During a meeting this morning with the Department of Social Protection it has been stated that the law has yet to be enacted to change the way share option schemes are calculated. This means that for the present share option schemes should be calculated with employers PRSI where applicable and that no refunds may made.
The Department of Social Protection (DSP) remind everyone of the following with respect to Share-based Remuneration.
1 The regulations to cater for the changes announced in March 2011, whereby schemes that were signed off between an employee and employer prior to 1 January 2011 are exempt from EE & ER PRSI and the May 2011 announcement whereby schemes signed off between employee and employer after 1 January 2011 are now subject to EE PRSI and exempt from ER PRSI, have yet to amended.
2 As the regulations have not yet been amended the rules that pertained at 1 January still apply. ie all schemes whether pre or post 1 January 2011 are subject to both EE and ER PRSI
3 As the regulations of 1 January still apply no refund arises and therefore no refund may be reclaimed.
However, revised regulations are currently being worked on and will be become law as soon as the relevant Minster signs them. The new regulations will give effect to:
1 Where share-based remuneration is based on a written agreement entered into between employer and employee prior to 1 January 2011, such income will be exempt from both EE and ER PRSI
2 Where share-based remuneration is based on a written agreement entered into between employer and employee on or after 1 January 2011, such income will be subject to EE PRSI but exempt from ER PRSI
3 Will allow for
a. Refunds of EE and ER PRSI on schemes entered into before 1 January 2011
b. Refunds of ER PRSI on schemes entered into on or after 1 January 2011
The Department has indicated that they intend to publish a document regarding refunds for Share-based Remuneration in conjunction with the revised regulations when signed off.
With respect to PRSI refunds that may be due on ER PRSA contributions, the DSP has indicated that a document will be published addressing the issues within the next couple of weeks, This document needs to be approved by DSP, Revenue, The Collector General and Finance prior to its publication and distribution. This is also the case for the documentation with respect to Share-based Remuneration.
DSP are aware of the issues facing both developers and users of Payroll Software, but state that getting agreement from all relevant State bodies will take time.