A "high-flyer" has lost his tax battle with the Revenue Commissioners concerning a €429,996 tax bill on the exercise of share options.
This follows the Tax Appeals Commission (TAC) finding that Revenue assessment of €429,996 stands concerning the employee recording a gain of €821,165 after he exercised share options.
The employee's tax form for 2016 stated that his income was €271,384 and did not include the gain from the exercise of share options.
In 2017, Revenue issued the assessment on total income of €1.09m, including the share options of €821,166 and the worker appealed the Revenue tax bill in December 2019.
The worker - an employee of an Irish registered firm in 2016 - contended that he was non-resident in Ireland and therefore taxation on the shares was not payable in this jurisdiction.
Commissioner Simon Noone found that the appellant was resident in Ireland in 2016 and that the exercise of the share options was a taxable event.
At a remote oral hearing on September 4, the worker stated that he paid tax on the sale of shares in another un-named jurisdiction and Revenue's amended notice of assessment amounted to double taxation.
The worker submitted an IRS form for 2016 which showed for "Wages, Tips and Other Compensation" a return of $970,469 ands stated that the sale of shares was included in this amount.
The worker also referred to another IRS documentation which stated that he owed $437,149 in taxes.
On cross examination, a representative for Revenue stated that the amended notice of assessment was raised on foot of the exercise of the Appellant’s share options, which was a separate transaction to the sale of the shares.
In response, the worker stated that the exercise and sale of the shares was done collectively.
In response to questions from Commissioner Noone, the worker stated that he sold the shares in 2016 and made a capital gain on them, tax on which he paid to other tax authorities.
In a written submission, Revenue stated that the worker had not provided it with documentation showing that he had paid tax on the share option gain.
Revenue also pointed out that a tax return by the worker did not declare that he was not an Irish resident in 2016, and a full PAYE employee tax credit was claimed for the year.
Revenue stated that stated that the notice of amended assessment was raised on the exercise of the share option, and not the sale of the shares.
The Revenue Assistant Principal Officer (AP) told the hearing that, even if the worker remitted tax on the sale of the shares in the other jurisdiction this would not alter that tax was due in Ireland on the exercise of the option.
The AP stated that the Appellant's employer was an Irish-registered company and had submitted a tax return showing the exercise of the share option, resulting in a gain of €821,165.
In his findings, Mr Noone found that while the Appellant stated that he spent a "significant amount" of time in another jurisdiction in 2016, no other evidence was submitted that would go to show that he was non-resident in Ireland in that year.
Mr Noone also stated that in any event, he is not satisfied that the Appellant has demonstrated that he paid tax, on either the exercise of the options or on the sale of the shares, to the IRS.
Upholding the Revenue assessment, Mr Noone noted that the Appellant may be entitled to credit in the other jurisdiction in respect of the amended notice of assessment raised by Revenue.
The dispute may yet be adjudicated upon by the High Court after the seven page TAC ruling confirmed that the Commission has been requested to state and sign a case for the opinion of the High Court in respect of its determination.
Reporting by Gordon Deegan
