Benefits
Employee shares: how ESPPs, RSUs and sell-to-cover are taxed
Last updated 16 October 2026
A share purchase plan discount and RSUs at vesting are taxed as pay, with income tax, USC and PRSI. A later sale falls under Capital Gains Tax.
Shares from your employer are taxed twice, at two different times. When you get them, the value you receive is taxed as pay, through payroll. When you sell them, any rise in value since then is a capital gain, which you report and pay yourself.
Employee share purchase plans (ESPPs)
An ESPP, common in Irish branches of US companies, lets you buy shares through deductions from your take-home pay, usually over six months. The price is typically 85% of the share price on the first or last day of the period, whichever is lower. The discount you get is taxed as pay: the market value on the purchase date, less what you paid. Your employer deducts income tax, USC and PRSI through payroll.
For an employee on €80,000 in 2026 who contributes €5,100, when the share price is €50 at the start and €60 at the end:
| 120 shares bought at €42.50 (85% of €50) | €5,100.00 |
| Discount taxed as pay: 120 × (€60 − €42.50) | €2,100.00 |
| Income tax, USC and PRSI on the discount | €1,096.79 |
Your base cost for Capital Gains Tax (CGT) is the market value at purchase, €60 a share, not the price you paid. So the discount is not taxed again. Some plans are written as share options; since 1 January 2024, options are also taxed through payroll.
Restricted stock units (RSUs)
An RSU is a promise of shares once you meet a condition, usually staying a set time. Nothing is taxed when they are granted. When they vest, their full market value that day is taxed as pay. RSUs that vest while you are Irish resident are taxed in full, even if you were abroad for part of the vesting period.
Sell-to-cover
The tax on RSUs is due through payroll, but you receive shares, not cash. So most plans sell enough of the vested shares straight away to pay it. That is sell-to-cover. For the same employee, 200 RSUs vesting at €100:
| Value at vesting, taxed as pay | €20,000.00 |
| Income tax, USC and PRSI | €10,447.34 |
| Shares sold to cover it (at €100, rounded up) | €10,500.00 |
| Shares you keep: 95 | €9,500.00 |
The shares sold to cover the tax are a disposal for CGT too. They are sold at about the vesting price, so the gain on them is usually small or nil. Your employer reports the vesting, and the use of sell-to-cover, to Revenue.
When you sell
Gains above your base cost pay Capital Gains Tax at 31% for sales from 7 October 2026 (33% before), after the €1,270 annual exemption. Your employer doesn't deduct it. You pay by 15 December for sales from January to November, and by 31 January for December sales. You must report the sale on your tax return even if no tax is due. See when to pay CGT.
Work it out
Sources
- Revenue: Share awards and RSUs (taxed through PAYE; no employer PRSI on share-settled awards) (checked 20/10/2026)
- Revenue: Unapproved share options (PAYE on exercises from 1 January 2024; RTSO before) (checked 16/10/2026)
- Revenue: When and how do you pay and file CGT? (checked 25/10/2026)
General information, not tax advice. HeyPenny is not a tax agent.