Taxes Consolidation Act 1997 section 128D

Tax treatment of directors of companies and employees who acquire restricted shares

Section 128D sets out the income tax treatment of restricted shares acquired by directors and employees, providing for an abatement of the benefit-in-kind (BIK) charge where the shares are subject to a disposal restriction for a specified period.

• Shares are "restricted" where a written contract prevents the employee or director from selling, transferring or otherwise disposing of them for at least one year, and the shares are held in a trust or other Revenue-approved arrangement during that period.
• The BIK charge on acquisition is abated by between 10% (one-year restriction) and 60% (restriction of more than five years), calculated by reference to the market value of the shares ignoring the restriction.
• If the restriction is removed, varied or the shares are disposed of in limited permitted circumstances before the specified period expires, the original tax charge is recalculated based on the actual period the restriction was in place, and any additional tax is collected.
• Employers must file details of all restricted share awards, and any removal or variation of restrictions, electronically with Revenue by 31 March in the year following the relevant tax year.