Ireland – Limits for KEEP Share Options Increased Effective January 2019
Ireland – Limits for KEEP Share Options Increased Effec
The Ministerial Order has been made which gives effect to certain measures in relation to Key Employee Engagement Programme (“KEEP”) share options contained in Ireland’s Finance Act 2018. There are limits as to the maximum market value of shares which quality for the KEEP favoured-taxation treatment per employee. These limits have now been increased, effective from 1 January 2019.
To subscribe to GMS Flash Alert, fill out the subscription form.
The Ministerial Order1 has been made (8 August 2019) which gives effect to certain measures in relation to Key Employee Engagement Programme (“KEEP”) share options contained in Ireland’s Finance Act 2018. As a result, the KEEP measures provided for in the Finance Act are now operational.
KEEP is an employee share incentive scheme designed to help small- and medium-sized enterprises (“SMEs”) attract and retain key personnel.
The new increased limits (described below) will apply to qualifying options granted to employees from 1 January 2019 to 31 December 2023.
WHY THIS MATTERS
Under a KEEP plan, a “qualifying company” within the SME sector would be allowed to provide “qualifying individuals” with “qualifying share options,” as long as certain conditions are met throughout the option holding period.
Moreover, the incentive provides for a saving of 19 percent, based on current tax rates, in the tax payable by an employee on the gain as compared to standard share option gains.
KEEP aims to support SMEs in attracting and retaining key talent by effectively deferring the taxation of gains on employee shares until the sale of the shares.
There are limits as to the maximum market value of shares which qualify for the KEEP favoured-taxation treatment per employee. These limits have now been increased. Effective from 1 January 2019, the total market value of all shares, in respect of which qualifying share options have been granted by a qualifying company to an employee or director, cannot exceed:
- €100,000 in any one tax year,
- €300,000 in all tax years, or
- The amount of the annual emoluments of the qualifying individual in the tax year in which the qualifying share option is granted.
1 The Ministerial Order (also known as “Commencement Order”) has been published, and can be found on the eISB Web site produced by the Office of the Attorney General. For the Ministerial Order, click here.
For the text of the Finance Act 2018, click here.
2 Also see “Taxing Times: Finance Bill 2018 and Current Tax Developments,” a publication of the KPMG International member firm in Ireland. Moreover, see “Employee Share Incentive Schemes,” a publication of the KPMG International member firm in Ireland.
The information contained in this newsletter was submitted by the KPMG International member firm in Ireland.
© 2021 KPMG, an Irish partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.