The European Commission grants State Aid approval for the Key Employee Engagement Programme

The Minister for Finance and Public Expenditure & Reform, Paschal Donohoe, T.D., welcomes the decision by the European Commission yesterday (19 December) to approve the Key Employee Engagement Programme under EU State Aid rules.

The KEEP scheme is designed to assist SMEs in Ireland in competing with larger enterprises to attract and retain key employees. It provides for a more advantageous tax treatment of gains arising on the exercise of qualifying share options acquired in SME companies. Where the KEEP applies, any gains realised on the exercise of qualifying share options granted during the period 1 January 2018 to 31 December 2023 will not be subject to income tax, PRSI or USC at the date of exercise. The gain will instead be subject to Capital Gains Tax on a future disposal of the shares.

SMEs contribute enormously to the Irish economy. The most recent CSO data from 2014 shows these enterprises accounted for nearly 69% of total persons employed at that time. KEEP aims to support this sector. International research has shown that employee financial participation can be effective in fostering partnership and increasing competitiveness and helping companies to attract and retain staff in a competitive international labour market. Improved competiveness supports the creation and maintenance of employment, and this in turn supports economic growth which benefits the economy as a whole.

Engagement with industry representatives has continued during the development process of KEEP, and the scheme has been positively welcomed by the sector since its announcement in Budget 2018.


20 December, 2017