Finance Act 2017 introduced a new tax-advantaged share scheme in Ireland known as the “Key Employee Engagement Programme” (KEEP). KEEP is an employee share option scheme aimed at helping SMEs to recruit and retain employees in Ireland.
Unlike share options granted and exercised under standard share option legislation, the KEEP scheme contains the following tax advantages:
• there is no income tax on a grant of a qualifying share option;
• there is no income tax or employee PRSI liability on exercise of the share options if the qualifying share options were granted between 1 January 2018 and 31 December 2023;
• the employee will only pay Capital Gains Tax (CGT) on the ultimate disposal of the shares, which in effect means that there is no upfront tax cost for employees who acquire shares under this scheme; and
• the value of shares acquired by key employees under the KEEP incentive will also be exempt from employer PRSI contributions, as is the case with the current regime applying to share-based remuneration.