PRSI to apply to company share option plans
Company employees receiving share-based remuneration will have to pay PRSI on the benefit from next January after the government yesterday clarified a rule introduced in March that aimed to make such payment schemes less financially onerous for employers.
In March this year, Finance Minister Michael Noonan said that a PRSI charge on share-based remuneration would not apply where the remuneration was being paid under an employer-employee agreement signed before January 1, 2011.
However, yesterday Social Protection Minister Joan Burton said that Mr Noonan had now clarified the measure and that employees would be liable for the PRSI charge from next year. The only exemption will be in relation to shares already held on behalf of an employee in an employee share ownership trust before January 1, 2011.
"This will ensure equity between pre-January 2011 written agreements, which awarded shares on a one-off basis and those of a multi-annual or ongoing nature," said Ms Burton.
Employers will continue to be exempt from paying PRSI related to share-based pay awarded to employees and have been told to stop deducting and remitting such payments with immediate effect.
Employers will also be refunded PRSI that may already have been paid during the current tax year in relation to employee share-based pay.
Legislative measures giving effect to the changes will be included in the next social welfare bill.