construed as including a reference to each such member);

(b)the address of the company;

(c)the Companies Registration Office number of the company;

(d)the date of exercise of the qualifying share options;

(e)the amount of the tax advantage granted under this section;

(f)in respect of the principal activity carried on by the company, the NACE classification code, as determined in accordance with Regulation (EC) No. 1893/2006 of the European Parliament and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No. 3037/90 as well as certain EC Regulations on specific statistical domains;

(g)the territorial unit, within the meaning of the NUTS Level 2 classification specified in Annex 1 to Regulation (EC) No. 1059/2003 of the European Parliament and of the Council of 26 May 2003 amended by Regulation (EC) No. 1888/2005 of the European Parliament and of the Council of 26 October 2005 , Commission Regulation (EC) No. 105/2007 of 1 February 2007 , Regulation (EC) No. 176/2008 of the European Parliament and of the Council of 20 February 2008 , Regulation (EC) No. 1137/2008 of the European Parliament and of the Council of 22 October 2008 , Commission Regulation (EU) No. 31/2011 of 17 January 2011, Council Regulation (EU) No. 517/2013 of 13 May 2013 , Commission Regulation (EU) No. 1319/2013 of 9 December 2013 , Commission Regulation (EU) No. 868/2014 of 8 August 2014 and Commission Regulation (EU) No. 2066/2016 of 21 November 2016 , in which the company is located.

(9)No obligation as to secrecy imposed by section 851A shall preclude the Revenue Commissioners from publishing information obtained by them under this section.

(10)A company or group shall not be regarded as a qualifying company or, as the case may be, a qualifying group for the purposes of this section where the company, or in the case of a qualifying group, the company designated for the purposes of subsection (7A), fails to comply with subsection (7) or (7A), as the case may be.

(11)This section shall not apply unless the qualifying share option is granted for bona fide commercial reasons, the main purpose of which is to recruit or retain employees in a qualifying company and is not part of a scheme or arrangement the main purpose, or one of the main purposes, of which is the avoidance of tax.

(12)Where this section applies relief under Part 16 shall not apply.

Employment Termination

TAXES CONSOLIDATION ACT

General tax treatment of payments on retirement or removal from office or employment.

Tax treatment of certain severance payments.

Tax treatment of payments made pursuant to an order under section 2B of Employment Permits Act 2003.

Tax treatment of benefits received under permanent health benefit schemes.

Tax treatment of certain benefits payable under Social Welfare Acts.

Tax treatment of restrictive covenants.

Tax treatment of members of the European Parliament.

Tax treatment of directors of companies and employees granted rights to acquire shares or other assets.

Deferral of payment of tax under section 128.

Payment of tax under section 128.

Tax treatment of directors and employees who acquire convertible securities.

Tax treatment of directors of companies and employees who acquire restricted shares.

Tax treatment of directors of companies and employees who acquire forfeitable shares.

Key Employee Engagement Programme.

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