Employee Share Plans in Europe and the USA - Sorainen

Employee Share Plans in Europe and the USARepublic of IrelandParticipation in a SAYE Plan must be offered to all employees on similar termsand the employee must agree to make monthly savings for at least 3 years. Theoption exercise price under a SAYE Plan may be set at a discount to marketvalue of up to 25% at grant (the option price cannot be less than market valueunder an Approved Plan). Where an option is granted under a SAYE Plan, notax is due on the exercise of the option provided that the exercise takes placemore than 3 years after the date the option was granted. Where an option isgranted under an Approved Plan, no tax is due on its exercise provided that theshares acquired on exercise of the option are not disposed of within 3 years afterthe date on which the option was granted.5.4 Tax withholdingThe employee must account for the income tax and levy due. There is nowithholding obligation on the employer.6. Taxation of share disposals6.1 A charge to capital gains tax may arise on the disposal of shares on thedifference between the proceeds of sale and (i) the value of the shares at thetime of acquisition (where they were acquired free or at a discount to marketvalue) or (ii) the exercise price paid for the shares plus any amount assessed toincome tax in respect of exercise, where the shares were acquired on exerciseof an option.6.2 Where the employee disposes of shares acquired on the exercise of an optionunder a SAYE Plan or an Approved Plan, the capital gains tax charge will be on• the remaining 30% of options may be granted to "key employees" without regard to the "similarterms" test. A "key employee" is one whose specialist skills, qualifications or experience areconsidered to be vital to the future success of the company. The "key employee" must be certifiedas such by the Revenue;• options must be granted with an option exercise price which is not less than market value at thedate of grant;• the shares subject to the option must form part of the ordinary share capital of the grantor (whichmust be the employing company or the parent company of the employing company provided, in thelatter case, that the shares are quoted on a recognised stock exchange). The shares must be fullypaid up, not redeemable and not subject to restrictions that do not apply to other shares of thesame class;• options must be non-transferable (except that the Approved Plan rules may provide that, in theevent of death of the optionholder, the options may be exercised by the optionholder's personalrepresentatives within 12 months); and• options may be exercised free from income tax provided that the shares acquired on the exercise ofthe option are not disposed of within three years after the date on which the option was granted.UK/1729295/03 109 September 2010