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As an employee, you may receive: |
Are these taxable? |
Employee Share Option (ESOP)
ESOP plans give the employee the rights to purchase shares in the company at a specific predetermined price within a time frame.
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An employee who is granted share options by an employer will be taxed on any gains or profits arising from the exercise of the share option.
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Other Forms of Employee Share Ownership (ESOW)
ESOW plans allow an employee of a company to own or purchase shares in the company or in its parent company.
They include share awards and other similar forms of employee share purchase plans (excluding phantom shares and share appreciation rights).
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An employee who is granted ESOW by the employer is subject to tax on any gains or profits when the ESOW plan vests on the employee.
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The above tax treatments are applicable to any ESOP/ESOW plans:
(i) granted by an overseas parent company operating a group ESOP/ESOW plan; or
(ii) granted to a person as a result of any office held by him (e.g. a director).
Find out more on:
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When is it taxable
- ESOW plans with no vesting imposed
The gains are taxable in the year when the shares are granted.
- ESOP/ ESOW plans with vesting imposed
| ESOP/ESOW plan granted while an individual is exercising employment in Singapore |
| Granted before 1 Jan 2003 |
The gains or benefits from any ESOP/ESOW plans are taxable in Singapore if the ESOP/ESOW plans are exercised/vested while you are physically present in Singapore or holding an employment in Singapore. |
| Granted on or after 1 Jan 2003 |
The gains or benefits from any ESOP/ESOW plans are taxable in Singapore.
This is regardless of where you exercise the ESOP or the ESOW plan vests, as the gains will be taxed to the extent that they are connected with your Singapore employment. The gains are taxable even when you exercise the ESOP or the ESOW vest after you have ceased employment or are posted overseas
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| ESOP/ESOW plans granted while an individual is NOT exercising employment in Singapore * |
| Exercised or vested before 1 Jan 2002 |
The gains or benefits from any ESOP/ESOW plans are taxable in Singapore if the ESOP/ESOW plans are exercised/vested while you are physically present in Singapore or holding an employment in Singapore. |
| Exercised or vested on or after 1 Jan 2002 |
The gains or benefits from any ESOP/ESOW plans are not taxable in Singapore |
* This does not apply to an employee who was temporarily away, as such absence from Singapore would be treated as incidental to his Singapore employment.
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How we tax gains from ESOP/ESOW plans
- Gains from ESOW plans with no vesting imposed
The gains are taxable in the year when the shares are granted.
- Gains from ESOP/ ESOW plans with vesting imposed
| ESOP/ESOW plans |
Granted before 1 Jan 2003 |
Granted on or after 1 Jan 2003 |
| Without selling restriction |
Taxable in the year when
- You exercised the ESOP or
- The shares under ESOW plan is vested on you
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Taxable in the year when
- You exercised the ESOP or
- The shares under ESOW plan is vested on you
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| With selling restriction (moratorium) |
Taxable in the year when the selling restriction is lifted |
For foreigners and Singapore permanent residents (SPRs)
Deemed exercise rule applies when a foreigner ceases employment or SPRs leave Singapore permanently.
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How to compute gains from ESOP/ESOW plans
- Without selling restriction:
• Gains from ESOP = Open market price of share on date of exercise less price paid for the shares (exercise price)
• Gains from ESOW plan (with vesting imposed) = Open market price of share on date of vesting less price paid for the shares (exercise price)
• Gains from ESOP (with no vesting imposed) = Open market price of share on date of grant less price paid for the shares (exercise price)
Mr Lim exercised his share options. Below is the amount of his ESOP gains:
Open market price per share on date of exercise
(a)
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Exercise price per share
(b)
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Number of shares acquired
(c)
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Gains from ESOP
[(a) - (b)] x (c)
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$10
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$5 |
100 |
500 |
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- With selling restriction (moratorium):
Open market price of the shares on the date the selling restriction is lifted less Exercise price of the shares = Taxable gain
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Tax Deferment Scheme
Qualified Employee Equity-based Remuneration Scheme (Qualified EEBR Scheme)
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Incentive Schemes
1. Equity Remuneration Incentive Scheme (SMEs) [ERIS (SMEs)]
(previously known as Entrepreneurial Employee Equity-based Remuneration Scheme)
New!As announced in the Budget Statement 2013, this scheme is not available to ESOP/ESOW granted on or after 1 January 2014
| Incentives |
You can enjoy 50% tax exemption on the gains arising from your ESOP/ESOW up to $10 million, over a period of 10 years. Applicable only for ESOP/ESOW gains derived on or before 31 December 2023. |
| How to qualify |
Please refer to the e-Tax Guide on Equity Remuneration Incentive Scheme (ERIS) (570KB) (The revised e-Tax Guide will be released by April 2013) |
| How to claim |
If your employer is participating in the Auto-inclusion scheme for employment income, the details of the gains will be sent to IRAS electronically. |
Otherwise, you must submit Appendix 8B (88KB) (details of gains and profits from ESOP/ESOW plans) together with your income tax form or separately if you e-File your income tax.
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2. Equity Remuneration Incentive Scheme (All Corporations) [ERIS (All Corporations)]
(previously known as Company Employee Equity-based Remuneration Scheme)
New!As announced in the Budget Statement 2013, this scheme is not available to ESOP/ESOW granted on or after 1 January 2014
| Incentives |
You can enjoy tax exemption on the gains arising from your ESOP/ESOW up to $1 million, over a period of 10 years.
Applicable only for ESOP/ESOW gains derived on or before 31 December 2023.
Tax exemption on the gains is computed as follows:
- full tax exemption on the first $2,000 of gains - 25% tax exemption on the remaining amount of gains |
| How to qualify |
Please refer to the e-Tax Guide on Equity Remuneration Incentive Scheme (ERIS) (570KB) (The revised e-Tax Guide will be released by April 2013) |
| How to claim |
If your employer is participating in the Auto-inclusion scheme for employment income, the details of the gains will be sent to IRAS electronically. |
Otherwise, you must submit Appendix 8B (87KB) (details of gains and profits from ESOP/ESOW plans) together with your income tax form or separately if you e-File your income tax.
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3. Equity Remuneration Incentive Scheme (Start-Ups) [ERIS (Start-Ups)]
New! As announced in the Budget Statement 2013, this scheme is not available to ESOP/ESOW granted on or after 16 February 2013
| Incentives |
You can enjoy tax exemption of 75% on the gains arising from your ESOP/ESOW up to $10 million, over a period of 10 years. Applicable only for ESOP/ESOW granted within the first three years of incorporation of the qualifying company and only for ESOP/ESOW gains derived on or before 31 December 2023. |
| How to qualify |
Please refer to the e-Tax Guide on Equity Remuneration Incentive (570KB) (The revised e-Tax Guide will be released by April 2013) |
| How to claim |
If your employer is participating in the Auto-inclusion scheme for employment income, the details of the gains will be sent to IRAS electronically. |
Otherwise, you must submit Appendix 8B (87KB) (details of gains and profits from ESOP/ESOW plans) together with your income tax form or separately if you e-File your income tax.
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Common terms related to stock options
How to report
You need to declare the gains from ESOP/ESOW plans under 'employment income' in your tax form.
If your employer participates in the auto-inclusion scheme, you do not need to report your employment income. Your employer will send us your income details. Check if your employer is a participant of the auto-inclusion scheme.
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