Worker loses Revenue battle over €430,000 tax bill

A man has lost his tax battle with the Revenue Commissioners over a €429,996 tax bill on the exercise of share options.

The Tax Appeals Commission (TAC) found that the Revenue assessment of €429,996 stands in relation to the employee recording a gain of €821,166 from exercising share options in 2016.

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 €1.09 million including the share options gain of €821,166 and the worker appealed the tax bill in December 2019.

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The man, who was an employee of an Irish-registered company in 2016, contended that he was non-resident in the State and therefore taxation on the shares was not payable in this jurisdiction.

However, 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 4th, the worker said he paid tax on the sale of shares in another unnamed jurisdiction and Revenue’s amended notice of assessment amounted to double taxation.

The worker submitted an IRS form for 2016 which showed a return of $970,469 (€906,732) for ‘Wages, Tips and Other Compensation’ and 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 said 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 his findings, Mr Noone said he was not satisfied that the appellant had 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 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.