What RSUs are
A Restricted Share Unit is a promise by an employer to deliver shares once a vesting condition is satisfied. The condition is usually continued employment over a set period, sometimes combined with performance metrics.
Tax point at vesting
Under Irish rules RSUs are taxed when they vest, not when they are granted. The full market value of the shares on the vesting date is treated as additional employment income.
Three taxes apply at vesting
- PAYE at 20 percent or 40 percent depending on your SRCOP
- USC at the marginal rate up to 8 percent
- PRSI at Class A1 rate (4.2 percent rising to 4.35 percent on 1 October 2026)
The combined deduction can be over 50 percent of the share value for higher rate earners.
How employers withhold
Employers must withhold the taxes through payroll. Two common methods:
- Sell to cover: enough shares are automatically sold to fund the tax bill
- Net settlement: employer keeps shares equal to the tax due, employee gets the net
The remaining shares belong to the employee with a cost base equal to the vesting day market value.
Worked example
Diarmuid is a tech employee on a €100,000 salary. 200 RSUs vest in May 2026 at €120 per share, total value €24,000.
| Tax | Rate | Amount | | --- | --- | --- | | PAYE | 40 percent | €9,600 | | USC | 8 percent | €1,920 | | PRSI | 4.2 percent | €1,008 | | Total | | €12,528 |
The workings, at the Class A employee rate in force for a May 2026 vesting: €24,000 x 40 percent = €9,600, €24,000 x 8 percent = €1,920 and €24,000 x 4.2 percent = €1,008, so €9,600 plus €1,920 plus €1,008 = €12,528.
After tax Diarmuid receives shares worth €24,000 minus €12,528 = €11,472 (or that cash equivalent if sell to cover is applied).
Capital Gains Tax on later sale
When the employee eventually sells the shares, any further gain or loss compared to the vesting day price is a capital event:
- CGT rate in 2026: 33 percent
- Annual CGT exemption: €1,270
- File a CG1 return by 31 October of the year following the disposal
- Pay the CGT long before that return is due. For a disposal between 1 January and 30 November the payment date is 15 December of the same year; for a disposal in December it is 31 January of the following year [source]
The two dates are the most expensive thing on this page to get wrong. Paying the tax when the CG1 is filed rather than on the payment date is up to eleven months late on an ordinary disposal, and Revenue charges interest on a late payment and a penalty on a late return.
If the share price falls between vesting and sale, the loss can be offset against other capital gains.
Worked CGT example
Diarmuid sells the 200 shares two years later at €150 each.
- Sale proceeds: 200 x €150 = €30,000
- Cost base: 200 x €120 = €24,000
- Gain: €6,000
- Less annual exemption: €1,270
- Taxable gain: €4,730
- CGT at 33 percent: €1,560.90
Common pitfalls
- Forgetting to declare CGT on later sales
- Currency fluctuations on US dollar denominated shares
- Vesting events while abroad triggering complex apportionment
Educational notice
Equity compensation tax is complex. This article is general information only. Specialist advice is strongly recommended for any RSU planning.