Key Employee Engagement Programme (“KEEP”) amendments

The Key Employee Engagement Programme (“KEEP”) is a tax-advantaged share option scheme which was introduced on 1 January 2018 with the objective of supporting Irish SMEs in the recruitment and retention of key employees. Some changes are being introduced to improve the operation of the scheme.

The original scheme had a number of limitations, for example:

  • Employees were required to be full time employees or directors of the “qualifying” company and they must spend at least 30 hours per week working for that company. This prevented employees of a company in a group structure from availing of the relief where the employee performs performed duties for other companies in the group.
  • KEEP options could only be provided over newly issued fully paid-up ordinary shares in a qualifying company.

Finance Bill 2019 contains the following provisions which addresses the above as follows:

  • Employees of companies who perform employment duties across a group may now qualify for KEEP, subject to meeting certain conditions. Broadly, a group for this purpose will comprise the 50% direct and indirect subsidiaries of a holding company, at least one of which should be carrying on a qualifying trade as defined.
  • The ‘qualifying individual’ definition will be amended to allow for part-time and flexible working employees to qualify.
  • Share options under KEEP can now be provided over existing shares in a qualifying company.

Since the introduction of KEEP there has been minimal uptake of the scheme due to the restrictive nature of the various conditions. The changes are intended to improve the flexibility of the relief, which may assist in improving the numbers of SMEs offering KEEP options to employees.

The Finance Bill is making its way through the houses of the Oireachtas and is due to be enacted into law at the end of December.

If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars employment tax team below:

Staff Member

Position

Email

Telephone

Ken Killoran

Tax Partner

kkilloran@mazars.ie

01 449 4451

John Kelly

Tax Director

John.kelly@mazars.ie

01 449 4495

December 2019

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