The important 31 March mandatory due date is looming in Ireland for the filing of 2021 returns of information for employee share participation schemes, and certain cash-settled schemes.1
WHY THIS MATTERS
The filing deadline is quickly drawing near and collating all the information needed to complete the returns within this timeframe may be challenging.
The deadline is particularly important for companies whose employees and directors have been awarded shares, vested restricted stock units, participated in unapproved share options schemes, key employee engagement programme (KEEP) options, or certain Revenue-approved share participation schemes.
Companies should have appropriate processes in place to collect, organise, distil, and report the necessary information.
The following returns are in electronic format:
- Form RSS1 – Details of the grant, release, assignment, and exercise of unapproved share options awarded to directors and employees.
- Form ESA – The level of detail required to be completed on the form is extremely broad. The form covers all share awards including those that are “cash-settled” as well as incentive cash payments whose value has been processed through Irish payroll but is based upon a notional share value, e.g., phantom shares. Please refer to our previous alerts (GMS Flash Alert 2021-188 (30 June 2021)) for more information on what share awards will fall within the scope and outside the scope of this form.
- Form ESS1 – Details of certain events and transactions on shares held by an Irish Revenue Approved Profit Sharing Scheme (APSS) trust.
- Form KEEP 1 – Details of Key Employee Engagement Programme share options which are granted to employees and directors of certain small - and medium-size enterprises.
Failure to comply with this mandatory filing obligation can result in a monetary penalty. In the case of Revenue-approved schemes (such as approved profit-sharing schemes, employee share ownership trusts, and “save as you earn” share option schemes), Revenue approval of the scheme can be withdrawn, and for KEEP share option schemes, the company would no longer be considered as a qualifying company.
Mechanics of Reporting
The electronic Forms ESA, ESS1, KEEP1, and RSS1, are in a spreadsheet format which must be uploaded on the Revenue Online System (ROS). Only registered ROS users may access and upload returns. Additional time should be factored in by employers if they need to obtain a Share Scheme Registration number (“SSR”) and make sure that their tax adviser (if filing the return on their behalf) is linked as their tax agent with Revenue, in order to help ensure the forms are filed on time.
Filing in Paper Forms SRSO1, ESOT1
A separate 31 March 2022 mandatory filing requirement also applies to the following Revenue-approved share participation schemes:
- Form SRSO1 for “save as you earn” share options.
- Form ESOT1 for employee share ownership trust transactions.
These filings continue to be in paper form.
Employers should consider the following:
- Reviewing current share plans and cash-based incentive arrangements to help ensure that the taxation and reporting position are fully understood – this may also be an opportunity to consider whether the current arrangements remain fit for purpose.
- Identifying the stakeholders that will be responsible for providing the information needed.
- Documenting the processes and procedures relating to securing the information including, where possible, automation.
- Assessing the reporting obligations in relation to domestic directors and employees and globally-mobile employees.
- Preparing an employee communication regarding the information that will be disclosed to Ireland’s Revenue.
If you have any queries in relation to the above or if would like any assistance in relation to preparation and completion of the forms, or implementing appropriate procedures, as well as issuing employee communications, please contact your qualified tax adviser or a member of the Global Mobility Services/People Services team or Reward Advisory Services team with KPMG in Ireland (see the Contact Us section below).
1 See Revenue’s webpage “Shares for employees” for further details.
The information contained in this newsletter was submitted by the KPMG International member firm in Ireland.
GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
© 2022 KPMG, an Irish partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.