Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I spoke on the amendment last night but I can speak more broadly on the section now. Section 10 inserts a new section after section 128E to provide for the introduction of a new share-option based relief for employees of SME companies, namely the key employee engagement programme, KEEP. It is designed to support SMEs in Ireland in competing with larger enterprises in the recruitment and retention of 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 however be subject to capital gains tax on a future disposal of the shares.

There are a number of conditions. For example, the share option must be granted at not less than market value on the date of grant; the share option must be held for a minimum period of one year before exercise, with limited exceptions; and the option must be exercised within ten years of grant to avail of this programme. Monetary limits apply at both company and employee level. The commencement of the programme is subject to EU State Aid approval, which I expect to issue shortly. Recent developments with regard to the employment and investment incentive programme make it even more important that the KEEP programme is effective in meeting its policy objective. With this in mind, the scope for further adjustments to this programme is being examined. Last night I flagged that I may bring further amendments to this on Report Stage.

However, I should emphasise that any such adjustments would require State aid approval, and I need to strike a balance between what is desirable and what I can make happen.