CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. EU Approves Irish SME Share Scheme

EU Approves Irish SME Share Scheme

by Jason Gorringe,, London

20 December 2017

The European Commission has approved an Irish tax incentive for employee share schemes offered by SMEs – the Key Employee Engagement Programme (KEEP).

The measure was introduced under the Irish Government's 2017 Finance Bill. Before KEEP could enter into force, the Government needed to receive approval from the Commission under EU state aid rules.

The Commission has now given its approval. It said that the scheme will allow SMEs to recruit and retain employees, without unduly distorting competition in the single market.

Under KEEP, any gain arising from the exercise of qualifying share options will be subject to capital gains tax (CGT) at the time of the disposal of the shares. CGT (currently at 33 percent) will be applied in place of income tax, Universal Social Charge, and pay-related social insurance.

The shares must be held for a minimum period of one year before exercise (with limited exceptions). They must be exercised within 10 years of the grant.

The Commission said that such government intervention is necessary to facilitate Irish SMEs' efforts to attract and retain employees, and to enable these companies to contribute further to economic growth and innovation.

The Commission noted that SMEs in Ireland often do not have the financial resources available to offer employees competitive remuneration packages.

According to the Commission, when provided on top of a fixed wage, these employee share options could enhance the ability of SMEs to attract and retain staff without the need to find immediate additional financial resources.

TAGS: capital gains tax (CGT) | compliance | tax | small business | business | European Commission | tax compliance | Ireland | tax incentives | share schemes | employees | small and medium-sized enterprises (SME) | tax rates | tax breaks | tax reform | European Union (EU) | Europe

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »