Budget 2011 signalled significant changes to the tax and social security (PRSI) treatment of share-based remuneration arrangements. Employers face increased administrative burdens, while employees will feel the impact in the form of an extra tax/PRSI cost. The changes will affect any company which uses share-based remuneration to incentivise and retain staff. The impact is likely to be felt in particular by multinational companies that offer employees ‘tax exempt’ Revenue approved share schemes. Such schemes are no longer ‘tax exempt’ as they will now be within the scope of both employee PRSI and the new Universal Social Charge (USC). Niamh Keogh and Maura Roe summarise the changes which have been introduced and consider what steps need to be taken by employers to address these changes. This article takes into account the Government accouncement on the 10 May 2011 to abolish employer PRSI liability.

This article appeared in the June 2011 edition of Accountancy Ireland.