Dublin Chamber is delighted to welcome the Key Employee Engagement Programme (KEEP), details of which were revealed in the Government’s Finance Bill published last week.

This follows a long Dublin Chamber campaign to help SMEs retain talent and compete with larger firms by allowing for share-based remuneration on a tax-efficient basis, giving key employees a financial incentive linked to the success of the company. Our members worked closely with Government officials to inform the design of the share-based remuneration scheme.

This is a targeted relief, and is subject to EU approval under State aid rules. The Government is now engaging with the European Commission to secure this approval. Assuming that approval is granted, KEEP will come into force in the New Year.

What is the benefit?

Gains arising on the exercise of a share option by SME employees will not be subject to Income Tax, PRSI or Universal Social Charge at the date of exercise. They will only be subject to Capital Gains Tax (33%) on a subsequent disposal of the shares.

What are the rules?

ü  The share option must be granted at not less than the market value on the grant date.

ü  The share options must be held for a minimum of 1 year before exercise (with limited exceptions) and must be exercised within 10 years of grant to avail of KEEP.

ü  Total market value of the issued but unexercised qualifying share options of the company must not exceed €3,000,000.

ü  KEEP will be available for share options granted from 1 January 2018 to 31 December 2023.

Does my business qualify?

To qualify for KEEP, your company must be:

ü  A micro, small or medium sized enterprise (SME) as defined by the European Commission. SMEs are businesses with fewer than 250 employees and an annual turnover not exceeding €50 million, and/or an annual balance sheet total not exceeding €43 million;

ü  Incorporated and resident in the State, or resident in an EEA state other than Ireland, and doing business in Ireland through a branch or agency;

ü  An unquoted company none of whose shares, stock or debentures are listed in the official list of a stock exchange, or quoted on an unlisted securities market of a stock exchange other than on the Enterprise Securities Market of the Irish Stock Exchange;

ü  Not be regarded as a company in difficulty for the purposes of European Commission Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty;

Which employees qualify?

ü  A full-time employee or full-time director of the company who is required to devote substantially the whole of his/her time to working for the company, with a minimum of 30 hours per week.

ü  An employee/director will cease to qualify if he/she (either alone or with connected persons) can directly or indirectly control over 15% of the company’s ordinary share capital.

Dublin Chamber will continue to make the case for supporting Dublin’s business community in the months ahead. If you have any feedback on the Budget or ideas about what the Chamber's 2019 Budget submission should contain, please email policy@dublinchamber.ie