Share Based Remuneration - PRSI Class Variance
SHARE AWARDS - THE CHARGE TO PRSI
Remuneration in the form of shares in companies other than that in which the employee holds his or her office or employment, or in a company which has control of that company, has been within the PAYE system since 2004 and remains fully chargeable to both employee and employer PRSI.
Remuneration in the form of shares in the company in which the employee holds his or her office or employment, or in a company which has control of that company, all such share-based remuneration is chargeable to Employee PRSI but NOT to Employer PRSI.
AMOUNT CHARGEABLE TO PRSI
The receipt of shares by an employee is treated as a prerequisite for income tax purposes and the rules that apply to the taxation of notional pay also apply for Employee PRSI purposes. Refer to Revenue guide to Benefit in Kind for further information on the related taxation rules and to what it applies.
RECORDING OF PRSI
As Share Based Remuneration is derived from insurable employment, it should be recorded under the PRSI Class applying to the employee at the time he or she receives the shares (if subject to vesting, the time of vesting) or exercises the share options, as the case may be, even if any benefit or gain accrues to the individual after he or she has left the particular employment.
Because the amount that is chargeable to PRSI is different for employees and employers it may attract different PRSI subclasses.
Where this occurs the return must always be made at the employee's subclass.
If a Class A employee has weekly pay of €350 and, in a particular week, has a derived benefit from the issue of shares of €450.
Employee PRSI is calculated on income of €800 - Subclass A1.
Employer PRSI is calculated on income of €350 - Subclass AO.
Employer and employee PRSI should be added together as normal.
Share Based Remuneration: Varying PRSI Subclasses between the employee and employer
PAYMENT OF PRSI
The obligation to deduct and remit PRSI in respect of Share Based Remuneration generally rests with the employer. Accordingly the PRSI payable should be deducted by the employer through payroll along with other PRSI liabilities and remitted to the Collector General with the monthly P30 return.
Further information on Share Based Remuneration can be found in our Knowledgebase article.