Government launches study on how share options are taxed

SMEs could be in line for a significant boost after the Department of Finance launched a public consultation into how share options are taxed.

Smaller businesses have long criticised the current model which sees employees taxed on the shares they take in a business at an earlier stage than in many other countries.

SMEs argue that this acts as a disincentive for prospective new hires and makes smaller businesses less competitive in attracting talent.

Following a commitment made in the Programme for Government, the department has now made its first move in examining the issue.

“International research has shown that when employees share in the profits of the company this can be effective in fostering partnership, increasing competitiveness and in helping companies to attract and retain staff in a competitive international labour market. This can then support employment and economic growth,” said Finance Minister Michael Noonan.

“Now is a good time to review the tax treatment of share-based remuneration, including consideration of whether existing supports can be targeted more effectively. I encourage all interested parties to make a submission,” the minister said.

The department said there may be potential “to provide for assistance to SMEs in their effort to retain skilled employees”.

Any new proposals will be subject to Oireachtas debate and a cost-benefit analysis.

The department’s supporting documentation says it’s committed to encouraging greater “employee financial participation” which increases SMEs competitiveness and helps create and retain employment. 

Submissions to taxpolicy@finance.gov.ie before July 1.


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