Taxes Consolidation Act 1997 section 128E

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

Section 128E sets out the income tax treatment of shares acquired by directors and employees where those shares are subject to forfeiture under certain conditions, and the reporting obligations on employers in relation to such shares.

• Shares are "forfeitable" where a genuine written contract requires the employee or director to give them up if specified conditions arise or fail to arise, without receiving more than what was originally paid for them.
• The income tax charge on acquisition is calculated by reference to the market value of the shares at the date of acquisition, ignoring the risk of forfeiture.
• If the shares are subsequently forfeited, the employee or director is treated as never having acquired them, and any income tax, income levy or USC paid on acquisition is refunded on foot of a claim made within four years of the end of the year of forfeiture.
• Employers must electronically file details of all awards and forfeitures of forfeitable shares with Revenue by 31 March following the relevant tax year, using the Form ESA.