Share Options Tax Guide · 2026
Share Options Tax Ireland 2026: KEEP, Unapproved Options & RSUs Explained
Share options and equity awards are increasingly common in Irish compensation packages. How you're taxed depends entirely on the type of scheme — KEEP options, unapproved options, or RSUs — and the stage of the lifecycle (grant, vest, exercise, sell). This guide covers the tax treatment for each scheme in 2026, with worked examples and a comparison table. Use our Equity Management Tool to model your full equity position.
1. KEEP Scheme (Key Employee Engagement Programme)
KEEP is a tax-advantaged share option scheme designed for SMEs (fewer than 250 employees, turnover ≤ €50m, or balance sheet ≤ €43m). Qualifying options granted to key employees benefit from significantly favourable tax treatment.
KEEP Tax Treatment at a Glance
- ✓No income tax on the gain at exercise — only USC at 40% on the difference between market value and grant price.
- ✓No employee PRSI on the gain at exercise.
- ✓No employer PRSI on the gain — a major saving for the company.
- ✓CGT on sale — when you eventually sell the shares, any further gain attracts CGT at 33%, with the base cost equal to the market value at exercise.
- ✓Options must be exercisable within 10 years of grant and held for at least 12 months before exercise.
📊 KEEP Example: 10,000 Options
| Grant price | €2.00 |
| Market value at exercise | €5.00 |
| Gain per option | €3.00 |
| Total gain (10,000 × €3) | €30,000 |
| USC @ 40% | €12,000 |
| Income tax | €0 |
| Employee PRSI | €0 |
| Employer PRSI | €0 |
Net proceeds at exercise
€18,000
after USC only
On sale at €8/share: further gain of €30,000 (10,000 × €3), CGT at 33% = €9,900.
2. Unapproved Share Options
Unapproved share options (also called non-tax-advantaged or "EMI-style" options outside of KEEP) are the default for most large companies and any SME that doesn't qualify for or elect KEEP. They are fully taxable as income at exercise.
📊 Unapproved Options Example: Same 10,000 Options
| Grant price | €2.00 |
| Market value at exercise | €5.00 |
| Gain per option | €3.00 |
| Total taxable gain | €30,000 |
| Income tax @ 40% | €12,000 |
| USC @ 8% | €2,400 |
| Employee PRSI @ 4.1% | €1,230 |
Total tax due at exercise
€15,630
52% effective rate on the gain
Employer also pays 11.05% PRSI = €3,315. Net to employee: €14,370.
⚠️ RTSO Reporting Requirement
Employers must report share option gains through the Revenue Taxpayer Segmentation Online (RTSO) system within 30 days of exercise. The gain is included in the employee's payroll and taxed through PAYE. Failure to report can result in penalties for the employer.
3. RSUs — Taxed at Vesting, Not Exercise
Restricted Stock Units (RSUs) work differently from share options. With an RSU, the company grants you the right to receive shares for free once they vest. There's no exercise price and no exercise decision — the shares are simply delivered to you at vesting.
📊 RSU Example: 5,000 RSUs Vesting
| Number of RSUs | 5,000 |
| Market value at vesting | €5.00 |
| Taxable income (5,000 × €5) | €25,000 |
| Income tax @ 40% | €10,000 |
| USC @ 8% | €2,000 |
| Employee PRSI @ 4.1% | €1,025 |
Total tax due at vesting
€13,025
52% effective rate
Key difference: no exercise step. Tax is triggered by vesting. Employer withholds shares (sell-to-cover) to settle the tax.
RSU vs Share Options — Timing Difference
| Event | Share Options | RSUs |
|---|---|---|
| Grant | No tax | No tax |
| Vesting | No tax (option is exercisable but not yet exercised) | Tax event — full market value treated as income |
| Exercise | Tax event — gain (MV − grant price) is income | N/A — shares already delivered |
| Sale | CGT on gain above MV at exercise | CGT on gain above MV at vesting |
KEEP vs Unapproved Options — Full Comparison
The table below shows how the two main option types compare across every dimension for 2026.
| Dimension | KEEP | Unapproved |
|---|---|---|
| Income tax on gain | None | Marginal rate (20% / 40%) |
| USC on gain | 40% (only tax due) | 0.5% – 8% |
| Employee PRSI | None | 4.1% |
| Employer PRSI | None | 11.05% |
| Effective tax rate on gain | 40% (USC only) | Up to ~52% |
| Employer eligibility | SMEs only (<250 employees, ≤€50m turnover) | Any company size |
| Option exercise window | Min 12 months hold, max 10 years | Per plan rules (typically 10 years) |
| Reporting method | Form 11 / myAccount (USC return) | RTSO + payroll (PAYE deducted) |
| CGT on later sale | 33% on gain above MV at exercise | 33% on gain above MV at exercise |
| Share value limit | €3m aggregate at grant date | No statutory limit |
Filing & Reporting Requirements
At Exercise — RTSO Filing (Employer)
For unapproved options, the employer files an RTSO return within 30 days of the exercise date and includes the gain in the employee's payroll for PAYE/USC/PRSI deduction. KEEP options are reported by the employee directly.
Annual Return — Form 11 or myAccount
Employees must declare share option gains on their annual tax return. For KEEP options, the USC liability (40%) is paid via the return. For unapproved options, confirm that the correct PAYE was deducted by the employer.
On Sale — CG1 Return (CGT)
When you sell the shares acquired through options, any gain above the base cost (MV at exercise) is subject to CGT at 33%. File a CG1 return within 4 months of disposal and pay the CGT due.
Record Keeping
Keep your option grant letter, exercise confirmation, payslip showing deductions, and share sale confirmations. Revenue can request these records for up to 6 years after the relevant tax year.