Taxes Consolidation Act 1997 section 128C

Tax treatment of directors and employees who acquire convertible securities

Section 128C imposes an income tax charge on directors and employees who acquire convertible securities through their employment and sets out how the tax is calculated both on acquisition of the securities and on the occurrence of subsequent chargeable events such as conversion, disposal, or release of the entitlement to convert.

• Where a director or employee acquires securities through employment that can be converted into different securities or into money, an income tax charge arises on acquisition based on the market value of the securities ignoring the right of conversion, with a further charge when a chargeable event occurs.
• Four chargeable events trigger an additional income tax charge: conversion of the securities, release of the entitlement to convert for payment, disposal of the securities while still convertible, and receipt of a benefit connected with the entitlement to convert.
• The chargeable amount on a chargeable event is the gain realised minus any consideration paid for the entitlement to convert and any expenditure incurred in connection with the event, with anti-avoidance rules applying where the securities were acquired under a tax avoidance arrangement.
• Any person chargeable to income tax under this section must file a self-assessment return, any income tax charged is added to the base cost for capital gains tax purposes, and employers must file details of awards and chargeable events with Revenue by 31 March of the following year.